Chapter 9: Facility Location

Assignment

Discussion Questions – 3

1. Discuss the advantages and disadvantages of locating manufacturing, assembly, or distribution facilities in countries with relatively low wages.

There are many advantages and disadvantages for locating different types of facilities in countries with low wages. Some disadvantages of this are; the cost and number of supervisory personal willing to relocate to another country, also the Government in that Country may insist on making its own residents be in a supervisory position. Some Countries have sweatshops which are not viewed very well by possible customers and could go against company regulations. Another disadvantage of locating facilities in another country is transportation cost to get the final product back to the initial country where it is needed. This has transportation costs and tariffs and taxes.
Advantages could be a larger available work force, they can get more employees for the same wage as one employee in a different company and therefore get more work done for less. Some countries they could get cheaper labor in close by could be one that they have free trade which means you don’t have to pay boarder tax or tariffs (NAFTA).

2. What are industry clusters, and what are some of their potential advantages?

Industry Clusters are the net advantages which can be gained by a sharing of common locations by various enterprises. They come in a number of different sizes and shapes, and one type of cluster offers organizations proximity to key suppliers. Proximity to key suppliers is a catalyst in the development of supplier parks. Potential advantage in terms of manufactures in a cluster could allow capacity pooling. For example if one manufacturer has to many orders that it can’t full they could in a sense hand of the extra orders to the other manufacturer to finish.