The business location decision is one of those playing the most influential factors influencing the quality of business performance. Choosing an area for a company’s spatial placement, managers have to consider particular strategies depending on the specialization area and the primary objectives of the organization. The business location decision-making presents a variety of challenges (especially for global corporations) and, in case of success, contributes to the development and economic growth of an enterprise.
The evaluation of enterprise location perspectives requires considering some decisive factors such as market, labor, safety, and economic advancement. According to Kimelberg and Williams (2013), these factors have to be analyzed from the perspective of the company’s type of facility. Large firms as “the operational units of an economy” employ precise analysis of the indicators of investment, production, and sales opportunities available on the territory they select (Laulajainen & Stafford, 2013, p. 1). The factors of supplier and consumer activity are also taken into consideration.
Cultural differences between the country of the company’s origin and the targeted area might be a challenge when regarding consumer relations and employment opportunities. It is vital for businesses to address the specific features of the countries and communities where their facilities are going to be located (Laulajainen & Stafford, 2013). Competition with local enterprises relates to the “overlapping products and area charters” (Laulajainen & Stafford, 2013, p. 380). Thus, a firm has to introduce a modified approach to compete with the current market.
In the case of an expertly designed strategy, the location of a corporation’s facilities contributes to their economic success. According to the study conducted by Ketokivi, Turkulainen, Seppala, and Rouvinen (2017), the most effective way to make a successful business location decision is to target “high-cost countries” for facilities placement (p. 20). The high GDP level countries offer higher prices and require higher wages. That is why it is essential to consider the type of facilities concerning its particular location.
Concluding the discussion, the location-oriented strategy employed by big corporations is potential to provide the basis for its rapid growth. There are some challenges firms might face on their way to general progress. They include cultural differences between the country of origin and the targeted territory, and the economic competition. However, all the efforts contribute to the overall development of the commercial sector in general, and an enterprise, in particular.
References
Ketokivi, M., Turkulainen, V., Seppala, T., & Rouvinen, P. (2017). Why locate manufacturing in a high-cost country? A case study of 35 production location decision. Journal of Operations Management, 49(51), 20-30.
Kimelberg, S.M., & Williams, E. (2013). Evaluating the importance of business location factors: The influence of facility type. Growth and Change: A Journal of Urban and Regional Policy, 44(1), 92-117.
Laulajainen, R., & Stafford, H.A. (2013). Corporate geography: Business location principles and cases. New York, NY: Springer Science & Business Media.