ATTRACTIVE LOCATIONS FOR BUSINESS OVER THE WORLD

PRODUCTION AND OPERATIONS MANAGEMENT

SUBMITTED BY: MD. RAHMAN RAHED ID: 103 126 019 MBA 21ST BATCH METROPOLITAN UNIVERSITY, SYLHET

INTRODUCTION Choosing the right location can be something of a balancing act. Ideally, the location should be convenient for your customers, employees and suppliers - without being too expensive. For shops and other retail businesses, location is of critical importance. Your location must attract customers. If you rely on passing trade, you want to be in an area where enough people who want your product or service can see you. For example, newsagents are often located in or around train stations. You could also benefit from customers who are attracted by other shops in a shopping centre. For employees, the best location will be easy to travel to. Good public transport links and local parking facilities or spaces make it easier for employees who don't live within walking distance. Employees also tend to prefer working somewhere with good local facilities. You may want to be near suppliers for a quick, flexible service. Deliveries may be easier if there are good road and transport links. You may not want to be too near your competitors, though clusters of similar businesses sometimes attract more customers. Your neighbors and your location also affect your image. Location has a major impact on cost. If you need premises in a prime location the extra costs may be justified. The location of a business is where it is situated. Where to locate a business is a crucial decision because this will have an important impact on profits. Typically businesses will seek locations that maximize revenues and minimize costs. High revenue - Low cost = High profit. Every business owner must figure out how location will (or won't) contribute to the success of the business -- and choose a spot accordingly. Though there are many issues to consider when you're looking for space to house your business, make sure you ask yourself these four important questions:

Is location important for the success of your business? What type of location is best for your business? How much rent can you afford? Is your proposed location appropriate for what you plan to do there?

FACTORS SHOULD BE CONCIDERED DURING THE SELECTION OF LOCATION Is location important for the success of your business? For some businesses, the classic advice "location, location, location" is right on the mark location can mean the difference between feast or famine. But for other enterprises, location may be much less important than finding affordable rental space. In fact, location is almost irrelevant for some businesses: service businesses that do all their work at their customers' locations (such as roofers and plumbers) and businesses that have little contact with the public (such as mail-order companies, Internet-based businesses, and wholesalers). If these types of companies can pass on

rent savings to their customers and their profit margin, picking a low-cost spot in an out-of-theway area might be an advantage. What type of location is best for your business? The key to picking a profitable location is determining the factors that will increase customer volume for your business. Ask yourself questions such as:

Will customers come on foot? Will customers drive and, if so, where will they park? Will more customers come if you locate near other similar businesses? Will the reputation of the neighborhood or even of a particular building help draw customers?

Keep in mind that different types of businesses attract customers in different ways. One key distinction is foot traffic versus automobile traffic. For example, if you're opening an urban coffee shop, you may assume your customer volume will be highest if there's lots of pedestrian traffic nearby during the hours you plan to be open. On the other hand, for an auto repair shop, the choicest locale is a well-traveled street where the shop will be seen by many drivers who can easily pull into the lot. Also consider whether it would benefit your business to be around similar businesses that are already drawing the type of customers that you want. A women's clothing store, for example, would no doubt profit from being near other clothing shops, since many people shopping for clothes tend to spend at least a few hours in a particular area. Ultimately, the perfect location for any business is a very individual matter. Spend some time figuring out the habits of the customers you want to attract, and then choose a location that fits. How much rent can you afford? Chances are that you'll rent rather than buy a space for your business. Most small start-ups don't have the funds to purchase real estate, and it's usually not a good idea to saddle your business with high interest payments in any case. One obvious and important concern when looking for commercial space to lease is finding a place that you can afford. When you projected your financials (as part of your business plan), you should have estimated how much rent your business would be financially able to pay each month, given its projected revenues and its other expenses. How to determine the average rent in your area? Brokers and agents are great sources of information on rental costs in various neighborhoods. They'll generally give you an average figure for the cost of commercial space per square foot per year in a given area. Once you have this figure, you can compare it to the costs of other spaces you're considering. If you haven't done so already, research the average rental costs in your area to make sure the amount you budgeted for rent makes sense, given the cost of commercial space in your area and how important location is for your business. For example, if you determined that location is very

important to your business, make sure your budget will allow you to rent good space given the average cost of space in your area. If not, you may have to rework your business plan. Is your proposed location appropriate for what you plan to do there? When choosing business space, the biggest consideration is sometimes not where it is but what it is. The building facilities need to be appropriate for (or adaptable to) your business. For example, if you're planning to open a coffeehouse, you need a place with at least minimal kitchen facilities. Unless you can convince the landlord to put in the needed equipment -- plumbing, electrical work, and the rest -- it's highly unlikely that laying out the cash to do it yourself will be worth it. In short, if a building lacks something major that is essential to your business operation, you should probably look for something else. Communications Wiring Another consideration that's important for many businesses these days is having modern phone and other data lines available to the business. When you're considering a specific space, ask the agent or the landlord for information about communications wiring, such as whether the space is connected to a fiber optic network or is wired for DSL or a T1 line (high-volume Internet connections). Also, find out to whom the landlord has sold the rights to the risers (wire conduits) in the building. A commercial landlord cannot enter into exclusive contracts with a single telecommunications provider such as MCI or AT&T. However, to bring in another provider of your choosing could be expensive. Electricity and Air Conditioning Besides high-tech communications wiring, don't overlook plain-old electrical power as an important consideration in choosing a business space. Make sure that any space you're looking at has enough power for your needs, both in terms of the number of outlets in your space and the capacity of the circuits. If you'll be running machinery or other electricity-hungry equipment, find out from the landlord how much juice the circuits can handle and whether a generator is available during power outages. Also, if you'll keep sensitive computer equipment at your office, ask the landlord how many hours of air conditioning are included in the terms of your lease, and negotiate longer hours if necessary. Parking Adequate parking is another common need for many businesses. If a significant percentage of your customers will come by car and there isn't enough parking at your chosen spot, it's probably best to look elsewhere. In fact, the city planning or zoning board might not allow you to operate in a space that doesn't have adequate parking. Zoning Rules Finally, the location that you choose needs to be legally acceptable for whatever you plan to do there. A certain spot may be good for business, but if it's not zoned for what you plan to do, you're asking for trouble. You should never sign a lease without being sure you'll be permitted to operate your business in that space. Your city planning or zoning board determines what activities are permissible in a given location. If your zoning board has a problem with any of your business activities, and it's

not willing to work out a way to accommodate your business, you may have to find another space.

ATTRACTIVE LOCATIONS RUSSIA The global economic crisis and rather gloomy forecasts for 2009 have forced many companies to scale down their activities and switch over to simply monitoring the market. Many analysts assert that even against the backdrop of the crisis, Russia still remains one of the worlds most attractive countries for investments. Even in crisis conditions, the dynamic nature of global markets and Russian business always allows for new and promising areas of further development. Statistics show very dynamic growth for the Russian market over the last 10 years. Russian and foreign companies have been able to work in a new business environment and benefit from extensive economic reforms. Over these years, Russia has made significant progress in its transition to market economy and with high degree of integration in global economic processes. Ironically, it was its integration in the global economy that exposed Russia to the effects of the global economic crisis. Some 20 or 30 years back, in the time of the Iron Curtain, the country would have suffered less serious effects of a global downturn like this. Russia is still recognized as an attractive market by foreign investors despite the crisis. Moreover, another process has come to the fore that could be called reverse globalization. Russian companies have started actively expanding onto international markets and purchasing international assets. The economic slump has interrupted this process. However, I would predict that very soon Russia and such countries as India and China will not only safely recover from the after effects of the crisis but also take leading roles in the development of a global post-crisis economic model. UNITED STATES OF AMERICA United States is an attractive location for foreign direct investment, as the latest government report showed that FDI in the country has created a significant number of jobs in the past several years. The United States is an attractive location for foreign companies to invest due to their strong and open economy, productive workforce, a unique culture of innovation and entrepreneurship, remarkable colleges and universities, and a business environment underpinned by transparency, protection of intellectual property, and the rule of law. Noting that the US is the world's largest recipient of FDI, the White House said according to the latest report by the Council of Economic Advisers, inbound FDI rebounded sharply and increased by 49 percent from the low it reached in 2009, after the financial crisis. This investment is particularly important to the US manufacturing sector, it said, adding that in 2008, the US affiliates of foreign multi-national corporations employed 13 per cent of the entire manufacturing workforce in the US. Additionally, the Administration launched the Select USA Initiative to facilitate additional investment, reconfirming the federal government's commitment to an open investment

climate. The report on Inbound FDI, highlights the Administration's open investment policy which allows foreign-based companies to grow and expand their businesses across the United States. The report also outlines how foreign-based companies that invest directly in the US economy create high-quality, well-paid jobs for American workers by building new facilities, investing in research and development and growing warehouses, sales offices and service centers. HONG-KONG The number of overseas and mainland companies running business operations in Hong Kong has increased 2.6 percent in the last year to 6,561, according to an annual survey released by Invest Hong Kong and the Census & Statistics Department. Director-General of Investment Promotion Simon Galpin said the encouraging results reflect Hong Kong's economic rebound in the wake of the global financial crisis. "Compared to 12 months ago, 77 percent of them now consider Hong Kong's outlook as a business location has improved or not changed," he said. "Hong Kong continues to be an attractive city for these companies to base their operations in this part of Asia." Of the 6,561 companies surveyed, 1,285 are regional headquarters, 2,353 are regional offices and 2,923 are local offices. This represents a year-on-year growth of 2.6 percent, 1.1 percent and 3.8 percent. Of the companies surveyed, 20 percent said they may expand their businesses in Hong Kong in the next three years either by increasing staff, expanding the scope of business functions or increasing office size. Finance and banking saw the most robust growth and reinforces Hong Kong's status as a world-leading international financial centre. Regional headquarters increased 5 percent to 135 and local offices rose 13 percent to 622. The top five favorable factors for choosing Hong Kong to set up offices are its simple tax system and low tax rate, the free flow of information, a corruption-free government, the absence of exchange controls, as well as political stability and security. About 64 percent of the companies said the overall business environment in Hong Kong as a location for setting up offices had remained more or less the same, and 13 percent said it had improved on a year ago. THAILAND A 2006 survey conducted by the Japan External Trade Organization (JETRO) showed that Thailand was the most optimal location for establishing a production/sales base in the coming 510 years. There are many reasons why Thailand is a favorable choice for the investors: Growing Economy: Economically, this country of 64 million people is characterized by steady growth. Abundant natural resources and a skilled and cost-effective work force help attract foreign investment, enables them to prosper and help develop industry in Thailand. Social and Political Stability: Thailand is a welcoming country. The countrys form of government constitutional monarchy allows democratic processes and reforms, and is balanced by the Thai peoples peace loving nature, of the people in Thailand are Buddhist, all religions are welcome, and His Majesty the King is the patron of all religions. Sufficient Infrastructure: Thailand has good infrastructure for foreign investors. Improved and modernized transportation facilities, as well as upgraded communications and IT networks, ensure optimum business and living conditions. State-of-the-art industrial estates boast sophisticated facilities and superior services.

Government Support and Incentives: Numerous government agencies support investors. Through the Board of Investment, the government offers a range of tax incentives, supports services and import duty concessions available to an extensive list of business that are regarded as priority or promoted activities. Through the Board of Investment, there are no foreign equity restrictions in the manufacturing sector, no local content requirement, and no export requirements as Thailands investment regime is in total compliance with WTO regulations. The Board of Investment also coordinates the activity of the One-Stop Service Center for Visas and Work Permits, which enables foreign staff of BOI-promoted companies to obtain work permits and long-term visas within 3 hours or less. EUROPE- NETHERLAND The Netherlands and Amsterdam in particular, is becoming an increasingly attractive location for international companies to set up shop and do business, as concluded by KPMG's Competitive Alternatives 2010 study. The Netherlands is the most attractive European location for businesses according to the study. Amsterdam: Europe's cost leader: Mexico emerged as the lowest cost country that was examined, while of the industrialized countries, only Canada surpasses the Netherlands as more cost effective. Japan and Germany have the highest cost structure according to the study. The Netherlands has a cost advantage of 1.7% to the United Kingdom, which ranks second among the European countries. Competitiveness of the Dutch: The Netherlands rose significantly in the list of most attractive locations for international firms. Elbert Waller, International Affairs Executive at KPMG knows why: The competitiveness of the Dutch has improved dramatically over the last two years. The homogeneous cost structure in the Netherlands contributed to this increased competitiveness. Furthermore, the Amsterdam Metropolitan Area scores high in terms of attractiveness. Comparing business costs: The study compares business costs for more than 100 cities in 10 countries: Australia, Canada, France, Italy, Germany, Mexico, the Netherlands, the United Kingdom and the United States with business costs now reflect those in each countrys major metropolitan regions. The entire report can be read on the website of KPMG.

CONCLUSION The right location can be critical to the success of your business and poor decisions are usually difficult and expensive to overcome. Location is particularly important for retail businesses. When buying an established business it is still necessary to check the suitability of the location because it will be reflected in the price paid for goodwill. There are many factors to take into account when making a decision about the location of your business you need to consider customers, transport, the neighborhood, finances and the longer term future. Choice of location should not be a once-only decision. Review your location at the time of lease renewal and when establishing a new outlet.

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