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Objective * To achieve competitive competiti ve advantage * To maximize the beneft o location to the frm * To determine an optimal acility location * To prove that the optimal acility is a good investment investmen t
Labor costs have decreased in Hongkong when its sovereignty was transerred back to !"# * Hongkong enjoys a large seaport and very good transportation transportati on inrastr$ct$re% and this is important in moving in raw materials and moving o$t fnished##
&nswer '# (ingapore &dvantages ) Labor relatively cheap% ) ood transport inrastr$ct$re + ,ncentives o-ered to stay# .isadvantages/ + ,ncreasing labor costs + ,ncreasing $tility costs# 0alayasia &dvantages/ '# &ccess to raw materials and nat$ral reso$rces 1# ,nexpensive labor .isadvantages/ '# "oncern with re2$ency o ship visits# 1# Transportation cost increased# Hong 3Ong &dvantages/ '# Labor consistently consistently cheap and 1# ood transport inrastr$ct$re# inrastr$ct$re# .isadvantage/ .isadvantage/ '# High "ost 1# 4hat other relevant actors that are not mentioned in the case st$dy might play a role in this decision+
5inding a Location or 6lectronic "omponent 0an$act$ring in &sia "ase &"0 &"0 is an electronic components man$act$rer located in (ingapore since '77'% providing prod$cts original e2$ipment man$act$rer 8O609 with good 2$ality over the last ew years# &"0 is $nder press$re rom man$act$rers located in other co$ntries# ,n singapore alone% labor is still 2$ite expensive% there there has been a relatively stable despite an increase increase in labor costs# ,n addition% there was an increase also in the cost o $tilities% especially water and energy costs have led companies to think to r$n the operation by b$ilding a plant in &sia in an e-ort to make the company more competitive#&"0 competitive#&"0 still achieve a proft in its operations% b$t the proft margin has shr$nk% and management m$st ens$re that the company remains competitive on a competitive basis in the medi$m and long term to ace competition rom other man$act$rers# &"0 ,n this case there are two sites that were proposed by management% namely Hong 3ong and 3$ching &dvantage Hongkong There are are iers large% large% transportation transportation inrastr$ct$r inrastr$ct$re e was nice so it:s easier meyal$rkan 5inished oods and .irect labor cost is relatively cheaper than
.irect labor cost in (ingapore 4hat are the advantages and disadvantages location o-ered by management senior+ 4itho$t the transport inrastr$ct$re is ade2$ate then the distrib$tion activity is inhibited then beore deciding on a location% so m$st pay attention to the inrastr$ct$re s$ch as the road is ade2$ate% rail% sea conditions% and the air was ade2$ate and the government:s readiness to participate in improving the inrastr$ct$re is the added val$e in determining a location % beca$se altho$gh the Hard !ock is one o the very well;known trademarks in the world% this is not nat$ral everywhere# Location is an important element in predicting reven$e or the company incl$ding the p$rchasing power o a region% competitors% the physical 2$ality o a location# 5ranchise a "ae !isks Legal Tenaga 3erja (ome 0any 5ew "ondition Hard !ock reer "hoose .i-erentiation 8cc9 photo by twicepix on 5lickr 8cc9 photo by t$dor on 5lickr 3$ching 80alaysian province o (arawak9 (tate
?%??? so$l Transport ,nrastr$ct$re that s$pports !aw 0aterials and 5inished oods can enter and exit easily Labor costs "heaper disadvantage 4hat disting$ishes Hong 3ong and 3$ching is the port o 3$ching is not as big as the port o Hong 3ong% and ships calling at the port o 3$ching less than Hongkong port actor other relevant are not mentioned in this case st$dy that may play a role in the decision;making locations+ '# !isk o 6xchange !ate and "$rrency 1# olitical !isks% @al$es% and "$lt$re A# roximity to markets <# roximity to s$ppliers 4hy transport inrastr$ct$re is essential in making location decisions+ Hard !ock "ae (ome people wo$ld say that Oliver 0$nday% @ice resident or the development o Hard !ock "ae% has done the best job in the world# Travel the world to b$ild a Hard !ock "ae Bext% select a city% and o$nd the location ideal# 0$nday do not j$st fnding the fnal location will be $sed as the Hard !ock "ae% b$t he designed the b$ilding design with the architects and b$ilding planners and stay $ntil the day o the opening o the cae and one year sales# 4hy Hard !ock a serio$s e-ort to analyze the location+ Thank Co$ 5or Co$r &ttention ### small
5,B.,B & LO"&T,OB 5O! 6L6"T!OB,"( "O0OB6BT 0&BD5&"TD!,B ,B &(,& '# 4hat advantages and disadvantages does each potential location o-er+ (ingapore &dvantages/ labor relatively cheap% good transport inrastr$ct$re and incentives o-ered to stay# .isadvantages/ increasing labor costs and increasing $tility costs# Hong 3ong &dvantages/ labor consistently cheap and good transport inrastr$ct$re# .isadvantages/ no specifc disadvantage has been identifed in the case b$t st$dents sho$ld attempt to disc$ss this $rther# 0alaysia &dvantages/ access to raw materials and nat$ral reso$rces inexpensive labor# .isadvantages/ "oncern with re2$ency o ship visits# 1# 4hat other relevant actors that are not mentioned in the case st$dy might play a role in this decision+ The ed$cation o the workorce 8both c$rrent workorce and $t$re generations9 as well as political stability will impact the decision# A# 4hy is transportation inrastr$ct$re so important in this decision+ (ince &"0 is reliant on logistics or raw materials and transporting fnal prod$cts to c$stomers% transportation costs 8both c$rrent and expected development o the costs9 will do$btlessly have a large impact on the decision# <# This is a long; term strategic decisionE what actors might change in the next ten to twenty years+ How will this inF$ence the decision+ (ince the plant will Gpay or itsel over a long time horizon% decision relevant costs m$st be examined not only at their c$rrent level b$t also how this is expected to develop over the horizon# 6xamples o costs which are likely to change and whose change wo$ld make or break the decision wo$ld incl$de labor costs% $tility costs% raw material costs% transport costs# &lso other diIc$lt to orecast developments s$ch as exchange rates and political stability will impact the proftability#
># 4hich alternative wo$ld yo$ recommend% $nder which circ$mstances+ &nswers will vary b$t st$dents sho$ld disc$ss how to approach the problem o selecting the appropriate location# 5or example% i possible% st$dents sho$ld explore the $se o actor rating method or this problem