Determining Suitable Location-Operation Mode Combinations

Abstract

In this chapter, the process for determining suitable location-operation mode combinations for the activity bundles to be relocated abroad is described. The location and the operation mode are selected at the same time, because they are strongly interlinked. For example, an attractive contract manufacturer can lead to the selection of a location, which is not the most attractive one. On the contrary, a very attractive location can push a company to build up its own production, even though the company generally favors joint ventures or contract manufacturers. First, approaches for the analysis of potential production and sourcing locations are presented. Then, the different operation modes are described: sourcing from a trade company, sourcing from an independent foreign manufacturer, sourcing from a foreign contract manufacturer and establishing own production abroad. Finally, a process to determine suitable location-operation mode combinations for the selected activity bundles is presented.