Alternative Locations for the Companys Expansion Plan - Essay Example

1. Near to customer – Being near to the market makes the new branch accessible to the customer and correspondingly, has a high likelihood for it to profit.
2. Near to supplier – the business is a retailer and requires heavy coordination with the retailer. Proximity to suppliers will save the business freight cost which is one of its highest overhead.  Proximity to suppliers also ensures the predictability of supplies and shorter delivery periods making the company more responsive to the demand of the market.  It will also save the company from spoilage and breakage.
3. Cost of setting up – the capital outlay for set up cost is one of the highest expenses in the company and the expansion cost should not be prohibitive which would hinder the expansion.
4. The convenience of setting up – the convenience of setting up includes the availability of building materials, good infrastructure, and the absence of red tape in the area. These factors could bring unexpected costs to the business and therefore must be absent to make the construction of the new location convenient.
5. Qualified manpower – there should be available enough competent manpower in the new location to become the human resource that would crew the new branch.

Decision Matrix

Near to Customer

Near to Supplier

Cost of Setting Up

Convenience

qualified manpower

Weights

Location 1

3

0

1

1

0

Location 2

0

2

1

1

2

Location 3

1

1

0

2

1

Location 4

2

3

1

1

2

Factors

Near to Customer

Near to Supplier

Cost of Setting Up

Convenience

qualified manpower

Weights

5

3

4

2

1

Total

Location 1

15

0

4

2

0

21

Location 2

0

6

4

2

2

14

Location 3

5

3

0

4

1

13

Location 4

10

9

2

2

2

25

The best option

            The best option among the alternative locations is location 4.  It has a total score of 2.  It is the best location for the expansion of the new grocery for a variety of reasons.   First is its proximity to the customers making the new branch very accessible and therefore ensuring the volume of grocery shoppers that could translate to sales.  Second is its proximity to suppliers where it is also the highest at 9.  This means that the delivery time is faster at a lower cost.  In addition, shorter travel time also means less spoilage and breakage translating to less wastage to the company.  Set up cost is also reasonable.  It is also convenient to construct the business there as regulatory bodies are friendly and construction materials are readily available.  There is also an abundance of highly qualified personnel in the area making Location 4 an ideal place for the expansion of the business.