Location Layout and Physical Facilities Chapter 16 Location

Location, Layout, and Physical Facilities Chapter 16 Location and Layout Copyright © 2012 Pearson Education, Inc. publishing as Prentice Hall 16 -1

Choosing a Location The right region of the country n The right state in the region n The right city in the state n The right site in the city n Chapter 16 Location and Layout Copyright © 2012 Pearson Education, Inc. publishing as Prentice Hall 16 -2

Logic of Choosing a Location Copyright © 2012 Pearson Education, Inc. publishing as Prentice Hall 16 -3

Choosing the Region: Sources of Information n U. S. Census Bureau - www. census. gov/ Ø American Community Survey Ø American Fact Finder Chapter 16 Location and Layout Copyright © 2012 Pearson Education, Inc. publishing as Prentice Hall 16 -4

Choosing the Region: Sources of Information Zoom. Prospector n Population Reference Bureau n Demographics USA n Lifestyle Market Analyst n Rand Mc. Nally's Commercial Atlas and Marketing Guide n Chapter 16 Location and Layout Copyright © 2012 Pearson Education, Inc. publishing as Prentice Hall 16 -5

Choosing the Region: Sources of Information n n n Sales and Marketing Management’s Survey of Buying Power Editor and Publisher Market Guide Small Business Development Centers American Marketplace: Demographics and Spending Patterns Commercial Atlas and Marketing Guide Site Selection Chapter 16 Location and Layout Copyright © 2012 Pearson Education, Inc. publishing as Prentice Hall 16 -6

Geographic Information Systems (GIS) n n Computerized programs combining mapdrawing with database management capability Example: Census Bureau’s TIGER file Search through a database and then plot the results on a map Visual display reveals otherwise hidden trends Chapter 16 Location and Layout Copyright © 2012 Pearson Education, Inc. publishing as Prentice Hall 16 -7

Most and Least Friendly States for Small Businesses Chapter 16 Location and Layout Copyright © 2012 Pearson Education, Inc. publishing as Prentice Hall 16 -8

Selecting the State Factors to consider: n Proximity to markets n Proximity to needed raw materials n Labor supply n Wage rates n Business climate n Tax rates n Internet access Chapter 16 Location and Layout Copyright © 2012 Pearson Education, Inc. publishing as Prentice Hall 16 -9

Sample State Evaluation Matrix Location Criterion Total Score Weight 10 -high 1 -low Score 5 -high 1 -low Weighted Score (weight x score) Florida Georgia South Carolina Quality of labor force Wage rates Union activity Energy costs Tax burden Educational/ Training Assistance Start-up incentives Quality of life Availability of raw materials Other Assign to each location criterion a weight that reflects its relative importance (10 high to 1 low). Then score each state on a scale of 1 (low) to 5 (high). Calculate the weighted score (weight x score) for each state. Finally, add up the total weighted score for each state. The state with the highest total weighted score is the best location for your business. Chapter 16 Location and Layout Copyright © 2012 Pearson Education, Inc. publishing as Prentice Hall 16 -10

Selecting the City Population trends n Population density n Competition n Ø Clustering Costs n Local laws and regulations n Ø Zoning n Compatibility with community Chapter 16 Location and Layout Copyright © 2012 Pearson Education, Inc. publishing as Prentice Hall 16 -11

Selecting the City Quality of life n Transportation networks n Police and fire protection n Public services n Incentives n Chapter 16 Location and Layout Copyright © 2012 Pearson Education, Inc. publishing as Prentice Hall 16 -12

Retail and Service Location Considerations n Trade area size Ø Retail compatibility Ø Degree of competition Ø Transportation network Ø Physical, cultural, or emotional barriers Ø Political barriers Chapter 16 Location and Layout Copyright © 2012 Pearson Education, Inc. publishing as Prentice Hall 16 -13

Retail and Service Location Considerations Continued n n Customer traffic Adequate parking Expansion potential Visibility Chapter 16 Location and Layout Copyright © 2012 Pearson Education, Inc. publishing as Prentice Hall 16 -14

Index of Retail Saturation A measure of the potential sales per square foot of store space for a given product within a specific trading area where C = Number of customers in the trading area RE = Average expenditure person for the product RF = Total square feet of selling space allocated to the product Chapter 16 Location and Layout Copyright © 2012 Pearson Education, Inc. publishing as Prentice Hall 16 -15

Reilly’s Law of Retail Gravitation An estimate of a site’s ability to attract customers where BP = Distance in miles from location A to break point d = Distance in miles between locations A and B Pa = Population surrounding location A Pb = Population surrounding location B Chapter 16 Location and Layout Copyright © 2012 Pearson Education, Inc. publishing as Prentice Hall 16 -16

Retail and Service Location Options Central Business Districts (CBDs) n Neighborhood locations n Shopping centers and malls n Chapter 16 Location and Layout Copyright © 2012 Pearson Education, Inc. publishing as Prentice Hall 16 -17

Shopping Centers and Malls n n Neighborhood Shopping Centers Ø 3 to 12 stores; anchor is supermarket or drugstore Community Shopping Centers Ø 12 to 50 stores; anchor is supermarket, superdrugstore, or discount department or variety store Power Centers Ø Combines drawing power of a mall with convenience of neighborhood shopping center Theme/Festival Centers Ø Employ unifying theme (often entertainment) and frequently target tourists Chapter 16 Location and Layout Copyright © 2012 Pearson Education, Inc. publishing as Prentice Hall 16 -18

Shopping Centers and Malls n n Outlet Centers Ø Rather than use anchor stores, rely on manufacturer’s and retailers’ outlet stores to draw shoppers Lifestyle Centers Ø Anchor is upscale specialty chain store; designed to emulate a village main street Regional Shopping Malls Ø 50 to 100 stores; anchor is one or more major department stores Super-regional Shopping Malls Ø Trade area stretches up to 25 miles Chapter 16 Location and Layout Copyright © 2012 Pearson Education, Inc. publishing as Prentice Hall 16 -19

Retail and Service Location Options Continued Near competitors n Outlying areas n Home-based businesses n Ø 52% of U. S. businesses are run from home Chapter 16 Location and Layout Copyright © 2012 Pearson Education, Inc. publishing as Prentice Hall 16 -20

Manufacturing Locations n Foreign trade zones Chapter 16 Location and Layout Copyright © 2012 Pearson Education, Inc. publishing as Prentice Hall 16 -21

How a Foreign Trade Zone (FTZ) Works Small Company Without FTZ Duty Paid Store Imported Parts and Materials Assemble Package With FTZ No Duty Paid Manufacture Process Mix Chapter 16 Location and Layout Copyright © 2012 Pearson Education, Inc. publishing as Prentice Hall aid U. S. P ty u D Sales No Du ty P aid Exports id a U. S. P y t Du Sales No Du ty P aid Exports 16 -22

Manufacturing Locations Foreign trade zones n Empowerment zones n Business incubators n Chapter 16 Location and Layout Copyright © 2012 Pearson Education, Inc. publishing as Prentice Hall 16 -23

Business Incubators Locations that combine low-cost, flexible rental space with a multitude of support services for their small business residents n 1, 200 incubators operate across the U. S. n They work!! Firms that “graduate” from incubators have a success rate of 87% n Chapter 16 Location and Layout Copyright © 2012 Pearson Education, Inc. publishing as Prentice Hall 16 -24

Business Incubators by Industry Source: National Business Incubation Association Chapter 16 Location and Layout Copyright © 2012 Pearson Education, Inc. publishing as Prentice Hall 16 -25

Layout: External Factors Size and adaptability n External appearance n Ø Create proper image or “personality” in customers’ eyes n Entrances Ø Invite customers to come in Americans with Disabilities Act n Signage n Chapter 16 Location and Layout Copyright © 2012 Pearson Education, Inc. publishing as Prentice Hall 16 -26

A Business Sign n n n Tells potential customers who you are and what you're selling Must comply with local sign ordinances Should be visible, simple, and clear Should be changed periodically to avoid becoming part of the background Should be legible both day and night Must be maintained properly Chapter 16 Location and Layout Copyright © 2012 Pearson Education, Inc. publishing as Prentice Hall 16 -27

Building Interiors n Ergonomics is an integral part of any design n Proper layout and design pays off in higher productivity, efficiency, or sales n Careful selection of colors can create the desired impressions among customers and employees n Proper lighting is measured by what is ideal for the job being done Chapter 16 Location and Layout Copyright © 2012 Pearson Education, Inc. publishing as Prentice Hall 16 -28

Building Interiors n Scents can have a powerful impact in retail stores Ø Scent marketing n Sound Ø Background music can be a selling tool Ø Classical music encourages shoppers to slow down and makes them feel more affluent Chapter 16 Location and Layout Copyright © 2012 Pearson Education, Inc. publishing as Prentice Hall 16 -29

Layout for Retailers The arrangement of merchandise and fixtures n “The stage on which a retail company functions” – Paco Underhill n Well-designed layout takes customers past plenty of displays of items they may buy on impulse n Ø 66% of purchase decisions are made after a customer enters a store Chapter 16 Location and Layout Copyright © 2012 Pearson Education, Inc. publishing as Prentice Hall 16 -30

Layout for Retailers Continued Identify “hot spots” and “cold spots” n Experiment with traffic flow, lighting, aisle size, music type, signs, and colors n Display merchandise attractively n Chapter 16 Location and Layout Copyright © 2012 Pearson Education, Inc. publishing as Prentice Hall 16 -31

Layout for Retailers n Continued When planning in-store displays Ø Make products easy to reach Ø Use wide aisles Ø Place shopping baskets in several areas Ø Make it easy to locate merchandise Ø Allow customers to touch the merchandise Chapter 16 Location and Layout Copyright © 2012 Pearson Education, Inc. publishing as Prentice Hall 16 -32

Space Value for a Small Store Source: National Business Incubation Association Chapter 16 Location and Layout Copyright © 2012 Pearson Education, Inc. publishing as Prentice Hall 16 -33

Factors to Consider in Manufacturing Layouts Type of product n Type of production process n Ergonomic considerations n Space availability within the facility n Chapter 16 Location and Layout Copyright © 2012 Pearson Education, Inc. publishing as Prentice Hall 16 -34

Manufacturing Layouts n Product layout Chapter 16 Location and Layout Copyright © 2012 Pearson Education, Inc. publishing as Prentice Hall 16 -35

Product Layout Chapter 16 Location and Layout Copyright © 2012 Pearson Education, Inc. publishing as Prentice Hall 16 -36

Manufacturing Layouts Product layout n Process layout n Chapter 16 Location and Layout Copyright © 2012 Pearson Education, Inc. publishing as Prentice Hall 16 -37

Process Layout Chapter 16 Location and Layout Copyright © 2012 Pearson Education, Inc. publishing as Prentice Hall 16 -38

Manufacturing Layouts Product layout n Process layout n Fixed position layout n Chapter 16 Location and Layout Copyright © 2012 Pearson Education, Inc. publishing as Prentice Hall 16 -39

All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without the prior written permission of the publisher. Printed in the United States of America. Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall Chapter 16 Location and Layout Copyright © 2012 Pearson Education, Inc. publishing as Prentice Hall 16 -40