5.4 Location

Qualitative factors

Qualitative factors

________: non measurable factors that may influence business decisions.

Optimal location

________: business location that gives the best combination of quantitative and qualitative factors.

Optimal location

business location that gives the best combination of quantitative and qualitative factors

Quantitative factors

measurable factors in financial terms and will have a direct impact on either the costs of a site or the revenues from it and its profitability

Qualitative factors

non measurable factors that may influence business decisions

Outsourcing

using another business (a "third party") to undertake a part of the production process rather than doing it within the business using the firm's own employees

Subcontracting

practice of assigning to another business (the subcontractor) part of a contract for example, a specialist activity that makes up part of construction contract

Offshoring

relocation of a business process done in one country to the same or another company in another country

Insourcing

reverse of outsourcing as it is undertaking a business function or process within the business rather than contracting it to another business

Inshoring

ending offshoring contracts with overseas suppliers and returning functions or processes to business operations in the home country

Optimal location

Business location that gives the best combination of quantitative and qualitative factors

Quantitative factors

Measurable factors in financial terms and will have a direct impact on either the costs of a site or the revenues from it and its profitability

Qualitative factors

Non measurable factors that may influence business decisions

Pull of the market; planning restrictions; external economies of scale; multi-site locations

4 other locational issues

Outsourcing

Using another business (a "third party") to undertake a part of the production process rather than doing it within the business using the firm's own employees

Subcontracting

Practice of assigning to another business (the subcontractor) part of a contract for example, a specialist a activity that makes up part of construction contract

Reduction and control of operating costs; increased flexibility; improved company focus; access to quality service/resources; freed-up internal resources

5 reasons for outsourcing

Loss of jobs within the business; quality issues; customer resistance; security

4 potential drawbacks to outsourcing and subcontracting

Offshoring

Relocation of a business process done in one country to the same or another company in another country

Language and other communication barriers; cultural differences; level of service concerns; supply-chain concerns; ethical considerations

5 potential limitations of offshoring

Insourcing

Reverse of outsourcing as it is undertaking a business function or process within the business rather than contracting it to another business

Inshoring

Ending offshoring contracts with overseas suppliers and returning functions or processes to business operations in the home country