Intended learning outcomes: Present in detail factors for location selection of a concrete case, namely a joint venture partner in China.
Continuation from previous subsection (3.2.1)
The final step in Figure 3.2.1.3, i.e. the local location selection, is discussed in the following. The figures show the criteria for each location factor that a European plant manufacturer rated in the concrete case of evaluating joint venture partners in China. The criteria were rated in the order shown in Figure 3.2.1.2. Each criterion was rated. Of course, the range of values for the factors chosen here are just examples; in other cases, a different range of values might be used.
Figure 3.2.1.4 shows the criteria of the factor “political and economic business environment.”
Fig. 3.2.1.4 Evaluation of a JV candidate in China: Criteria of the location factor “political and economic business environment.”
As a further criterion for the location factor “political and economic business environment,” political stability (unrest, corruption, and strikes) could be evaluated, for example.
Figure 3.2.1.5 shows the criteria of the location factor “cultural and infrastructure aspects.”
Fig. 3.2.1.5 Evaluation of a JV candidate in China: Criteria of the location factor “cultural and infrastructure aspects.”
Other criteria under “cultural and infrastructure aspects” could also be work ethic, availability and skills of workers, and the telecommunications infrastructure or water availability.
Figure 3.2.1.6 shows the criteria of the location factor “regional customer structure.”
Fig. 3.2.1.6 Evaluation of a JV candidate in China: Criteria of the location factor “regional customer structure.”
Further criteria under “regional customer structure” can be the proportion of customers in the region that already are being supplied by the home base, the market power of customers, purchasing power of customers, customer and buying behavior, and the specific product and delivery time requirements of the customers.
Figure 3.2.1.7 shows the criteria of the factor “medium-term attractiveness of the market.”
Fig. 3.2.1.7 Evaluation of a JV candidate in China: Criteria of the location factor “medium-term attractiveness of the market.”
Further criteria under “medium-term attractiveness of the market” can also be examined: the expected market position, the origins of the competitors (possibly from home), the market segments, the company’s own potential for exporting products (transport, customs duties, and so on), and possible substitution products by competitors.
Figure 3.2.1.8 shows the criteria of the location factor “internal company evaluation of a joint venture candidate.”
Fig. 3.2.1.8 Evaluation of a JV candidate in China: Criteria of the location factor “internal company evaluation of a JV candidate.”
Figure 3.2.1.9 shows the criteria of the factor “general positioning as joint venture candidate.”
Fig. 3.2.1.9 Evaluation of a JV candidate in China: Criteria of the location factor “general positioning as joint venture candidate.”
Further criteria of the location factor “general positioning as joint venture candidate” that can be rated are: regional presence (production / distribution / sales / service), innovation behavior, and strategic orientation.
Figure 3.2.1.10 shows the criteria of the location factor “performance program of the potential joint venture partner.”
Fig. 3.2.1.10 Evaluation of a JV candidate in China: Criteria of the location factor “performance program of the potential joint venture partner.”
Further criteria that can be examined under the location “performance program of the potential joint venture partner” are also the specific process know-how in individual areas of sales and distribution, R&D, production, and installation.
Continuation in next subsection (3.2.1c).
Course section 3.2: Subsections and their intended learning outcomes
3.2 Location Selection and Location Configuration
Intended learning outcomes: Differentiate between location selection and location configuration. Explain location selection using qualitative methods and factor rating. Describe location selection and location configuration with linear programming.
3.2.1 Location Selection: Systematic Reduction of Possible Locations / Partners
Intended learning outcomes: Disclose a procedure for systematic reduction of possible locations / partners. Present factors for location selection. Produce an overview on steps in location selection and evaluation of a concrete case, namely a joint venture partner in China.
3.2.1b Location Selection: Factors Used for Identifying a Joint Venture Partner in China
Intended learning outcomes: Present in detail factors for location selection of a concrete case, namely a joint venture partner in China.
3.2.1c Location Selection: Cost-Benefit Analysis Using a Qualitative Method (Factor Rating)
Intended learning outcomes: Identify cost-benefit analysis using a qualitative method. Explain the results of factor rating and the sensitivity analysis in this case.
3.2.2 Location Selection and Location Configuration with Linear Programming
Intended learning outcomes: Produce an overview on linear programming (LP). For the design option of “in part decentralized production for the global market”, explain the use of mixed-integer linear programming (MILP).
