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Inward Investment Guides

Location Strategy Decision Chain

The role of the key groups involved in location selection - and how and when they fit into the decision - must be established early in the process.

Lawrence Moretti (Apr/May 09)
Successful projects for expanding, consolidating, or relocating a company's geographic operating footprint share a common grounding. They are guided by a logical, defendable process to build a case for, and to guide the decision, based on underlying business needs and critical project success factors. An equally important dimension is a clear project command, communication, and decision structure. This structure constitutes - to borrow and augment a well-known term - the "supply (and demand) decision chain" of corporate site selection and economic development.

The key groups in this decision chain comprise three categories: demand-side, supply-side, and a third group that evaluates, or otherwise influences, the decision. The views and motivation of each of these groups toward alternative solutions and factors of importance will likely vary. The underlying process needs to be grounded in the project objectives, but flexible enough to anticipate the actions and reactions of each of these parties.

Demand: "We need to make the right decision and (for some) live with the decision."
The demand for changing a location footprint can be viewed in the context of broader organizational considerations such as talent sourcing, market penetration, process improvement, and revenue enhancement. Here are some of the key parties in the decision chain from the demand side:
• Corporate end-users - These are personnel who will be most directly impacted by the decision. They and their families may need to move, or perhaps a new site represents a huge increase in travel and responsibility due to the distance to the new site and the criticality of start-up.
• Internal project team - This comprises corporate real estate, strategic planning, human resources, or other team members charged with managing the location selection project and insuring that the decision is aligned to company goals.
• Customers/suppliers - Often directly influencing the decision, both groups may control criteria related to pricing margin, service delivery metrics, quality, and reputation.
• Operating model constituents - Business process changes are linked to deployment decisions (e.g., building a shared services organization, changing the ratio of in-house versus outsourced operations, or shifting from a decentralized to centralized model). These stakeholders will be drivers of change toward new geographic and sourcing alignments.

The end-user groups and the project team charged with evaluating options are at the center of the decision. They may directly experience, and have to live with, the new environment. As important, they may be held accountable for making the decision successful. Additionally, the project team needs the right facts to build a business case that satisfies the needs of the end-user groups, to sell the decision internally (perhaps to executive leadership) and to gain the necessary authorization to proceed with the investment.

Supply: Place and Promotion - "We are the best location!"
Next are some representative parties on the supply-side. These groups represent candidate locations for the project and those who want to attract the investment to the community:
• Economic developers - These groups are charged with attracting jobs and capital investment to the area. They are the community's principal ambassadors as well as the managers of local intelligence and networks to guide the decision and deliver commitments.
• Local business and employer representatives - An essential source of knowledge for prospective site-seekers, these groups can make or break a community's chances to win a project. They can open up local networks and, sometimes, broader business opportunities for site-seekers.
•Recruiters and educators - These are important representatives and entry points to the work force and new sources of talent.
• Infrastructure providers - The roles of utility, telecommunications, and transportation services vary with the type of project, sometimes key (e.g., for manufacturing or data center projects), and other times less visible (e.g. for office projects).
• Property and construction advisors - These groups transact the site and deliver the "bricks and mortar": lease commitments, land acquisition, environmental due diligence, permitting, project design, and construction.
• Other implementation partners - These include business structuring, regulatory, and tax advisors, and other sources of start-up and operating support.

These groups should strive to give the end-user confidence, backed up with facts. They need to focus on client needs and how the community can be part of the solution and deliver the project. One of the most important things this group can collectively do is to present an orchestrated, unified client-facing team with clear messaging.

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