Choosing the Right Location

Group Members:
Aayush Alok (1)
Ayush Adhikari (2)
Sachin Banzade (6)
Harsha Shah (23)

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 Choosing the Right Location And Layout

Benefits entrepreneurs in long and short term.

Key Considerations:
• Availability of qualified workforce
• Tax rates
• Quality of Infrastructure
• Traffic Pattern
• Quality of life
• Resource Availability
• Worker’s Wage

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Location: A Source of Competitive Advantage

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 Location: A Source of Competitive Advantage

• Choosing a Region

• Choosing a State

• Choosing the City

• Choosing the Site

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 Choosing a Region

• Choose a location by analysis of demographic data of

different regions.

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http://cbs.gov.np
 Choosing a Region

• Analysis By Recognizing Trends in:

– Population
– Economical
– Business starting

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http://cbs.gov.np
 Choosing a State

• A State may offer an advantage than other.

– Laws & Regulations
– Facilities
– Taxes that govern business
– Cost of operation
– Workforce availability
– Incentives or investment credits state offering to that
business

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Agriculture Knowledge Centre has been established in Rajbiraj by the Ministry of Land
Management, Agriculture and Cooperatives of Province 2 to provide services to
farmers of Saptari and Siraha districts.

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 Choosing the City

• Based on kind of Business we can analyze following

factors and analyze trends and patterns:
– Population density
– Literacy
– Family size
– Job categories
– Religion

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 Choosing the Site

• Final Selection of actual site of business.

• Defined by unique set of criteria of that
business.
• Primary Considerations;
– Raw material availability
– Workforce Availability
– Audience(i.e customers)
– Surrounding Environment

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Busy market of Indrachowk and high population
density made it a successful business .
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Location Criteria for Retail and
Service Businesses

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 Trading Area
• Every retail and service business should
determine the extent of its trading area, the
region from which a business can expect to
draw customers over a reasonable time span.
• The primary variables that influence the scope
of the trading area are the type and the size of
the business.

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 Retail Compatibility
• Retail compatibility describes the benefits a
company receives by locating near other
businesses that sell complementary products
and services or that generate high volumes of
foot traffic.
• The concentration of businesses pulls
customers from a larger trading area than a
single freestanding business does.

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 Degree of Competition
• The size location and activity of competing
businesses also influences the size of a
company’s trading area.
• Market saturation is a problem for businesses
in many industries, ranging from fast-food
restaurants to convenience stores.

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 The Index of Retail Saturation
• One of the best ways to measure the level of
Saturation in an area is the index of retail
saturation (IRS), which evaluates both the
number of customers and the intensity of
competition in a trading area.
• The index is the ratio of a trading area's sales
potential for a particular product or service to
its sales capacity:

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 Contd…

 
• Where,
C= number of customers in the trading area
RE= retail expenditures, or the average expenditure
per person for the product in the trading area
RF= retail facilities, or the total sq.ft of selling space
allocated to the product in the trading area

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 Transportation Network
• For many retail and service businesses easy
customers and access form a smoothly flowing
network of highways and roads is essential.
• If a location is inconvenient for customers to
reach, a business located there will suffer from
a diminished trading area and lower sales.

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Physical and Psychological Barriers
• Trading area shape and size also are
influenced by physical and psychological
barrier. Physical barriers may be parks, rivers,
lakes, bridges, or any other natural, or man-
made obstruction that hinders customers
access to the area.
• Psychological barriers include areas that have
a reputation for crime and illegal activities.

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 Political Barrier
• Political barriers are creations of law. Country,
city, or state boundaries—and the laws within
those boundaries —are examples.
• State tax laws sometimes create conditions
where customers cross over to the next state
to save money.

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 Other Criteria
• Customer Traffic: To be successful, a business
requires an ample volume of customer traffic
going past its doors. The key success factor for
many retail stores is a high- volume location
with easy accessibility.
• Adequate Parking- If customers cannot find
convenient and safe parking, they are not
likely to shop in the area.

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 Contd…
• Reputation- Sites in which businesses have
failed repeatedly create negative impressions
in customers minds; many people view the
business as just another one that soon will be
gone.
• Visibility- Highly visible locations simply make
it easy for customers to find a business and
make purchases.

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 Contd…
• Room of Expansion: A location should be
flexible enough to provide for expansion if
success warrants it. Failure to consider this
factor can result in a successful business being
forced to open a second store when it would
have been better to expand in its original
location.

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Location Option for Retail and Service Business

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 Location Option for Retail and Service
Business

There are six basic areas where retail and service business owners
can locate:
• The central business district(CBD)
• Neighborhoods
• Shopping centers and malls
• Near competitors
• Outlying areas
• At home

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 1. Central Business District
• A central business district (CBD) is the
commercial and business center of a city. In
larger cities, it is often synonymous with the
city's "financial district".

Hetauda Industrial Estate, Hetauda

Photo Courtesy: Tech Lab at Summit 26
 Contd.
• Since the business is centrally
located, it attracts customers from
the entire trading area of the city.

• In addition, a small business

usually benefits from the customer
traffic generated by other stores in
the area.

Streets of Ason, Kathmandu

Photo Courtesy: Lonely Planet

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 2. Neighborhood
• Small Businesses that locate near residential areas rely
heavily on the local trading areas for business.
• One study food stores found that the
majority of the typical grocer’s
customers live within a five-mile
radius.
• Primary advantage: Low op. cost
:Low rent
:Close contact
with customers
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 3. Shopping Centers and Malls:
• In the early days, CBD were the primary
option for locating a business which is
nowadays being replaced gradually by
Shopping centers and malls.

• Because many different types of stores

operate under one roof, shopping malls give
meaning to the term “one-stop shopping”

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 Contd.

Gadget Store inside

Bhatbhateni
Photo courtesy: lexlimbu

Bhatbhateni supermarket
Grocery Store inside
Bhatbhateni
Photo courtesy: Invent 30
Kathmandu
 Contd.
• More than 50 supermarket, and shopping
centers are located inside valley.

• Eg: Bhatbhateni Supermarket, CTC mall,

Kathmandu mall, Chhaya mall, Sherpa mall,
Rising mall, Labim mall etc.

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 Contd.
• There are eight types of shopping centers:
• Neighborhood shopping centers
• Community shopping centers
• Power centers
• Theme or festival centers
• Outlet centers
• Lifestyle centers
• Regional shopping malls
• Superregional shopping malls

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 Contd.
I. Neighborhood shopping centers

• Such shopping centers are relatively small, containing from 3

to 12 stores serving a thousandth of population living within a
small radius.

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 4. Near Competitors
• One of the most important factors in choosing a retail or
service location is the compatibility of nearby store with the
retail or service customer.
• Locating near competitors might be a key factor for success in
those businesses selling goods that customers shop for and
compare on the basis of price, quality, color, and other factors.
• Inside Large Retail Stores - Rather than compete against giant
retailers, some small business owners are cooperating with
them, locating their businesses inside the larger company’s
stores.

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 Contd.

Series of Jewellery store

Photo Courtesy: Explore Himalaya Travel & Adventure
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 5. Outlying Areas
• Such areas are not advisable for small
business because customer traffic and
accessibility is relatively low.

• Rather than select a location and try to draw

customers to it, many small businesses are
discovering where their customers already are
and setting up locations there.

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 Contd.
• Many of these are
nontraditional locations
offer high concentrations of
potential customers.

Kathmandu University, Dhulikhel

Photo Courtesy: Sachin Banjade
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 6. Home based Business
• Many Service business don’t have customers
to come to their business place; so an
expensive office location is unnecessary.

• Eg: Plumbing
:Handicrafting
: Cotton thread weaving

Nepalese artist creating

traditional mandala, Bhaktapur,
Nepal 38
 Contd.

Spinning yard by hand in home

Photo courtesy: The longest way home

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 Contd.
• Most often home based entrepreneurs set up
shop in a space bedroom or basement,
avoiding the cost of renting, leasing, not
buying a building.

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THE END

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