location strategy

The process of choosing where to locate a unit producing goods or services. This must take account of a range of variables to achieve the minimum cost that optimizes the overall strategy of the particular organization. There are three basic strategies. In a product-based strategy, independent facilities are used to produce each product in a company's range. This permits dedicated design and organization of facilities, which may vary from product to product. A market-based strategy gives priority to locating as close to customers as possible. This is clearly important in the case of services and for organizations offering a quick response to customer requirements, e. g. in fast-moving consumer goods. A vertically differentiated strategy locates different elements of the process at different sites, according to the economic characteristics of each element. These considerations are particularly important for transnational and global operations.