1. Do Now:Innovation Re-cap1. What is meant by the term innovation? 5 minutes2. Why are patents often associated with investment in R&D?3. Explain one benefit of investment in R&D.4. If R&D is high risk then why do firms undertake it? End

2. Operational Strategies: Location 3. Learning ObjectivesBy the end of the lesson you should be able to:1. Understand the importance of an optimal location to the success of a business.2. Apply quantitative and qualitative decisions-making techniques when making location decisions.3. Analyse and evaluate the advantages and disadvantages of multisite locations.4. Analyse and evaluate important issues relating to international location. 4. What is meant by Optimal Location?Optimal location a business location thatgives the best combination of quantitative aqualitative factors.Choosing the right location has significanteffects on functional areas, profitability andchances of success.Three key characteristics:Strategic in natureDifficult to reverseManaged by senior leaders/ members of staff 5. What is the impact of location on thefollowing?LowHigh variable costs unemployment Close toHigh fixed costs Rural area competitorsMinimum Wage 6. Quantitative or Qualitative methodsof deciding upon locationWhat is meant by Quantitative andQualitative Factors?Quantitative Factors These aremeasureable on financial terms andwill have a direct impact on either thecosts of a site, revenue from it orprofitability.Qualitative Factors Non-measureable factors that mayinfluence business decisions. 7. Westfield Shopping CentreChoose and onequalitative andone quantitativereason whyWestfield locatedin West London.Justify youranswer. 8. Sellafield Nuclear Power StationChoose and onequalitative andone quantitativereason whySellafield locatedin Cumbria.Justify youranswer. 9. Primark Production Choose and one qualitative and one quantitative reason why Primark had chosen to produce in otherPrimark countries such asethical or China and India.unethicalpractice? Justify your answer. 10. What quantitative techniques can also beused assist in the location decision ?Profit EstimatesInvestmentBreak-even AnalysisFirm may compare Appraisal Calculating the break- even point will tell a firmestimated revenue andLocation decisions will how much it needs tocosts for each location. involve substantial produce and sell in order capital investment. to avoid making a loss. Therefore Payback, ARRComplete the Profitand NPV can be used.Estimates task in your Use the break-even point formula to decide if Site Ctextbook (P105)Use investmentor Site D is most viable appraisal techniques to (P106).Q1 and Q2decide if Site X or Site Y is most viable (P105).Q1, Q2 and Q3. 11. Multisite LocationsThis is when a businessoperates from more than onelocation.List as many multisitebusinesses that you can thinkof and note what sector theyoperate in2 minutes 12. What are the advantages anddisadvantages of multisite locations?AdvantagesDisadvantagesConvenient for customers. Co-ordination problems.Delegation of tasks fromIf branches or stores aretoo close to each otherHO.could be risk ofcompetition.Cost advantages of set-upin other countries. Lack of control from HO. 13. International Location DecisionsOne of the main features ofglobalisation is the growingtrend for businesses torelocate completely toanother country or set up newoperating bases abroad.Write down 3 reasons why abusiness may decide to dothis. 14. International Location DecisionsAccess to growing marketsBenefits from greater Minimise impact economies of scale of exchange ratesOff-shoring Government incentives Avoid trade barriers 15. International Location DecisionsOccupation Salary in India % of UK salaryCall centre operator 90p to 1.25 per hour 13-20%Top law graduate 4,700 per year 11-14%Farm worker500 per year 5% 16. What are the potential problems ofinternational location?1. Language and cultural differences: E.g. - Working week, public holidays etc2. Economic and political stability: Firms will choose countries with history of stability.3. Impact on public image: Unethical practices such as child labour.4. Diseconomies of scale: Loss of co-ordination, control, communication. 17. Re-cap Learning ObjectivesYou should now be able to:1. Understand the importance of an optimal location to the success of a business.2. Apply quantitative and qualitative decisions-making techniques when making location decisions.3. Analyse and evaluate the advantages and disadvantages of multisite locations.4. Analyse and evaluate important issues relating to international location.