First argument
All business organisations rely on customers to sustain their profitability and gain market share (Farrell 83; Orlikowski 250). A business should focus on achieving a multi-site system so that it could have better targeted customers and the opportunity to attract new ones. Different market segments are characterised by unique customers who are different with regard to their purchasing behaviours. For example, a business location could have customers who buy products based on their prices. On the other hand, a different business site could be characterised by consumers who purchase goods based on their quality.
If a business adopts a multi-site system, then it could work towards producing products that suit different customers. A detailed market analysis could be utilised to understand the needs of customers. Therefore, business sites would be established in locations that have the targeted customers (Mayer 330). When a business site is near the targeted customers, customers can be offered high quality products without the constraints of long distances. Having a multi-site system has the potential of attracting new customers for products (Ferdows 2). For example, many customers could be unaware of certain products that are produced by a particular business establishment.
In order for such a firm to create awareness to customers, it would be important for it to consider locating its production systems in multiple locations. A high number of business locations would positively correlate with the chances of attracting new customers. New customers would benefit a business because they would lead to increased sales that would help a company to expand. The following relationship illustrates the relationship between multiple-sites of a business establishment and number of customers.
Second argument
The environments in which companies operate are essential for their expansion. It would be prudent for business organisations to keep their production in many locations so that they could expand operations rapidly in an environmentally friendly capacity. Business environments are characterised by several factors (Narula 796). Some of the factors could be friendly or unfriendly to business establishments. Friendly business environments could negatively impact the performance of an organisation because they make companies incur the high costs of production. Higher costs of production lead to increased prices of products, which could make customers purchase similar goods from business competitors at lower prices. Such unfriendly business environments could be influenced by the negative effects of government regulations, high business taxation, unfair competition, sale of low quality products, and high production costs, among other causes (Lorentz 311).
However, multiple business sites could give a business the opportunity to operate in environments that support competitiveness. Competitive market in multiple business sites could be achieved through decreased production costs (Ferdows 4). A reduction in the costs of production could enable a firm to make more profits. The profits could be utilised in expanding to other sites that support business competitiveness. Also, having a multiple-site system that is characterised by friendly markets would enable the firm to manage leverage to maximise the value of its assets. Assets of a company are important because they could be used to obtain loans from financial organisations. Also, the value of the firm’s assets greatly determines its financial stability. Thus, companies should keep their production in many locations. The following graph shows the relationship between multiple sites of business and output costs.
Works Cited:
Farrell, Diana. “Beyond offshoring.” Harv Bus Rev 82.12 (2004): 82-90. Print.
Ferdows, Kasra. “POM Forum: Transfer of Changing Production Know‐How.” Production and Operations Management 15.1 (2006): 1-9. Print.
Lorentz, Harri. “Production locations for the internationalising food industry: case study from Russia.” British Food Journal 110.3 (2008): 310-334. Print.
Mayer, Thierry. “Spatial Cournot competition and heterogeneous production costs across locations.” Regional Science and Urban Economics 30.3 (2000): 325-352. Print.
Narula, Rajneesh. “Innovation systems and ‘inertia’in R&D location: Norwegian firms and the role of systemic lock-in.” Research policy 31.5 (2002): 795-816. Print.
Orlikowski, Wanda J. “Knowing in practice: Enacting a collective capability in distributed organizing.” Organization science 13.3 (2002): 249-273. Print.