Location

Strategies

Prepared by:

Anna Dewi Lestari

Astrid Widayani
Rudianto Nugroho
Welli Kristanto Koerniawan

1
What is Location?
 Absolute : geographic construct
 Relative : its location in
relationship to other relevant
places


 A location is GOOD if it is in
proximity to others called
AGGLOMERATION/Geographic
concentration/Cluster
2
Location Theory
(economical-geographical perspective)

 Neoclassic:
 Location is driven by factors of
production,
 Profit maximization and cost reduction
 Behavioural:
 Location as a decision making (and
learning) process
 It is a matter of the owner
style/preferences when they decide to
choose one location
 Institutional:
 Location as an exercise in bargaining,
especially MNC 3
Objective of Location Strategy

Maximize the
benefit
of location to
the firm

4
Why Location is Important?
 As a strategic decision (long term
decision)
 Start-up
 Expansion
 Relocation

 Location related to success

 Objective
 Subjective

5
Industrial Location Decisions

•Cost fo cu s
–Revenue varies little
between locations
• Location is a major
cost factor
– Affects shipping &
production costs (e.g., labor)
– Costs vary greatly between
locations

6
Service Location Decisions

 Revenue focus
 Costs vary little between
market areas


 Location is a major
revenue factor
Affects amount of
customer contact
Affects volume of
business
7
 Country, Region and Site Decision

Indonesia – Jawa –
Yogyakarta

8
Factors Affecting Country

•Government rules,
attitudes, political
risk, incentives
•Culture & economy
•Market location
•Labor availability,
attitudes, productivity,
and cost
•Availability of supplies,
communications, energy
•Exchange rates and
currency risks
9
Region Location Decisions
 Corporate desires
 Attractiveness of region
(culture, taxes,
climate, etc.)
 Labor, availability,
costs, attitudes
towards unions
 Costs and availability
of utilities
 Environmental
regulations of state
and town
 Government incentives © 1995 Corel Corp.

 Proximity to raw 10
materials & customers
Factors Affecting Site
 Site size and
cost
 Air, rail,
highway, and
waterway
systems
 Zoning
restrictions
 Nearness of
services/supp © 1995 Corel Corp.

lies needed
 Environmental 11
Location Decision Example

Nike

Internet cafés
business in Indonesia

12
Location Evaluation Methods

•Factor-rating method
•Locational break-even
analysis
•Center of gravity
method
•Transportation model

© 1995 Corel Corp.

13
Factor-Rating Method
 Most widely used location technique
 Useful for service & industrial
locations
 Rates locations using factors
 Tangible (quantitative) factors
 Example: Short-run & long-run
costs
Intangible (qualitative) factors
Example: Education quality,
labor skills
14
Locational Break-Even Analysis
 Method of cost-volume analysis to make
an economic comparison of location
analysis
 Used for industrial locations
 Determine the lowest cost
 Steps
 Determine fixed & variable costs for
each location
 Plot total cost for each location (Cost
on vertical axis, Annual Volume on
horizontal axis)
 Select location with lowest total cost
for expected production volume
15
 Locational BEP Example

$60k, & $110k respectively. Variable costs per case

© 1995 Corel Corp.

16
Locational BEP Chart
200000
n
ro
Ak
150000
Annual Cost

o
Chicag
100000 G ree
n
g
owlin
B
50000 Akron Bowling Green Chicago
lowest lowest cost lowest
cost cost
0
0 500 1000 1500 2000 2500 3000
Volume

17
Center of Gravity Method
 Finds location of single distribution
center serving several destinations
 Used primarily for services
 Minimize distribution cost
 Place the locations on a coordinate
system
 Considers
 Location of existing destinations
 Example: Markets, retailers etc.
 Volume to be shipped
 Shipping distance (or cost)
 Shipping cost/unit/mile is constant
18
Center of Gravity Example
(page 354)

19
Transportation Model

 Finds amount to be shipped from

several sources to several
destinations
 Used primarily for industrial
locations
 Type of linear programming model:
Objective: Minimize total
production
& shipping costs
Constraints
Production capacity at
source (factory) 20
Example Transportation Method
To WAREHOUSE Factory
From Aceh Bengkulu Semarang Capacity

F Yogya Rp5 4 3 100

A
C
T
O
Surabaya 8 4 3 300
R
Y Bandung 9 7 5 300

300
Warehouse Requirement 200 200 700

21
 Location: Service vs. Industrial
Service/Retail/Professional  Goods-Producing Location
Revenue Focus  Cost Focus
❏ Volume/revenue q Tangible costs
❏ Drawing area, ❏ Transportation cost of
purchasing power raw materials
❏ Competition; ❏ Shipment cost of finished
advertising/pricing goods
❏ Physical quality ❏ Energy and utility cost;
❏ Parking/access; labor; raw material;
security/ lighting; taxes, etc.
appearance/image ❏ Intangible and future costs
❏ Cost determinants ❏ Attitude toward union
❏ Rent ❏ Quality of life
❏ Management caliber ❏ Education expenditures
❏ Operations policies by state
(hours, wage rates) ❏ Quality of state and local
 government
22
 Location: Service vs. Industrial
 Service/Retail/Professional  Goods Producing Location
Techniques  Techniques
❏ Regression models to ❏ Linear Programming
determine importance of (Transportation method)
various factors ❏ Factor-rating method
❏ Factor-rating method ❏ Locationalbreakeven
❏ Traffic counts analysis
❏ Demographic analysis of ❏ Crossover charts
drawing area
❏ Purchasing power analysis of
drawing area
❏ Center of gravity method
❏ Geographic information
systems
23
 Location: Service vs. Industrial
 Service/Retail/Professional
 Assumptions
❏ Location is a major
determinate of revenue
❏ High customer-contact issues
are critical
❏ Costs are relatively constant
for a given area; therefore,
the revenue function is
critical
 Goods-Producing Location
 Assumptions
❏ Location is a major
determinate of cost
❏ Most major costs can be
identified explicitly for
each site
❏ Low customer contact
allows focus on
identifiable costs
❏ Intangible costs can be
evaluated
24
 Location strategies of broad-line retailers: an
empirical investigation

p a d a b a g a im a n a p e n g a ru h stra te g i p e m ilih a n lo ka si p e n g

stance)
imity) dan strategi Menjaga Jarak (distancing)
 Dalam penelitian ini ditinjau kembali baik secara
konsep maupun empiris mengenai:
(1) faktor-faktor yang menjadi pertimbangan
penentuan jarak dari toko kompetitor
 (2) strategi yang digunakan oleh pengecer
berdasarkan jarak tersebut
 (3) apakah strategi pemilihan lokasi didasari
perbedaan geografis pasar atau area
perdagangan toko.

Menurut Miller et al (1999) Outlet


Pengecer dapat diklasifikasikan sebagai

berikut :
M e to d e R ise t ju rn a lin id a la m m e n e n tu ka n
stru ktu r d a n stra te g ija ra k / sp a sia l:
A . 2 ka te g o ri p a sa r ya n g d ila ya n i, yakni :
Ya n g m e la ya n i Pa sa r u n tu k P e rb a ika n R u m a h
ya n g d ila ku ka n se n d iri, M isa ln ya : H o m e
D e p o t d a n Lo w e ’ s
Ya n g m e la ya n i Pa sa r u n tu k Pe ra la ta n / Supplies
kantor,
Misalnya: Office Depot, Office Max, dan
Staples
 
B .Daerah yang dilakukan riset adalah tiga daerah
metropolitan, dengan data statistik:
§Norfolk-Virginia Beach-Newport News,VA (Populasi:
1,5 juta)
§Jacksonville, FL (populasi:1,1 juta)
§Charlotte-Gastonia-Rock Hill, NC (populasi 1,4
C .Dilakukan penghitungan jarak antara setiap
Spesialis Broad Line satu dengan yang lainnya
dengan menggunakan:
Software : ESRI's ArcView 3.2 Geografis
Informasi System (GIS)

D .Dilakukan penelitian hubungan antara

karakteristik pasar dan jenis strategi yang
digunakan oleh para Spesialis Broad Line,
dengan menggunakan :
Data geodemografis dan daya beli dari Sistem
CACI Marketing (2002)
 Research questions:


 RQ1 : Di tiga daerah metropolitan yang diteliti, apakah

para Spesialis Broad Line cenderung untuk memilih
lokasi yang mendekati lokasi pengecer barang
umum?
Data Analysis:

 RQ1 dihitung dengan menggunakan jarak tetangga

terdekat dengan menggunakan metoda pengukuran
jarak Tetangga dari Schmidt and Lee, untuk
mengetahui hubungan dari efek jarak/spasial.
Dengan menggunakan rumus, para tetangga
terdekat asosiasi ruang nilai R dan yang dimodifikasi
tetangga terdekat R* adalah rasio rata-rata yang
diamati jarak antara tetangga terdekat dan
diharapkan menegaskan umur jarak tetangga
terdekat untuk suatu daerah tertentu. Pola titik
tunggal statistik tetangga terdekat diberikan dengan
Kesimpulan dari data :

Angka dalam tabel di atas melambangkan tipe kompetisi

dan kemampuan spesialis broad line untuk mengontrolnya.
Dari tabel di atas yang nilainya berkisar 0,13 – 0,35
yang menunjukkan pola hubungan yang jelas antara
kedekatan jarak baik dalam seluruh pasar maupun dalam
semua tipe pertokoan.
Dari hasil investigasi RQ1 disarankan untuk para
spesialis broad line agar memilih lokasi yang dekat
dengan pedagang barang umum.
RQ2: Berkaitan dengan penentuan lokasi yang dilihat dari
pengecer broad line lain, apakah dilakukan penghitungan
kedekatan (proximity) dan penetapan jarak (distancing) oleh
pengecer broad line di pasar metropolitan?

Data Analysis:
menggunakan analisis dengan uji t.
RQ2 didapatkan dari metoda pemisahan antara jarak yang
diinginkan dan jarak dari pengecer broad line terdekat.

 Kesimpulan dari data :

Hasil dari penelitian RQ2 menyarankan agar spesialis broad
line menggunakan dua strategi jarak dan kedekatan tersebut.
Jarak rata-rata untuk strategi proksimitas yang digunakan
0,565 mil dibandingkan dengan jarak 6,9 mil bila strategi
distancing yang digunakan
RQ3: Apakah karakteristik di daerah perdagangan di mana
spesialis broad line menggunakan strategi proksimitas
akan berbeda dibanding daerah perdagangan yang
menggunakan strategi distancing?
 
Data Analysis:
RQ3 telah diteliti dengan menggunakan analisis varian
multivarian (MANOVA).
Kesimpulan dari data :
Hasilnya didapatkan bahwa areal perdagangan di mana
pengecer broad line menggunakan strategi yang berbeda
antara proksimitas atau distancing, dipengaruhi oleh
karakter pasar yang berbeda. Terdapat perbedaan yang
signifikan antara kepadatan penduduk kawasan
perdagangan, per kapita pendapatan, pengeluaran ritel,
usia rata-rata, dan extentof kepemilikan rumah (F =
4,369, P <0,001).
 Kesimpulan Riset :

-pengecer broad-line akan mendapatkan keuntungan

lebih baik dari pengecer barang umum dan dari
kedekatan lokasi dekat pengecer tersebut.
-Spesialis Broad-line menggunakan dua strategi lokasi,
terkait dengan jarak dari spesialis broad line
lainnya, baik strategi proksimitas (kedekatan)
maupun distancing
-Penentuan strategi proksimitas maupun distancing
juga dipengaruhi oleh kondisi pasar (demografis)
wilayah perdagangannya. Spesialis broad line
cenderung akan memilih strategi proksimitas di
wilayah perdagangan yang mayoritas penduduknya
memiliki kriteria pendapatan, kepadatan penduduk
dan pendapatan per kapita, populasi anak muda dan
kepemilikan rumah yang tinggi