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Current Trends in Business Positioning in the World.


2.3 Current trends in business positioning in the world.

Currently, in the context of internationalization of production and business activities, economic cooperation between countries and regions, along with increasingly fierce competition in the world, the following main business positioning trends are taking place:

Overseas positioning

The formation of multinational and transnational companies and economic groups has accelerated the process of bringing domestic enterprises beyond borders to locate abroad. Currently, the trend of locating enterprises abroad has become a popular trend, no longer exclusive to large enterprises in developed countries but a general trend, compared to many enterprises in countries with lower levels of development also invest in building enterprises in developed countries.

Located in industrial parks and export processing zones

This is a trend that is currently receiving a lot of attention from businesses. Putting businesses in industrial parks creates many advantages for the operations and development of the businesses themselves. Locating in industrial parks and export processing zones helps businesses take advantage of the advantages created by industrial parks and export processing zones, apply modern business organization forms, save costs and improve the efficiency of operations.

The trend of dividing businesses into smaller ones leads to placing them right in the consumer market.

Increasingly fierce competition requires businesses to pay more attention to the interests of customers. Customers have the right to choose who provides their products or services, so favorable conditions in delivery and fast, timely delivery times have become decisive in business. A current trend is that businesses divide and place them right in the consumer market to minimize delivery times and increase favorable conditions in after-sales service.


III. METHOD OF DETERMINING LOCATION

To make a decision on choosing a business location, many different methods can be used, including both qualitative and quantitative analysis. In deciding on a business location option, there are many synthetic factors that are difficult to determine. The choice needs to be considered based on many synthetic qualitative factors. However, a basic factor in choosing a business location decision is to create conditions to minimize production and consumption operating costs. These costs can be quantified, so most of the techniques and methods introduced below are used to calculate and quantify some economic indicators, mainly cost indicators, of business location options. On that basis, choose the location option with the smallest total cost.


3.1 Simple weighting method.

A method for determining the location of a business is best chosen when taking into account both quantitative and qualitative aspects of analysis. In each specific case, priority can be given to quantitative or qualitative aspects depending on the overall objectives of the business. The simple weighting method allows both qualitative evaluation of options and the ability to compare quantitative options. This method allows combining qualitative assessments of experts with quantification of some indicators. However, the simple weighting method is more inclined towards qualitative. The process of implementing this method includes the following basic steps:

- Identify important factors affecting business location;

− Give weight to each factor based on its importance;


− Score each factor according to business location;

− Multiply the score by the weight of each factor;

− Calculate the total score for each location;

− Choose the location with the highest total score.

The first three steps are mainly performed by experts, the results depend largely on the identification, selection of factors, assessment ability, scoring and weighting of experts. Therefore, this can be considered as expert method. This method is very sensitive to subjective opinions.

Example 4-1 : Company A has entered into a joint venture with cement company B to establish a cement factory. The company is considering choosing between two locations X and Y. After investigation and research, experts evaluate the following factors:

Element

Weight

Score

Weighted Score

X

Y

X

Y

Ingredient

0.30

75

60

22.5

18.0

Market

0.25

70

60

17.5

15.0

Labor

0.20

75

55

15.0

11.0

Labor productivity

0.15

60

90

9.0

13.5

Culture, society

0.10

50

70

5.0

7.0

Total

1.00



69.0

64.5

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Current Trends in Business Positioning in the World.

According to the above calculation results, we choose location X to place the business because it has a higher total score than location Y.


3.2 Center coordinate method.

This method is mainly used to select the location of a central enterprise or central warehouse that is responsible for supplying goods to different consumption locations. The goal is to find a location so that the total distance of transporting goods to consumption locations is the smallest. The central coordinate method considers the cost proportional to the volume of goods and the distance of transport. This method requires the use of a map with a certain scale. The map is placed in a two-dimensional coordinate system to determine the central location. Each point corresponds to a coordinate with x-coordinate and y-coordinate. The calculation formula is as follows:


n

X i Q i

n

t

X i 1

Q i

i 1


n

Y i Q i

n

t

Y i 1

Q i

i 1

In which: X t − is the x-coordinate of the center point Y t − is the y-coordinate of the center point X i − is the x-coordinate of location i

Y i − is the y-coordinate of location i

Q i − Volume of goods to be transported from the centroid point to point i

Example 4-2 : Garment company C wants to choose one of four main distribution locations in the provinces.

to set up a central warehouse. The coordinates of the locations and the volume of goods transported are as follows:

Location

X

Y

Shipping weight (tons)

A

2

5

800

B

3

5

900

C

5

4

200

D

8

5

100


Locate to minimize the distance of transporting goods to the remaining locations.

Solution

First, we determine the center coordinates of the new location, based on the coordinates of the following four proposed locations.

x​​​​​​​​​​

t 800 900 200 100

Y ( 800* 5 ) ( 900* 5 ) ( 200* 4 ) ( 100* 5 ) 4.90

t 800 900 200 100

Thus, the central location with coordinates (3.05; 4.9) is closest to location B, so we choose

Location B to locate the company's central warehouse.


3.3 Transport problem method.

The objective of this method is to determine the most profitable way of transporting goods from multiple

production points to many consumption points so that total cost is smallest.

Let us consider the simplest transportation problem with the following information requirements:

There are m supply locations (of the same type) denoted as A 1 , A 2 ,..., A m corresponding to the mass at each location A i (i = 1,2,...,m) as: a 1 , a 2 , ..., a m

There are n receiving locations (of the same type) denoted as B 1 , B 2 , ..., B n corresponding to the amount of goods to be received at each location B j (j = 1,2,...,n) as: b 1 , b 2 , ..., b n

The cost of transporting a unit of goods from A i to B j is given in the cost matrix (C) below.

Here, c ij is the cost of transporting one unit of goods from A i to B j .

⎛ c 11 c 12 ... c 1n ⎞

⎜ cc ... c ⎟

⎜21 22 2n ⎟

C = ⎜

⎜

⎜

. . ... . ⎟

⎟

. . ... . ⎟

⎜ ⎝ c m1

c m2

...

c mn ⎟ ⎠

From the original information and requirements of the above problem, we model the problem as follows: Let x ij be the amount of goods to be transferred from A i to B j , we have:



B 1

B 2

...

You​


A 1

C 11

x 11

C 12

x 12


C 1n

x 1n

a 1

A 2

C 21

x 21

C 22

x 22


C2n​

x 2n

a 2

...

...

...

...

...

...

A m

C m1

x m1

m2​

x m2


C mn

x mn

a m


b 1

b 1

...

b 1



mn

ÂK1.

c ijx ijMin

i 1 j 1

n

ÂK2.

x ij

j= 1


m

x ij

i=1

a i , i = 1,2,...,m


b i , j = 1,2,...,n

(4.1)


(4.2)

ÂK3.

x ij


0,i = 1,m ; j = 1,n.

i 1

i

Assume that ma


b

n

j 1 j

, in this case we have a transportation problem with condition 2

as follows:


ÂK2.


n

x ij

j=1


m

x ij

i=1


a i , i = 1,2,...,m


b i , j = 1,2,...,n

A transport problem with the above condition 2 is called a closed model transport problem or an equilibrium transport problem. In practice, it is rare and not necessary to be a closed model transport problem. However, we can put any transport problem that does not balance aggregate supply and aggregate demand into an equilibrium form.

j 1

j

Case 1. nb

m

a

i 1 i


, we add a dummy location B n +1 with the quantity of goods

b

n

virtual b n +1 and the cost from A i (i = 1,2,...,m) to B n +1 is zero.

b

n

j 1 j

b n 1

m

a

i 1 i

( b n 1

m

a

i 1 i

j 1 j )

i 1

i

Case 2. ma


b

n

j 1 j


, we add a dummy location A m +1 with the quantity of goods

a

m

virtual a m +1 and the cost from A m +1 to B j (j = 1,2,...,n) is zero.

a

m

i= 1 i

a m 1

n

b

j 1 j

( a m 1

n

b

j 1 j

i 1 i )

Steps to solve the problem:

Step 1. Determine the first allowable solution using the Northwest root or least element method.

Step 2. Check the optimal sign of the solution:

If the number of cells is m+n-1 and does not form a loop, we get the first possible plan. If the number of cells is less than m+n-1 (say k cells), we need to add k dummy cells with x ij =0 so that the old and new cells do not form a loop.

Calculate the potential numbers U i and V i of the transport table:

− For the selected cells: the coefficients U i and V j must satisfy the equality U i + V i = C ij . To solve this system, we let any coefficient U i or V j be zero, then find the remaining U i and V j .

− Check for optimal signs: For cells that must satisfy the condition

U i + V i C ij or U i + V i - C ij = E ij 0


If there exists at least one coefficient E ij > 0 , then the plan is not optimal. If the optimal condition is not satisfied, we go to step 3.

Step 3. Improve the plan when it does not meet the optimal sign:

− If there are many cells with coefficient E ij > 0 , then we choose the cell with the largest E ij > 0 (if E ij are equal, then choose the cell with the smallest C ij ).

− Establish a new plan adjustment cycle:

Principle of looping:

* The control loop is a network consisting of a control cell (containing the input variable) and select cells (output variables).

* Create a loop starting from the control cell, moving along the row (or column) to a selected cell from which it can move along the column (or row) to another selected cell, and finally returning to the control cell. Examples of some types of control loops we often encounter in transportation problems.



Form 1

Form 2




Form 3

The square symbol is the control cell, the circle symbol is the selection cell.



Marking principle: Mark (+) for the adjustment cell, (-) for the next cell, (+) for the next cell...for all cells in the adjustment circle.

Determine the adjustment amount: adjustment amount = min(xij) with x ij in the cell within

Adjustment with (-) sign.

Build a new plan



Xj + ​

The cell with the (+) sign in the adjustment circle

X'ij =​

X j -

The cell with the (-) sign in the adjustment circle


X j

Cell outside the adjustment range

Step 4. Repeat steps 2 and 3 until the optimal plan is achieved.


Example 4-3. Suppose the company currently has 3 factories A, B, C producing the same type of goods and supplying them to four consumption locations , , , with the quantity of products of each sales location, and knowing the transportation cost/unit of goods as in the table below. Determine the optimal distribution plan for goods.



x 11

10


Bow

A





10





x 12

2

x 13

20 11

x 14


12

7

9

20

x 21 x 22 x 23 x 24

2 14 16 18

x 31 x 32 x 33 x 34

B 25

C 5

Bridge 5 15 15 10

Step 1. Determine the first permitting plan

We determine the first allowable plan by the Northwest corner method with the data given in Example 4-3.



Bow

1

10

5

2

10

20

11

15

2

12

7

5

9

15

20

5

25

3

2

14

16

18

5

5

Bridge

5

15

15

10


Step 2. Check the optimal sign of the solution

v 1 = 10 v 2 = 2 v 3 = 4 v 4 = 15 Arc

10 2

u 1 = 0


5 10

( 16)

20

(4)

11 15

12

u 2 = 5 (3)

7 9 20 25


u 3 = 3 (11)

5

2

( 9)

15 5

14 16 18

( 9)

5 5

Bridge 5 15 15 10

In this case, the first allowed plan is not the optimal plan because there are 3 coefficients.

Eij is positive ( = 4, 3 and 11 the cells are in dark color). We must continue with step 3.


Step 3. Improve the plan:



v1 = 10

v 2 = 2

v 3 = 4

v 4 = 15

Bow

u 1 = 0

+ 10

2

20

11

15



+


+



u 2 = 5


u 3 = 3

Bridge

25


5

10



12

7

5

9

15

20

5

2

14

16

18

5

5

5 15 15 10

We determine the new plan of the above problem in the following table.

10

0

2

15

20

+11

12


0

+7


15

9


20

10




2

5

14

16

18

v 1 = 10 v 2 = 2 v 3 = 4 v 4 = 15 Arc

u 1 = 0


u 2 = 5


u 3 = 8

Bridge

15


25


5

5 15 15 10

Check the plan, E 14 = 4 > 0. The plan is not optimal. We build a new plan as follows.

10

0

+2

5

20

11

10

+12

7

10

9

15

20

2

5

14

16

18

v 1 = 10 v 2 = 2 v 3 = 4 v 4 = 11 Arc

u 1 = 0


u 2 = 5


u 3 = 8


Bridge

15


25


5

5 15 15 10

Check the plan, E 21 = 3 > 0, the plan is not optimal. We improve it according to the known method. This plan has all test numbers Eij 0, the plan is optimal.

u 1 = 0

10

2

5

20

11

15


10


u 2 = 5

12

0

7

10

9

15

20

25

u 3 = 5

2

5

14

16

18

5

Bridge

5

15

15

10


v 1 = 7 v 2 = 2 v 3 = 4 v 4 = 11 Palace





Here we give the result information as follows:

A 1 B 2 : 5 units of goods. A 1 B 4 : 10 units of goods.

A 2 B 2 : 10 units of goods. A 2 B 3 : 15 units of goods. A 3 B 1 : 5 units of goods.

Corresponding to the above transportation plan, we have the smallest total transportation cost and equals: (5 x 2)

+ (10 x 11) + (10 x 7) + (15 x 9) + (5 x 2) = 335 units of money.


--- o O o ---


SUMMARY OF FORMULA & END OF CHAPTER EXERCISES


I. REVIEW QUESTIONS

1. Please state the purpose of determining the location of the manufacturing and business factory.

2. Describe the process of organizing factory location determination.

3. State the factors that influence the selection of the specific region and location of the factory.

4. State the methods of determining factory location.


II. APPLICABLE FORMULA.

Method of determining center coordinates The calculation formula is as follows:


n

X i Q i

n

t

X i 1

Q i

i 1


n

Y i Q i

n

t

Y i 1

Q i

i 1

In which: X t − is the x-coordinate of the center point Y t − is the y-coordinate of the center point X i − is the x-coordinate of location i

Y i − is the y-coordinate of location i

Q i − Volume of goods to be transported from the centroid point to point i

Location determination using the transportation problem method. General model of the transportation problem.

mn

Z c ij x ij

min

i 1 j 1

n

x ij

j 1

m

x ij

i 1

a i


b j

i 1,2,...,m


j 1,2,...,n

x ij 0

(i 1,2,...,m ;

j 1,2,...,n)


III. EXERCISES.

Lesson 1 : Company X currently has 2 production facilities located at locations A and B. The products of the 2 production facilities mainly supply 3 locations I, II, III. Due to increasing market demand, the company decided to build another production facility at location C or D. Knowing the production costs and transportation costs from the production facility to each consumption location as follows:

Production facility

CPSX

Ton/Ton

CPVC (Million/Ton)

Output

(Tons/day)

I

II

III

Available

A

8.2

0.8

0.6

0.9

18

B

7.3

1.0

1.1

1.4

26

Expected

C

7.4

0.9

1.1

1.2

10

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