Logistics. Choosing a business location (most important)

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Logistics. Choosing a business location (most important)

Lecture notes, cheat sheets

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23. SELECTING A BUSINESS LOCATION

Enterprise location selection problem is to find a location that makes it possible to implement a given program of production and sales. The choice of the location of the enterprise is determined by the need to save resources, the ability to produce a certain product at a given location with lower total costs than in other places. At the same time, the influence of logistics costs on the decision regarding the location of the enterprise is investigated. In particular, the costs of transportation, raw materials and fuel, labor, storage of products are taken into account.

Factors influencing the decision regarding the location of the enterprise:

1) internal - financial constraints to cover the costs associated with choosing a location;

2) external - are determined, as a rule, by legislation (regulations in the field of construction and in the field of ecology may contain prohibitions on the implementation of industrial construction).

Factors taken into account when determining the location of the enterprise:

1) general - transport costs and labor costs;

2) special, important for enterprises of certain industries (availability of raw materials, water);

3) regional - attract enterprises to certain regions (for example, deposits of raw materials);

4) concentration factors - determine the territorial concentration (for example, sales markets with a high population density);

5) socio-cultural (for example, the cultural level of the city).

Factors for choosing the location of the enterprise in terms of supply:

1) land plots (structure, purchase price or amount of rent);

2) raw materials, auxiliary and production materials (prices, transportation costs);

3) labor force (labor resources depending on the size of the population, the standard of living in a given region, the level of wages, qualifications of the labor force, attitude to work);

4) energy (energy supply costs);

5) transport (transport infrastructure, eg availability of roads, proximity to airports, transport costs).

Factors for choosing the location of the enterprise in terms of sales:

1) sales potential (population structure, purchasing power, competition, special prestige of the product in the area of production);

2) transport (transport routes);

3) contacts that promote implementation (fairs, advertising agencies).

Factors for choosing the location of the enterprise, determined by the state:

1) taxes (tax rate, tax incentives for certain regions);

2) legislation governing border crossing (customs regulations, foreign trade laws);

3) the economic system (competitive business laws, the right to take part in the affairs of the enterprise), as well as the risks associated with political instability (for example, restrictions on the movement of capital, expropriation);

4) measures in the field of environmental protection (reducing the level of environmental pollution);

5) government assistance (programs to assist regions with an underdeveloped economic structure, assistance in founding private enterprises, promotion of research and development work).

Author: Shepeleva A.Yu.

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