Who is Integrated Strategies?

October 17, 2007

Site Selection (How It Should Be Done)

One of the most important decisions that a business needs to make is where they will locate their facilities. Traditional Site Selection firms take a limited cross-section of markets into consideration that varies from industry to industry. Call Centers can only go to these markets, Technology companies can only go to these, and Transportation companies to another set. Their process is driven by past successes within a certain industry or where the majority of companies in a given industry are located.

Unfortunately, past success is not a reliable indicator of future success. Many traditional call center markets are becoming oversaturated to the point where turnover is beginning to damage the bottom lines of companies located in those markets. Technology companies are becoming centralized in such a way that incentives decrease in value because a market no longer needs to draw these types of companies. But the biggest problem with traditional Site Selection is that it does not accurately account for the fact that a company can exist in multiple industries at one time. Where should the research center for a company doubling in size every year that is an outsource provider of IT services to the Healthcare industry be? It falls under research, IT, and Healthcare.

The ideal process for site selection should start by evaluating the internal facts about a company and what their needs for the new site are. Then it should look at a completely blank map and evaluate the relative characteristics of each and every city or county with a labor force capable of supporting their facility. If a non-biased, full geographic approach is not used there is no way to verify that the best site was chosen.

If you are currently going through a site selection process either internally or with an outside consultant you should stop and analyze the approach taken to finding the correct location. If there are only a few options on the table why aren't other cities included? If your team tries to tell you that it is too expensive or impossible to evaluate every market in the US then they aren't really performing site selection are they? There are firms capable of looking at every market across the board to find the best one for you. The amazing thing is that these firms are also charging less for their services because they are leveraging available technology to decrease their costs and increase their accuracy.

The non-biased approach allows emerging and non-traditional markets to enter consideration in the Site Selection process. Many times these markets offer aggressive incentives to bring in new businesses. These markets have the same infrastructure, labor force, and financial costs as traditional markets without the intense competition for land, labor, and attention. If traditional site selection processes were used by everyone then Austin, Texas wouldn't be what it is today and many other mid-size markets wouldn't be getting the attention they deserve for having wonderful demographics and superior infrastructure.

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