Friday, April 29, 2016

Why does LOCATION matter?

 Source: ESRI

According to professor Murray Rice, from the University of North Texas, LOCATION matters due to everything being located somewhere, from factories, to rail lines and warehouses, they all need to be in proximity of something that is of interest to us and the business. Moreover, LOCATION allows us to identify the cost, knowing how expensive it is to do business in that area, taking in consideration insurance and property prices as the two most common factors. Most importantly however, LOCATION determines how much revenue is expected to be made using cash flow forecasts. These forecasts would be useless if the demographic and LOCATION factors would not be taken in consideration. How much disposable income do people in the area have? These types of questions will be easy to answer if you look at LOCATION.

In other words, LOCATION allows us to perform something called the location analysis, being able to manage risks better through a thoughtful manner. Having branches in more distinctive locations, reduces the likelihood of everyone in that specific demographic and similar location attributes changing their buying behaviours and reducing business profitability. In terms of operations, you are able to manage the distribution of your goods and services taking in consideration the LOCATION and size factors of doing business.

Using the example of a case study exercise I undertook on the 'Location Advantage' course by ESRI, I had to characterise a fictional Toronto bank's branch locations in terms of the services they were selling to customers. This allowed me to get familiar with ArcGIS Online and being able to search for different data information, such as showing only the customers with a medium income of over $100,000 and over two vehicles in order to identify the best LOCATIONS to sell more vehicle insurance. Due to the Toronto bank in this exercise looking to build a new branch in the US, looking at the new services the bank was aiming to sell, the medium income had to be generally higher, with the branch location having to be close to the Canadian border for more manageable operations, LOCATION was detrimental in choosing the right area for business expansion. This task would have taken months to complete if the ArcGIS Online software was not used to look at the customer attributes that were important to the bank using the Census Data. Furthermore, the branch extension reduced the business risks through now targeting different customers, in a LOCATION with different customer attributions.

Thank you for reading, please share to be able to get more people interested.

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