A lot of decision-making responsibility currently rests with Smitheford Pharmaceuticals. Since the plant in Canada will soon be shut down, the company is collecting as much information as possible to help it determine where to locate the replacement facility. Here’s when calculating the costs and benefits becomes important. The plan’s cost-effectiveness is analyzed, as are its potential benefits, in a feasibility study and a cost-benefit analysis. Using these methods, the company can gain insight into which area is best suited to its operations. The location of a business significantly affects its exposure to risk and potential for profit (Heizer et al., 2017). Therefore, this essay will discuss the tangible and intangible expenses that can influence the organizations’ choices.
Transportation is one of the most important factors, accounting for up to 25 percent of the product’s selling price. Smitheford Pharmaceuticals should investigate which cities offer the best access to rivers, ports, roads, rail, airports, and major thoroughfares to determine where to locate their next facility (Heizer et al., 2017). These various modes of transportation will play a significant role in the decision-making process considering location. The organization will have more opportunities to sell its wares in a wider variety of locations if they are based in a city with improved accessibility. This is one of the consequences of providing the organization with the chance to operate worldwide. The movement of people and things is simply one aspect of what is known as transportation.
Setting up a shop in the wrong location can significantly negatively impact a company’s capacity to turn a profit. One factor to consider is the labor cost ratio per day to the number of units produced per day. When deciding where to locate their business, some companies may find low wage rates attractive. However, these organizations should be aware that wage rates are not the only factor to consider. Additionally, one must take into account the productive capacity of the locations. When it comes to dealing with this matter, the corporation has to take into consideration demographics as well as geographic factors (Heizer et al., 2017). Even though the pay is cheap, it might not be worth investing in employees with poor work habits, inadequate education, or inadequate training.
Lastly, the intangibles might make a difference in the company’s decision on where to set up shop. In the United States, even the most fundamental aspects of life can vary from state to state and even from city to city. Political principles and ingrained cultural norms can contribute to these variations. The organization should also consider these three factors while deciding where to shop. Politics is important because it can determine the success or failure of policies and procedures inside an organization and the regulations that must be adhered to (Mahardhika et al., 2019). The companies themselves best determine the standards and ideals of a company. They can greatly impact how receptive the company is to hire workers from elsewhere. And then there are the cultural norms. Canadian culture is likely different from American culture in some significant ways; thus, the firm will need to take steps to adjust to this.
For the final question, “Do world-class organizations always select the higher technology option; why or why not?” I do not think businesses always go with the most advanced technology available. In my view, it depends on whether the organization making the decision has a firm handle on selecting the optimal product and timing its adoption. The choice between more advanced and less advanced technologies should be based on factors such as cost and the nature of the business. By sticking to a set amount of money, your business will be less likely to waste money on unnecessary technical frills. (Dodgson, 2018). When deciding what course of action to take, it is important to consider both the price of the technology and the cost of putting it into practice.
References
Dodgson, M. (2018). Technological collaboration in the industry: strategy, policy, and internationalization in innovation. Routledge.
Heizer, J., Render, B., Munson, C., & Sachan, A. (2017). Operations management: sustainability and supply chain management, 12/e.
Mahardhika, B., Mulyana, P., & Rosmaniar, A. (2019). Cost benefits analysis and feasibility for office relocation in the public service agency. European Alliance for Innovation (EAI). Web.