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Factors That Affect Location Decisions

Learn about key success factors influencing location decisions including political risks, cultural issues, labor productivity, supply availability, exchange rates, and more. Understand how location choices impact costs, currency risks, and cultural values.

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Factors That Affect Location Decisions

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  1. Factors That Affect Location Decisions The Basics: Country Decision Region/Community Decision Site Decision

  2. Country Decision Key Success Factors • Political risks, government rules, attitudes, incentives • Cultural and economic issues • Location of markets • Labor talent, attitudes, productivity, costs • Availability of supplies, communications, energy • Exchange rates and currency risks

  3. MN WI MI OH IL IN Region/Community Decision Key Success Factors • Corporate desires • Attractiveness of region • Labor availability and costs • Costs and availability of utilities • Environmental regulations • Government incentives and fiscal policies • Proximity to raw materials and customers • Land/construction costs

  4. Site Decision Key Success Factors • Site size and cost • Air, rail, highway, and waterway systems • Zoning restrictions • Proximity of services/ supplies needed • Environmental impact issues

  5. Labor cost per day Productivity (units per day) = Cost per unit Labor Productivity • Area’s wage rate • Companies do not want to go to low • ↓Wage Rate = ↓Knowledge • ↑Wage Rate = ↑Knowledge

  6. Exchange Rates and Currency Risk • With the low wage rate that particular country must have GOOD exchange rates

  7. Costs • Tangible Costs- easily measured costs such as utilities, labor, materials, taxes • Intangible costs- less easy to quantify and include education, public transportation, community, quality-of-life

  8. Political Risk, Values and Culture • National, State, Local governments’ attitudes towards private company • National, State, Local property, zoning and pollution laws • Workers values differ with culture • Do not want to insult a different countries beliefs, morals, and or culture

  9. Proximity • → Markets Near customers • → Suppliers Near raw material • → Competitors clustering

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