Question

Consider any two factors that a service operation assigns the greatest weight when making a location decision. Using those two factors, identify one local service operation that likely used one of those factors as their top priority and a different service operations that likely used the other of your two factors as their dominant criterion. Briefly describe the business and justify your assignment of each factor as the overriding concern.

Answer 1

The two major reasons for a service organization to make location decisions are as follows -

1. Cost of operations

2. Market opportunities for growth

The first example here is of a local investment bank that has migrated its back-office operations internationally to India where the cost of labor is low and skilled employees can be leveraged at a much lower cost to conduct operational activities. Complementing to this the operational costs of infrastructure and services are low. This helps the investment bank in maintaining lower operational costs and able to still have control over the back-office processes.

The other example is of a large car maintenance service unit that relocated near a large residential area as there were more opportunities for revenue. It is a classic example of business moving near the customers. The relocation makes it convenient for the customers to approach for car services to this unit. it provides the business with a larger customer base and the relocation proved to be an opportunity for the business to grow.