Location Decisions Essay

Deciding on the trounce location for a unseasoned railway line or relocating an existing one is often crucial to its success. Location decisions choosing new positions for expansion or relocation of the transmission line be some of the most(prenominal) important decisions made by management teams. Selecting the best site depart constitute a significant effect on many departments of the furrow and, ultimately, on the profitability and chances of success of the whole firm. Location decisions have trio key characteristics They be strategic in nature as they are long term and have an impact on the whole pipeline.They are difficult to reverse if an error of judgment is made due to the be of relocation.They are taken at the highest management levels and are not delegated to subordinates.An best location decision is one that selects the best site for expansion of the business or for its relocation, given current information. This best site should maximize the long profits of the business. The optimal site is nearly always a compromise between conflicting benefits and drawbacks. For exampleA well-positioned high-street shop will have the potential for high sales but will have high rental charges than a similar sized shop out of town. A factory location which is cheap to purchase due to its distance from major(ip) towns might have problems recruiting staff due to lack of a grand and trained working population.So an optimal location is likely to be a compromise one that balanceshigh fixed be of the site and buildings with convenience for customers and potential sales revenue the low addresss of a remote site with limited supply of suitably qualified job quantitative factors with qualitative onesFactors influencing location decisionsSite and other capital cost such as building or shop-fitting cost These vary greatly from region to region within a country and between countries. The best office and retail sites may be so expensive that the cost of them is beyond the resources of all but the largest companies. The cost of building on a Greenfield site one that has never previously been developed must be compared with the costs of adapting existing buildings on a developed site. Labor costsThe relative importance of these as a locational factor depends on whether the business is capital or labor intensive. An insurance company holler out touch on will need many staff, but the labor costs of a nuclear power station will be a in truth small proportion of its total costs. The attraction of much lower plight rates overseas has encouraged many European businesses to set up operations in other countries for example, bank and Insurance Company call centers. Transport costsBusinesses that use heavy and bulky raw materials such as leaf blade making will incur high head costs if suppliers are at a great distance from the steel plant. Goods that increase in bulk during production will, traditionally, reduce transport costs by locating c lose to the market.