Imaginative Toys Case Study

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INTRODUCTION One of the most important strategy decisions made by companies is where to locate their operations. The location of a company has a great impact on the overall risk, profit and competitive advantage of the company. Companies make location decisions relatively infrequently, usually because demand has outgrown the current production capacity or because of changes in labor productivity, exchange rates, cost or local attitudes. The main objective of location strategy is to maximize the benefit of location to the firm. Being in the right location is a key ingredient in a business's success. If a company selects the wrong location, it may have adequate access to customers, workers, transportation, materials, and so on but may not be able to maximize it efficiently. Consequently, location often plays a significant role in a company's profit and overall success. A location strategy is a plan for obtaining the optimal location for a company by identifying company needs and objectives, and searching for locations with offerings that are compatible with these needs and objectives. Generally, this means the firm will attempt to maximize opportunity while minimizing costs and risks. Imaginative toys, founded in 1975 was currently faced with the problem of location decisions for capacity expansion in order to meet next spring’s production needs and projected growth in sales for the future. Sales forecast revealed a potential growth in demand for its existing and promising sales figure for the new products launched. There is therefore the need for the company to expand it capacity to meet the anticipated growth in demand. Analysis of factors affecting the location decision • Labour Labour constitute 30% of the total operational cost of imaginative toys hence in the selection of a location, labour is a critical factor management should consider. All

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