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Source: ILSA Consulting based on a combination of literature review, evaluations of investment location decisions, and previous case experience.
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The specific composition and weighting businesses attach to these location requirements and evaluation issues for potential investment projects vary, depending on a range of factors including: Experience of locating investment projects. Business type size structure, culture, experience etc. Industry/sector characteristics. Stage in the investment decision process.
Decision/outcome point
Market size, access (Foreign) investment track record at location Communications, labour, operating infrastructure quality/availability
Communications, labour, operating infrastructure availability/quality Taxation tax rates Suppliers availability
Property availability/costs/quality Communications, labour availability/costs/quality Operating infrastructure availability/costs/quality Location IPI/government support
Incentives type/availability/benefit Property specific availability/costs/terms Environment and quality of life Project start and operation requirements Location IPI/government support
Location characteristics Market Communications and transportation Labour issues Operating infrastructure Property Supplier access Taxation and incentives Environment/quality of life
Project start and operation requirements Property acquisition, (re)development Labour recruitment, training Location IPI/government support
Source: ILSA Consulting based on a combination of literature review, evaluations of investment location decisions, and previous case experience.
The process highlights the role of different drivers in the (re)investment decision. Commercial requirements (a combination of strategy and risk, rate of return and profitability imperatives) drive businesses internal resource allocation decisions (i.e. the type and scale of investment and its location).
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At the start of the decision process businesses usually pre-select a long-list of no more than 8 to 12 location options. Often this reflects their previous location decisions and those of key competitors and suppliers. At each decision point, businesses consider a range of particular evaluation issues and associated issues. They gather information against these issues and assess location alternatives accordingly. The further a business is in its decision process, the more critical to the decision particular location issues become. Businesses disqualify locations that do not meet their evaluation issues. Each decision point effectively acts as a location filter so that for: The early stages of the decision process, businesses focus on assessing the relative attractiveness/competitiveness of a location in meeting their investment requirements. The later stages, particular sites capabilities in meeting investment requirements assume greater importance. The final stages, businesses concentrate more on understanding the compliance and legislative protection requirements and issues for the start-up, entry, operations and exit. The process also emphasises the critical role of information in reducing uncertainty and managing risk through the decision process itself.
For further support please contact: Sean Duggan Director, ILSA Consulting Limited
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