Question

Global Facility Location Assignment

1. Pick any one of these: Wal-Mart retail outlet in East Asia; McDonald’s restaurant in Europe; an international HUB in Asia (other than China) for FedEX; Ford Motor Corporation assembly plant in North America; or Eberly College’s off-shore campus with a partner in Latin America (we have partners in Asia, the Middle East, & Europe).

2. Clearly identify what factors (country-specific as well as region and industry/business specific) you would use in deciding if and where you would locate your facility.

3. Would you use any specific methodology or quantitative tool in your analysis? Discuss.

4. Finally, if you were responsible for making the decision, would you locate the facility in this country or not? Why or why not?

5. DO NOT consider the COVID 19 situation since it is too early to know its impact.

No more than two pages (single- or double-spaced)

Cite any references that you might use on an additional page

Show a map on an additional page.

Rubric

1. Factors identified at country/region levels and business-specific (50%)
   1. Comprehensive
   2. Acceptable
   3. Not clear
2. Methodology or Quantitative tool recommendation (15%)
   1. Ideal
   2. Acceptable
   3. Not pertinent
3. Decision to locate the facility (25%)
   1. Articulated very well
   2. Acceptable
   3. Not convincing
4. Map (10%)

E.    References (Bonus up to 25%!)

Answer 1

Global Facility Location in general is guided by some facts found by analyzing several primary and secondary aspects.

Objective of any business is to make profit and for that it needs to produce goods or services and sell to its customer at the minimum costs to complete with the market and still earn profits.

Primary factors would typically include personnel, materials, infrastructure, cost effective operational capabilities and minimum risk of undesired disruption in business.

Secondary factors would comprise advantageous interests, incentives, insurance, etc.

A well assessed decision based on unbiased collection of data helps any business to propel itself with increased efficiency and unhindered business continuity on such global facility location.

Discussing Wal-Mart retail outlet in East Asia;

1) Factors used to decide location of facility:

a) For a retail outlet like Wal-Mart to work profitably, you need to place it at the right spot; This would be a market where the target group of consumers already frequent to purchase they daily needs as well as other necessities.

b) Secondly, you need to see if the target group of the region is able to access the items they would need as a socio-economic part of their culture; Meaning, the regionally needed material supply to stock at the store for sale, needs to be available easily.

c) The store will need to provide customer an exclusive experience to win over loyalty, so will need the local staff members to service the store; Hence, availability of local man-power and transportation to bring them in at the outlet on time is of utmost importance. This would solve any issues relating to conflicting culture and/or language matters.

d) It will also be important for the outlet to receive certain incentives, as secondary factor, if available to reduce initial operational cost till breakeven is reached.

e) The last thing that the outlet would want is any undesired disruption due to certain laws of the land favouring affinity towards unscrupulous labour union activity.

2) There are several methodologies and quantitative tools, which may be used in analysis reaching to the decision:

a) Two of the most important methods are the Factor Rating Method & the Breakeven analysis: Although I might be inclined to take trial by both methods, but in the case we are considering here, the latter will work better. Basically, the method ask for an evaluation of the amount of goods to sell to make upto the cost of selling. In case of a retail outlet, the survey taken to collect data of footfall per week, to conversions, to total value of sales, etc. would be more relevant to evaluate the situation if the store is set up at this location.

1. I would locate the facility in this country because east asia provides me the target consumer group I would like to have; It also allows me to enjoy all the infrastructure and incentives that I may require to set up initially. There is not serious competition around for me.

2. I may not locate the facility here owing to primitive or inferior infrastructure, people still prefer neighbourhood shops as a matter of culture. The limited scope of expansion within this country, etc.

3. Factors identified at country/region levels and business-specific (50%): Virgin grounds for introducing one point all needs purchase customer experience mostly. Enthusiastic population which is tech-savvy. Better control on authorities can be exercised owing to prominence of Wal-Mart.

a. Comprehensive: Low Breakeven cost but limited scope of expansion within the country owing to total landmass and density of population.

b. Acceptable: Availability of man power and local sales force, etc.

c. Not clear: Projected time to ramp up to the desired level to earn “normal profits” inherent to the company.

B. Methodology or Quantitative tool recommendation (15%): Breakeven analysis or Factor Rating Methods.