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118 CHAPTER 8 LO C A T I O N ST R A T E G I E S
8.25 (a) Weighted scores:
British International Airways
Milan
Rome
Genoa
Paris
Lyon
Nice
3,415
2,945
3,425
3,155
3,970
3,660
Munich
Bonn
Berlin
3,425
3,915
3,665
So, for part (a) the top three cities become: Lyon is best (3,970),
8.27
9 9 6 8 2 5 8 5 2 4
Downtown rating 6.03
31
7 9 6 8 5 5 4 5 9 4
Suburb A rating 6.19
31
6 9 8 8 6 5 5 5 6 4
Suburb B rating 6.35
31
+ + + +
==
+ + + +
==
+ + + +
==
Suburb B has the highest rating, but weights should be examined
120 CHAPTER 8 LO C A T I O N ST R A T E G I E S
1
8.34 With weights given, the result became:
Spain 2.55
England 3.55
Italy 3.30
3. Evaluate the reasons cited by Mr. O’Brian for relocation.
Are they justifiable?
Matters of economics are certainly justifiable reasons to relo-
cate. If a firm can generate more revenue, operate more effi-
4. What responsibilities does a firm have to its employees when
a decision to cease operations is made?
Whenever the management of a firm decides to cease opera-
tions in a given location, it has the responsibility to aid its
mendations. In addition, the employer has a responsibility to
notify its employees of the decision as soon as it has been
finalized in order to give each worker ample time to find
employment elsewhere. Finally, severance pay should be
considered in an attempt to alleviate financial hardships on
workers who have been unsuccessful in their attempts to find
employment elsewhere. If the company has more than 500
employees, closing to avoid unionization is illegal.
VIDEO CASE STUDIES
LOCATING THE NEXT RED LOBSTER RES-
TAURANT
1. MapInfo has 72 clusters that provide socioeconomic profiling.
3. Darden has shied away from urban locations; high location
costs do not fit its current model, but Darden has found fertile
ground in first- and second-tier suburban and exurban/small (over
90% of the Red Lobsters are in these three density classes). Inci-
lects and analyzes about each site. As such, it provides the answer
to the first question.
2. The ratings of the four cities are
A = 80.5, B = 64.5, C = 71.5, and D = 79.5. So City A is a close
first choice over City D. In reality, they are so close that other
3. Expansion is the lifeblood of any global organization. Good
decisions mean a 10- to 20-year cash flow. Bad ones mean a
10-plus year commitment to a money-losing location.
4. Hard Rock considers political risk, crime, currency, and other
factors in location decisions abroad. In Russia and Colombia,
corruption is so endemic that having a local partner who can
understand and handle these issues is a necessity.
Copyright ©2014 Pearson Education, Inc.
1. The five factors appear reasonable. Many others could be
included, such as potential parking or concession revenue, park-
ing, and long-term potential.
2. Option 1 Expand y = $1,000,000 + $1x
1. Identify comparable existing HRC markets
2. Explain similarities (e.g. regional population, visitors,
hotel rooms, seasonality, etc.)
3. Prepare city P&L spreadsheet analysis
Conclusion
1. Estimate of Gross Food & Beverage Revenue for
market in General with backup and comparables
2. Estimate of Gross Merchandise Revenue for market
in General with backup and comparables
122 CHAPTER 8 LO C A T I O N ST R A T E G I E S
Option 2 New stadium y = $5,000,000 + $2x
Option 3 Rent y = $1,000,000 + $750,000 + $1x
3. Based on the survey data, rating “comfort” and “national
image” as 1s, “convenience” as a 2, and “cost” and “guaranteed
availability” as 4s, the results (using A = 4, B = 3, C = 2, D = 1,
4. The expansion of the existing stadium appears preferable
even at annual attendance of 500,000 fans.
5. Gardner used the factor rating method to rate the constituency
responses. This was appropriate for evaluating the qualitative
values. He should consider weighting the criteria as the admin-
*This is the solution to the case that appears on our Web sites www.pearsonhighered.com/heizer and www.myomlab.com.
120 CHAPTER 8 LO C A T I O N ST R A T E G I E S
1
8.34 With weights given, the result became:
Spain 2.55
England 3.55
Italy 3.30
3. Evaluate the reasons cited by Mr. O’Brian for relocation.
Are they justifiable?
Matters of economics are certainly justifiable reasons to relo-
cate. If a firm can generate more revenue, operate more effi-
4. What responsibilities does a firm have to its employees when
a decision to cease operations is made?
Whenever the management of a firm decides to cease opera-
tions in a given location, it has the responsibility to aid its
mendations. In addition, the employer has a responsibility to
notify its employees of the decision as soon as it has been
finalized in order to give each worker ample time to find
employment elsewhere. Finally, severance pay should be
considered in an attempt to alleviate financial hardships on
workers who have been unsuccessful in their attempts to find
employment elsewhere. If the company has more than 500
employees, closing to avoid unionization is illegal.
VIDEO CASE STUDIES
LOCATING THE NEXT RED LOBSTER RES-
TAURANT
1. MapInfo has 72 clusters that provide socioeconomic profiling.
3. Darden has shied away from urban locations; high location
costs do not fit its current model, but Darden has found fertile
ground in first- and second-tier suburban and exurban/small (over
90% of the Red Lobsters are in these three density classes). Inci-
lects and analyzes about each site. As such, it provides the answer
to the first question.
2. The ratings of the four cities are
A = 80.5, B = 64.5, C = 71.5, and D = 79.5. So City A is a close
first choice over City D. In reality, they are so close that other
3. Expansion is the lifeblood of any global organization. Good
decisions mean a 10- to 20-year cash flow. Bad ones mean a
10-plus year commitment to a money-losing location.
4. Hard Rock considers political risk, crime, currency, and other
factors in location decisions abroad. In Russia and Colombia,
corruption is so endemic that having a local partner who can
understand and handle these issues is a necessity.
Copyright ©2014 Pearson Education, Inc.
1. The five factors appear reasonable. Many others could be
included, such as potential parking or concession revenue, park-
ing, and long-term potential.
2. Option 1 Expand y = $1,000,000 + $1x
1. Identify comparable existing HRC markets
2. Explain similarities (e.g. regional population, visitors,
hotel rooms, seasonality, etc.)
3. Prepare city P&L spreadsheet analysis
Conclusion
1. Estimate of Gross Food & Beverage Revenue for
market in General with backup and comparables
2. Estimate of Gross Merchandise Revenue for market
in General with backup and comparables
122 CHAPTER 8 LO C A T I O N ST R A T E G I E S
Option 2 New stadium y = $5,000,000 + $2x
Option 3 Rent y = $1,000,000 + $750,000 + $1x
3. Based on the survey data, rating “comfort” and “national
image” as 1s, “convenience” as a 2, and “cost” and “guaranteed
availability” as 4s, the results (using A = 4, B = 3, C = 2, D = 1,
4. The expansion of the existing stadium appears preferable
even at annual attendance of 500,000 fans.
5. Gardner used the factor rating method to rate the constituency
responses. This was appropriate for evaluating the qualitative
values. He should consider weighting the criteria as the admin-
*This is the solution to the case that appears on our Web sites www.pearsonhighered.com/heizer and www.myomlab.com.
