Worksheet on Operations Management and Location Decisions
Developed as part of the QUILT FE training project
This worksheet was prepared by:
- Kenneth Moore - Sheffield College
- Colin Swift - Weald College
- Julie Kinnersley - Worthing 6th Form College
- Diane Thomas - West Kent College
This worksheet has been developed to help you understand the issues that a business has to consider when deciding where to locate or relocate. It uses various sources of data and information which are available on the Internet. To answer the questions follow the highlighted links (or the Internet addresses given in brackets) to access the information you will need to complete this worksheet.
Aims
- To extract appropriate data from Internet sites
- To understand the variables which influence location/relocation decisions
- To apply theoretical concepts to a contextual situation
- To interpret, analyse and evaluate research information
- To make a location decision and give justified recommendations.
Where should "SWITCH WATCHES" locate in the UK?
A watch manufacturer based in Switzerland has decided to locate one of its manufacturing plants in the UK. Like other businesses it needs to consider many variables before deciding on a location.
The company has already undertaken preliminary research on this matter, and has drawn - up a short - list of three sites (below). Only one of these will be chosen.
- Plymouth
- Barnsley
- Newcastle
To find information on these areas, you will need to find the Local Council's pages on the Internet. The best route to find these is to go to the main government index (http://www.ukonline.gov.uk/).
From here choose A - Z of local government and then access the geographical areas you want by choosing from the list.
Step 1 - Help?!?
For many areas, there are government incentives available to encourage firms to locate there. From each of the sites establish what government assistance may be available and tick the appropriate boxes in the table below:
N.B. You may need to look under Inward Investment or Financial Assistance .
| Plymouth | Barnsley | Newcastle | |
|---|---|---|---|
| Regional Selective Assistance? | |||
| Enterprise Zone? | |||
| English Partnerships Investment Fund? | |||
| Training assistance? | |||
| Subsidised finance? | |||
| Regional Enterprise Grants? |
Look up in your course book or textbook to find out how Government regional policy has changed in the last 15 years. Write a short paragraph summarising these changes:
Step 2 - Is there anybody out there?
The potential labour force in the area, and the skills of that labour force are clearly going to be important to the decision on where to locate. Return to each of the sites and try to establish the following:
- Plymouth (http://www.plymouth.gov.uk/)
- Barnsley (http://www.barnsley.gov.uk/)
- Newcastle (http://www.newcastle.gov.uk/)
| Plymouth | Barnsley | Newcastle | |
|---|---|---|---|
| Population | |||
| No. of people within 30 min. drive? | |||
| Quality / skills of the workforce? | |||
| Availability of training? |
It may also be helpful to know what other firms / industries are located in the area. Industries requiring similar skills may lead to the possibility of external economies of scale.
Use your text book or course book to find out a definition of external economies of scale.
Return once again to the council's web sites:
- Plymouth (http://www.plymouth.gov.uk/)
- Barnsley (http://www.barnsley.gov.uk/)
- Newcastle (http://www.newcastle.gov.uk/)
Try to find out for each area the major industries that are located there and some examples of major employers:
| Plymouth | Barnsley | Newcastle | |
|---|---|---|---|
| Major industries / sectors | | | |
| Major firms | | | |
| Particular skills of workforce? | | | |
Step 3 - So where do we go?
You are a business consultant who has been asked to consider various areas of the country and produce a report recommending one of the locations.
To help you in writing your report try to rate each variable in the table below on a scale of 1 to 5. (1 is very poor, 2 is poor, 3 is satisfactory, 4 is good, 5 is very good). Use the council web sites wherever possible to gather the relevant information:
- Plymouth (http://www.plymouth.gov.uk/)
- Barnsley (http://www.barnsley.gov.uk/)
- Newcastle (http://www.newcastle.gov.uk/)
| LOCATION VARIABLE | PLYMOUTH | BARNSLEY | NEWCASTLE |
|---|---|---|---|
| Ancillary services | |||
| Capital costs | |||
| Competition | |||
| Government assistance | |||
| House prices & availability | |||
| Image of area | |||
| Infrastructure & communications | |||
| Initial/set up costs | |||
| Labour market-quality of labour force | |||
| Legal/social constraints | |||
| Local amenities | |||
| Closeness to markets | |||
| On-going costs (rent, UBR, wages) | |||
| Suppliers | |||
| Tradition |
Using this and all the other information you have gathered you should now try to write the report for Switch Watches. Your report should look at the most important arguments for each of the three geographical areas and prioritise these factors. With a full justification you should then recommend which area will be most suitable for Switch.