Location Strategy

A company’s business strategy as well as external developments such as e.g. geopolitical trends lead to locational challenges in terms of creating or reducing new operations or facilities. In order to be able to determine the right location strategy, companies are applying a strategic approach to these challenges by conducting location scenario analyses, addressing questions such as:

  • Do we want to cover a region with one, two or more distribution centers or manufacturing plants?
  • What is the right mix of onshore, nearshore and offshore locations for our back office activities?
  • Is it better to build a new plant in Asia and ship the products to Europe and the US and sell the products there or is a postponed manufacturing model the preferred option?

Importance of location strategy development

Companies invest in new manufacturing, distribution or office locations with a long-term perspective. In the current global environment however, uncertainty is a given. Geopolitical turmoil, technological developments, labor market challenges, tax climate changes etc. are having an impact on the cost effectiveness, the quality of the business environment and the risk profile of current locations. But these challenges also make it complex to determine the optimal location strategy for the future. Do we need to be closer to the markets? Can we continue consolidating into a truly global structure? Do we need to regionalize or even localize? A thorough process to determine the optimal location strategy is therefore key.

Criteria used when making new location decisions

In location scenario analyses it is key to create scenarios taking into account various directions of the future development of the company: which new markets will be entered? Which new products will be launched? What role will new technology play? Are there significant mergers or acquisitions to be expected? Another important input for the location scenario analyses are the foreseen and unforeseen external developments such as geopolitical developments, global trade policies, regulatory changes, labor market developments, new upcoming location hotspots, etc.
Based on the business strategy and external factors different location scenarios can be defined and analyzed based on cost, qualitative and risk factors in order to determine to optimal location strategy going forward.

Location Strategy & BCI advice

BCI supports clients in developing a clear location strategy that is aligned with the overall business strategy, coping also with potential external developments. Based upon the business requirements by geography we develop a clear location strategy addressing the company’s needs from a cost, quality as well as risk perspective. The typical steps in BCI’s location strategy development approach are:

  • Analysis of the business strategy
  • External factors analyses
  • Definition of location scenarios
  • Location scenario analyses
    • financial assessment
    • qualitative assessment (e.g. business environment, labor market, suppliers, etc.)
    • risk assessment (such as political, economic, transparency, natural disaster risks)
  • Analysis and review of all location scenarios
  • Business case and recommendation

The benefit to the client is first of all a fact-based and comprehensive location strategy to prepare the company for the future. Also, a clear framework is developed, including different location scenarios, which can be used for future analyses when internal or external factors change with a potential impact on the future location strategy.

Learn more about Location Strategy?

  • AkzoNobel – Global shared services center location selection
  • Allen & Overy – Office location strategy
  • AstraZeneca – Shared services location strategy
  • Baxter – Manufacturing and distribution location strategy
  • Beiersdorf – Warehousing location strategy
  • Bugaboo – Global analysis of different scenarios for the manufacturing and distribution footprint
  • Bose – Global analysis of different scenarios for the manufacturing and distribution footprint
  • Cisco – Manufacturing and distribution location strategy
  • Cofco International – European and Latin-American location strategy for shared centers
  • Footlocker – Location strategy for a new warehouse in Europe
  • Lely Industries – Manufacturing location strategy
  • Lilly –  Optimization of the manufacturing footprint in China including scenario analysis
  • Michael Kors – Location strategy for a new distribution set-up
  • Novocure – Scenario analysis for the manufacturing strategy of the future