Service Operation Management (S.O.M)
Topic 3: Service Facility Location

Strategic Location Consideration

  1. Competitive Clustering
  • A reaction to consumer buying behaviour (when choosing among competitors)
  • Consumers like to make comparisons
  • Seek out area where many shops selling similar products are concentrated (for convenience)
    eg. Auto dealers (Alexandra Road), Sporting goods (Queensway), IT goods (Sim Lim Square)
  1. Saturation Marketing
  • Idea is to group outlets of the same firm near each other in high traffic areas
    eg. MacDonald's, 7-11, etc

Factors to Consider when Selecting Location for Overseas Business

1.Government Policies and Regulations

  • Rules
  • Political Risk
  • Policy
  • Attitude
  • Exchange Rates
  • Taxes

2.Economic & Social

  • GDP
  • Purchasing power
  • Culture

3.Market

  • Locations
  • Size
  • Demand
  • Competition

4.Infrastructures

  • Air & sea ports
  • Telecommuncations
  • Roads
  1. Costs
  • Rental
  • Transportation
  1. Supplier
  • Availibity

7.Labour

  • Workers and management staff
  • Availability
  • Productivity
  • Cost

Site Selection Factors

  1. Access
  • Convenient to expressways
  • Accessible by pubic transport
  1. Visiblity
  • Availability of sign placement

3.Traffic

  • Traffic volume in that area might increase potential sales

4.Parking

  • Adequate parking

5.Expansion

  • Room for expansion

6.Environment

  • Immediate surrounding should complement the service

7.Competition

  • Location of competitors

8.Government

  • Zoning restrictions
  • Taxes

9.Labor

  • Available labor with appropriate skills

10.Complements

  • Complementary services nearby

Cross-Median Approach for a Single Facility

Step 1:
Plot the points of a graph with x&y axis

Step 2
Calculate the median
eg. 1+2+3+5 / 2

Step 3

  • Map out X coordinates from both left and right directions
  • Move the line until cumulative "w" is equal to or more than median

Step 4

  • Map out Y coordinates from both left and right directions
  • Move the line until cumulative "w" is equal to or more than median