2013 Module 7 Location, Location, Location Brad Fink CIT 492 5/30/2013
Executive Summary Subway is planning for a new restaurant in Buffalo, New York. There are three locations that are being considered. Data has been provided for an analysis in which a determination must be made as to which site to build. Insurance Company of Latin America (ILA) is considering opening an office in the U.S. The two cities that are being considered are Philadelphia and New York. ILA needs help in determining which city to open in. A location analysis for Temponi Controls, a small manufacturer of parts for hightechnology cable systems is conducting a location analysis and has narrowed their decision down to four locations. Temponi will need to train assemblers, testers and robotics maintainers in local training centers. Cecilia Temponi, the president, has asked each potential site to offer training programs, tax breaks, and other industrial incentives. A company is planning on expanding and building a new plant in one of three Southeast Asian countries. Chris Ellis, the manager charged with making the decision, has determined that five key success factors can be used to evaluate the prospective countries. Working for a company that owns and operates convenience stores (w/ gas stations) in several southern states, they have decided to cater to the growing Hispanic populations within the southern states. I have been asked to identify new opportunities, specifically in the Kentucky area. My job is to study a potential location for a new convenience store. The U.S. Population is aging and the baby boomers will quickly be retiring. The aged care business is growing and assisted living centers are in great demand. I work for a health care provider that builds and operates these assisted living centers. I need to find a new area to expand its operations in Kentucky. Being that I will soon be graduating from Western Kentucky University, I have decided to conduct an analysis of my local area based on the age density compared to my own, as well as how many individuals hold a Bachelor s degree. I work for Western Kentucky University in the Office of Admissions and have been placed in charge of working with newly admitted freshman to help them get acquainted with the University and properly register for classes. Part of the class selection process is a function of the students declared majors. Along with this, I also play an active role in the political scene and have decided to survey the southern states in which I may be able to persuade the locals on the importance of contributing and becoming active with 4/30/2013 1
Executive Summary politics themselves. Based on information that ahs been provided to me, I will need to examine which states or actively participating in the government and those who are lacking in this role. 4/30/2013 2
Contents Subway...4 Insurance Company of Latin America (ILA)...7 Temponi Controls...9 Chris Ellis...12 GIS 1 (Part 1)...16 GIS 1 (Part 2)...18 GIS 1 (Part 3)...19 GIS 2 (Part 1)...21 GIS 2 (Part 2)...22 Summary...24 4/30/2013 3
Subway Subway, being the number three fast food chains in the world is yet again opening another restaurant in Buffalo, New York. They have decided on three neighborhoods and need to make a decision as quickly as possible. They are also basing their decision off of five factors: (Space, Costs, Traffic Density, Neighborhood Income and Zoning Laws). With Buffalo being such a large metropolitan, the three sites which are under consideration are, (Maitland, Baptist Church and Northside Mall). Each site location has been studied and analyzed which helped give each site their appropriate values; these values have already been placed into Table 1 below. SUBWAY FACTOR RATINGS Factor Weight Maitland Baptist Church Northside Mall Space 0.30 60 70 80 Costs 0.25 40 80 30 Traffic Density 0.20 50 80 60 Neighborhood Income 0.15 50 70 40 Zoning Laws 0.10 80 20 90 Table 1 Subway Factors for New Location By taking the value in the weight column and multiplying it for each site value (score) the results will produce a scaled value for each factor. For instance, taking the weight of the factor Space multiplied by the score value for Maitland the formula will look as so;, By performing this for all factors and location sites, the results will end up being that of Table 2. 4/30/2013 4
Subway Factor Weighted Scores Maitland Baptist Church Northside Mall Space 18 21 24 Costs 10 20 7.5 Traffic Density Neighborhood Income 10 16 12 7.5 10.5 6 Zoning Laws 8 2 9 53.5 69.5 58.5 Table 2 Weights Scores Results To find out which site holds the most favorable attributes, sum up all the valued results for each site, the site with the highest value will be the best site to open a new Subway restaurant. With Maitland having a total value of 53.5, Baptist Church 69.5, and Northside Mall ending up with 58.5, the logical choice is the site at Baptist Church. Some of the Management at Subway were debating on the weighted values for the space and traffic density, they believe the two should be reversed and would like to see if the results would differ from that in Table 2. By reversing the two, Table 3 still shows that the Baptist Church site still has the advantage, in fact with this scenario; it has an even larger advantage than before as seen in Table 3. 4/30/2013 5
Subway Weighted Scores Factor Maitland Baptist Church Northside Mall Space 12 14 16 Costs 10 20 7.5 Traffic Density Neighborhood Income 15 24 18 7.5 10.5 6 Zoning Laws 8 2 9 52.5 70.5 56.5 Table 3 Results with the factors Space and Traffic Density Reversed 4/30/2013 6
Insurance Company of Latin America (ILA) ILA wants to expand their business to the growing population of Latinos in the U.S. but are concerned where to open an office. Knowing the large population in New York would bring in business, they are also considering Philadelphia as well since it has a large amount of Latino s and is one and a half hours away from New York. Of course, it will be the factors that will out weight one city over the other. Table 4 already has the data emplaced for further analysis. Factor Weight Philadelphia New York Customer convenience Bank accessibility Computer support 0.25 70 80 0.20 40 90 0.20 85 75 Rental costs 0.15 90 55 Labor costs 0.10 80 50 Taxes 0.10 90 50 Table 4 Weighted Factors for Insurance Company of Latin America Taking the information in Table 4, ILA can now continue to make their final decision. Using the weighted value for each factor, ILA will need to multiply that by each score under each city, for example; for Taxes the formula will look as so. For Philadelphia the calculation will be, (0.10 * 90 = 9) and for New York (0.10 * 50 = 5). Table 5 has all the formulas completed and ready for the final analysis. 4/30/2013 7
Insurance Company of Latin America (ILA) Factor Philadelphia New York Customer convenience 17.5 20 Bank accessibility 8 18 Computer support 17 15 Rental costs 13.5 8.25 Labor costs 8 5 City scores summed up for the final decision point Taxes 9 5 Total Score: 73 71.25 Table 5 ILA Analysis Data Looking at the bottom of the table under the city columns, all the scores have been added for a total score. Based on the calculations the city that ILA should open a new office in is Philadelphia. Although New York has many opportunities available to any business, the deciding factors show that Philadelphia is just a smarter city to operate in. The three factors that pushed away from New York are the rentals costs, the Labor costs and the Taxes. With New York being only one and a half hours away, making a commute will not present much of an issue if travel there is necessary. 4/30/2013 8
Temponi Controls Temponi Controls has completed their analysis of a possible future site and has asked the cities of these projected sites for assistance in a few areas before making the final decision. Cecilia Temponi has asked for tax breaks, and to provide a training center in which Temponi Controls would seek those with training for employment opportunities. Table 6 shows the weighted values of the factors which Cecilia believes are vital to her company, as well as the scores for each city based off the factors and the incentives the cities have offered. Temponi Controls Factor Labor availability Technical school quality Operating cost Land and construction cost Industrial incentives Weight Akron OH Table 6 Temponi Data Analysis Location Biloxi MS Carthage TX Denver CO 0.15 90 80 90 80 0.1 95 75 65 85 0.3 80 85 95 85 0.15 60 80 90 70 0.2 90 75 85 60 Labor cost 0.1 75 80 85 75 0.1 * (Akron, OH 95) = 9.5. Results shown in Table 7 Based off all the information above, Cecilia needs to make the calculations which will help her make the final decision. Taking the weighted value for each factor, Cecilia will have to multiply it by each score for each city. Following the calculations for each city and each factored weight Cecilia has finished her calculated formulas which is shown in Table 7 below. 4/30/2013 9
Temponi Controls Temponi Controls Factor Akron OH Biloxi MS Location Carthage TX Denver CO Table 7 Completed Location Analysis for Temponi Controls Labor availability 13.5 12 13.5 12 Technical school quality 9.5 7.5 6.5 8.5 Operating cost 24 25.5 28.5 25.5 Land and construction cost 9 12 13.5 10.5 Industrial incentives 18 15 17 12 Labor cost 7.5 8 8.5 7.5 Total Scores 81.5 80 87.5 76 Cecilia now has the information she needed to make a clear decision based off the total scores form Table 7, and the best choice for the company s new site is definitely Carthage, Texas. Looking at the data, the values are somewhat even, but what really set Carthage above the rest is the Operating Cost, which will produce more with fewer deficiencies versus the other cities. But what would happen if the situation were slightly different? What if the Labor cost and the Operating cost were reversed? Would Cecilia need to reconsider her decision, to find out she did a quick swap in the spreadsheet and came to the same conclusion as seen in Table 8. 4/30/2013 10
Temponi Controls Temponi Controls Factor Akron OH Biloxi MS Location Carthage TX Denver CO Labor availability 13.5 12 13.5 12 Technical school quality 9.5 7.5 6.5 8.5 Operating cost 8 8.5 9.5 8.5 Land and construction cost 9 12 13.5 10.5 Industrial incentives 18 15 17 12 Labor cost 22.5 24 25.5 22.5 Total Scores 80.5 79 85.5 74 Table 8-Recalculated Location Analysis By changing the operating cost and the labor cost, Carthage, TX still has the overall advantage. Instead of the operating cost being the dominant factor as in Table 7, the combination of the labor cost along with the operating cost keeps Carthage ahead of the other cities, all the other factors are still in the same ball park. 4/30/2013 11
Chris Ellis Chris Ellis has been charged with conducting an analysis of outside sources to expand and build a new plant. While looking overseas due to the reputations of Southeast Asian countries, Chris has narrowed his search to three countries, Taiwan, Thailand and Singapore. Chris has also determined five major factors which have influenced him to look into these specific areas as well as assigned a weighted score for each factor. For each of the factors, Chris has placed a score per country, 1 being least desirable, and 5 being the most desirable. All this data can be viewed in Table 9 below. Key Success Candidate Country Ratings Factors Weight Taiwan Thailand Singapore Technology 0.2 4 5 1 Level of education Political and legal aspects Social and cultural aspects Economic factors Table 9 Country Candidate Ratings 0.1 4 1 5 0.4 1 3 3 0.1 4 2 3 0.2 3 3 2 With all the data in place, Chris can now determine the most desirable country in which to proceed with the construction of the new plant. Chris will have to perform a little math by multiplying the weighted value by the country score values. All the completed calculations have been completed and are shown in the chart in Figure 1. 4/30/2013 12
Chris Ellis 3.5 Candidate Country Ratings 3 2.5 2 1.5 1 0.5 Taiwan Thailand Singapore 0 Technology Level of education Political and legal aspects Social and cultural aspects Economic factors Total Score Figure 1 Completed Country Analysis Looking at Figure1, it is easy to see that Thailand is definitely the best choice to expand in, it is also clear that Thailand does have some situations that are not perfect, such as the level of education and social and cultural aspects. With a new plant going to Thailand, it is also reasonable to believe the educational aspect can improve, and dealing with their culture and social beliefs will have to be dealt with through our own education and respect. After the awarded contract went to Thailand there has been some significant changes in the local political scene, which has lower the score in the political and legal factor to a two. After this recent change Chris needs to reanalyze the situation to determine if his decision was the best avenue of approach. Chris went back to his spreadsheet and made a quick change in the value form a 3 to a 2 in the appropriate factor value. Figure 2 still has Thailand ahead of Taiwan and Singapore but not by much as seen below. 4/30/2013 13
Chris Ellis 3 Candidate Country Ratings 2.5 2 1.5 1 0.5 Taiwan Thailand Singapore 0 Technology Level of education Political and legal aspects Social and cultural aspects Economic factors Total Score Figure 2 Recalculated Analysis based off the Political Unrest in Thailand It was obvious Thailand political and legal aspects score would fall, but overall Thailand has still managed to slightly be the best choice, however the political scene will have to be monitored in case a withdraw of the plant needs to be made. Chris s supervisors have been very concerned with this project and asked Chris to provide them a What-if Analysis based on a situation where Thailand s political and legal scored value was to drop to a 1. Chris again changed the original score from 3 to a 1, Figure 3 shows that if this does in fact happen, Thailand will not be the best choice and Taiwan along with Singapore will be overall tied dropping Thailand out of the race. 4/30/2013 14
Chris Ellis 3 Candidate Country Ratings 2.5 2 1.5 1 0.5 Taiwan Thailand Singapore 0 Technology Level of education Political and legal aspects Social and cultural aspects Economic factors Total Score Figure 3 Thailand s Political Score with a value of 1 With this scenario, the only factor in which Thailand has an edge on the other two countries is with their technology, the political unrest dropping down to a one has ultimately dropped it into third place. If the political analysts believe there will be more turbulence in their political and legal aspects, the plans will have to been redrawn and the decision will have to be re-evaluated. 4/30/2013 15
GIS 1 (Part 1) As the economy has slowly become more stable and the Hispanic population is continuing to rise, the opportunity of expanding and building a new convenience store with a gas station has never been better. Although Kentucky does not have the largest Hispanic population, it will no doubtable continue to grow, and should not be overlooked. After observing the demographics throughout the state there are several areas that need to be considered which are represented by the shaded red areas, the graphical legend is directly below the map of Kentucky to get a better idea of the Hispanic populations and where the largest communities are within the state. Ethnicity: Hispanic (2007) by County 20,000 141 Although there are more shaded areas in the state than once thought, the darker shaded areas are still in the most populated cities such as Lexington with an Hispanic population just under 15,000 and Louisville just under 19,000. Both Hopkinsville and Bowling Green both have a growing population, both just over 3,000 but in close proximity of Clarksville, TN. 1 But after looking closer at Lexington and Louisville due to the larger populations both cities will have to be the two best opportunities, which are depicted in the map below for closer view. 4/30/2013 16
GIS 1 (Part 1) Lexington which has a large population does have one downfall, and that it is not on I-65 unlike Louisville. Opening a store in the downtown area is more congested and those living in the area mostly rely on public transportation, I am suggesting the store be opened in the Shelby vicinity, with a good population and still growing, also because of the Lexington Louisville corridor. Traffic between the two cities are becoming more and more suggested, and in my opinion a great opportunity for those just entering Louisville from Lexington, and for those leaving Louisville headed to Lexington, not to mention the fact that the city of Louisville will continue to expand in the direction of Lexington allowing for a larger Hispanic growth in the area. 4/30/2013 17
GIS 1 (Part 2) Income, household: $75,000 - $99,000 (2007) by ZIP Code 10,000 5,000 0 Age: population, 55 years and above (2007) by County 20,000 447 10 While trying to figure which area of Kentucky to emplace a new assisted living facility, there are a few things to take into consideration. First and most important is learning where most of the elderly live and second is can they afford to pay for the services. With the cost of assisted living being $50,000 per year, the search for the average yearly income was conducted for the amounts of $75,000 to 99,000. Looking at legend to the right which corresponds to the map above, the green circles are encased in the shaded blue areas of Kentucky. The Blue shaded areas are the communities which exceed the 20,000 mark per county. The five areas which would prosper are the Louisville area, The Lexington area, the Fort Knox area, Owensboro and Bowling Green. 4/30/2013 18
GIS 1 (Part 3) Getting close to earning my degree, as well as looking to further my career, I need to know what the competition is and where my skills, experience and education will be best suited. I will need to find out how many people are in my area of the job market that have a Bachelor s degree, what area they live in and what their average age is. Based on these facts, I will be able to consider looking in my immediate area, or decide to make a longer commute back and forth for employment. Education: population, adults with bachelor's degree (2007) by ZIP Code 5,000 2,500 0 Age: population, 4554 years (2000) by County 8,000 283 Looking at the map above I know that the population in my age bracket is just over 8,000. Of the 8,000 people in the area only about 2,800 have earned a Bachelor s degree not including the immediate area of Elizabethtown, which has the local college along with the WKU Campus. Of course with this being a military community, there are more than a handful of Army Officers, all of which must have at a minimum, a Bachelor s degree. 10 The area I am concentrating on is the employment opportunities on Fort Knox, working as an IT, what the demographics do not show is what degree they hold, but with the recent Brack alignment, I am very sure most have a degree in Human 4/30/2013 19
GIS 1 (Part 3) Resourses. This should give me an upper hand in my career decision as well as my job searches, not only in Government Services but with the many Contractors on Fort Knox. 4/30/2013 20
GIS 2 (Part 1) With industries weighing in more and more on the emphasis of education, it is vital for WKU to help our current and possible future students along with their educational needs. In order for this to happen, the administration department cannot afford to wait for students and families to come to Bowling Green, WKU has to go to the public, and in doing so, this will enable WKU to keep an competitive with other educational institutes. The map below shows areas with students having undeclared majors, with circled areas of interest to help these students find their path. Start Finish The main Campus at Bowling Green should be both the start and finish, providing two separate dates allowing more opportunities for the local residents and those of neighboring areas like Clarksville and Nashville, TN. Making a round trip the second destination needs to go to Owensboro to capitalize on the Campus there and divert any students that may be considering going to Indiana or Illinois. From Owensboro the third stop should be at Elizabethtown, there we can get exposure from the ECTC along with the WKU Campus there, and get information to the military soldiers and families. Scheduling a day on Fort Knox would be another good stop, especially being that May and June is when most soldiers are moving into a new unit known as Permanent Change of Station (PCS). From the Elizabethtown area, WKU needs to go to Louisville where there is an extremely large cluster of undeclared majors. From Louisville WKU needs to go towards Florence, KY which borders along Cincinnati, OH, where a large amount of students sway towards the University of Louisville and University of Kentucky. On the last leg of the trip is Lexington area, this area may be harder to get students to make the move to WKU, but not impossible. To finish the trip, the second date on main Campus in 4/30/2013 21
GIS 2 (Part 2) Bowling Green should be a great outcome for those students and families that missed the first exhibition. As a student who is politically active in organizing the political rallies and fund raisers in the southern districts, I have looked into a few issues pertaining to the inquiries of the states which are both active and inactive. To help develop a plan, I received from the Federal Election Commission a list of contributors, (names have been removed for their protection), in order for me to concentrate my efforts to motivate the public to become more politically aware and involved. Below is a map scoping in on the southern states. The map above shows the southern portion at a faraway look, but clearly the states which are active in donating to their political choice can easily be seen such as Florida, which is pretty good at donating. Tennessee is also very proactive in the political scenario. The map below takes a closer look which will provide a better view. 4/30/2013 22
GIS 2 (Part 2) One of the states which will require more attention than the others is Louisiana, not by any way a landslide from Arkansas or Alabama, but per capita, Louisiana does not traditionally contribute as much as the other southern states. After Louisiana, I will need to go to Mississippi to organize some fund raisers then to Alabama. Once I have finished in these two states I will have to travel to Kentucky and then to West Virginia. The two states which have no problems being active and contributing is again Tennessee and Florida. Working the political scene in the southern states will definitely have its challenges due to the economy, and the fact that these states fall below the National average of income to begin with. Convincing the local populations to contribute either time or money will be a long tough fight. To sum up my suggestion on which states to concentrate on are as follows: Louisiana Mississippi Alabama Kentucky West Virginia South Carolina Although there are other states which need help organizing the political arena, the fore mentioned states have the potential to grow and influence other states such as Georgia. 4/30/2013 23
Summary When making a decision to expand or open a new business, one of the most important considerations is sometimes forgotten or at least not thought through all the way. By using the software applications such a MapPoint, anyone, with just a little practice can find the best location that will cater to both the business and their future customers. Another great tool to use is of course Microsoft Excel. By determining the specific factors and assigning those factors with a weighted number, Excel can help determine if one location is better another, as with the case of Subway or the Insurance Company of Latin America. Going back to MapPoint, you can see that by importing data, someone with a politically active background can find where the focus needs to be directed, not only can they find out which states contribute more than others, but the state of interest can be expanded down to counties and zip codes if need be. On a personal note, when I opened a Barbershop here at Fort Knox, the first thing my wife and I did was drive the area to find out what times and what roads had the most traffic where the soldiers and civilian employees entered and exited the post. Once we found the best gate, we were both in agreement almost instantly as to where the location of our shop would be, based on the information we now had, but also how much parking space was available to the customers as well as the ease of entering and exiting. This turned out to be a wise decision, as for the last seven years we have been one of the most successful shops in the Fort Knox area. As I have mentioned to a few good friends when asked about a business, I have always said, it s not all about your service or product; it s also about the location, location, location. 4/30/2013 24