Q&A - What are the main issues in operating a multi-site business?

Many businesses start and continue to trade from just one business location.  However, for others, the growth of the business necessitates the opening of locations on more than one site…

Examples of multi-site businesses include:

• A retailer who expands by launching the same format in other locations nearby and then across the UK
• A manufacturer who establishes regional distribution centres
• A franchisor that expands by selling geographical territories to franchisees
• A financial services business that opens a call centre operation overseas

In all these and other examples, the decision to operate multi-site creates opportunities and issues in relation to the four main functional areas.  A summary of the main points is provided below.

Advantages of multi-site locations

• Most importantly – closer to customers; the business operates in the geographical markets when it can compete
• Greater potential for promotion amongst junior management
• Recruitment may be easier, particularly is done locally
• Marketing and management economies of scale – costly resources can be spread across more business locations, customers and revenues
• Easier to flex capacity – by adding or removing locations
• Less risk of the business disruption from problems at just one location
• Better understanding of local market cultures & conditions

Disadvantages of multi-site locations

• Potential duplication of activities (diseconomy of scale)
• Harder to control operations – though IT systems can make this much easier
• Communication across the business is more challenging
• Increased strategic risk – the risk that the business does not understand the local market which it is entering

Revision Presentation - Making Operational Decisions [17 May 2012]
Predictions of a dramatic change in the way goods are produced - and how it may change business [25 Apr 2012]
Vodafone takes over Cable and Wireless Worldwide [23 Apr 2012]
Competitiveness and organisational structure - a great example of delayering [20 Apr 2012]
Garden Centre Takeover - Can Hands Get the Growth? [26 Mar 2012]
Mergers - problems first, synergies later [2 Mar 2012]
Takeovers and Mergers - the Language of M&A [16 Feb 2012]
How to turn threats into an opportunity at Ryanair [31 Jan 2012]
Business size and the innovation debate [11 Jan 2012]
Revision Presentation - Economies of Scale & Resource Mix [3 Jan 2012]
Revision Presentation - Business Location [2 Jan 2012]
Revision Presentation - Workforce Planning [26 Dec 2011]
PepsiCo: economies or diseconomies of scale? [2 Nov 2011]
Revision Quiz - Marketing: Competition [1 Nov 2011]
Location Location Location [28 Oct 2011]
Greggs, Sausage Rolls and the Ansoff Matrix [20 Oct 2011]
Revision Quiz - Locating the Startup Business [12 Oct 2011]
Lesson activity - the Dyson Debate [29 Sep 2011]
Jaguar Land Rover Essay [20 Sep 2011]
Tesco and Retrenchment [31 Aug 2011]
Automation and the arrival of 290,000 robots [2 Aug 2011]
McDonalds - Making a Meal out of the Olympics [20 Jul 2011]
Jaguar goes for NPD investment with £5bn plan [10 May 2011]
Using Chucklevision to Teach Business [8 May 2011]
Lesson Worksheet - Capacity Utilisation [5 May 2011]
Horizontal integration in action - Virgin grabs Esporta [26 Apr 2011]
Capacity cuts at Toyota UK as production still hit after Japanese earthquake [20 Apr 2011]
CSR - The Mega Dairy, Economies of Scale and Cornflakes [25 Feb 2011]
Unit 3 Micro: Economies of Scale - the Mega Container Ship [22 Feb 2011]
Nestle - using branding & productivity to overcome commodity price increases [17 Feb 2011]
Economies of Scale - A cool video [9 Jan 2011]
Q&A - What is the difference between outsourcing and offshoring? [29 Dec 2010]
Q&A - Explain what is meant by industrial inertia [29 Dec 2010]
Q&A - How important is location in determining business success? [29 Dec 2010]
Some amazing images to help teach economies of scale [14 Dec 2010]
Britain’s changing High Street - Poundland, nail bars and empty shops [8 Dec 2010]
Cash flow Clue-doh! The Mystery is Revealed… [2 Nov 2010]
Royal Family’s favourite water: Malvern to be axed, but wind farm harvest to come from the sea [25 Oct 2010]
How to start a toy shop [12 Oct 2010]
Would you stand for it? [14 Sep 2010]
Adding value…to the humble toilet roll [2 Sep 2010]
Alliances - benefits of scale without the risks? [15 Jun 2010]
Is the mega-merger falling out of fashion? [7 Jun 2010]
Strategy Case Study - Vauxhall/Opel restructuring [24 May 2010]
Starbucks - the Famous Strategic Change Memo from 2007 [21 Apr 2010]
Technological change shakes up book production [3 Mar 2010]
BUSS4 Research - a Corus of Disapproval [1 Mar 2010]
Flexible working thrives in the recession [1 Feb 2010]
Video case study - New Balance quality in a successful UK factory [28 Jan 2010]
Retrenchment and capacity cutting at Blacks Leisure - and then expansion again? [12 Jan 2010]
Revision Presentation - Capacity Management [19 Dec 2009]
Economies of scale - lesson idea [2 Dec 2009]
Operations in Action - Video Tour of the Amazon Depot [23 Nov 2009]
Brompton Bicycles - Guardian Profile [9 Nov 2009]
Auto Warriors - the Capacity Management Reality Show [28 Oct 2009]
Q&A - How are businesses affected by unemployment? [27 Oct 2009]
Managing Cash Flow - Beware the Economic Recovery [26 Oct 2009]
Entrepreneur takes advantage of the postal strike [24 Oct 2009]
Strategic business decision-making - Network Rail [26 Aug 2009]
Standing room only - on Ryanair? [6 Jul 2009]
Spare capacity prompts a fall in business investment [4 Jul 2009]
U2 on Tour - Investment appraisal and capacity utilisation rolled into one! [2 Jul 2009]
Stock control - de-stocking was over £5bn in Q1 of 2009 [2 Jul 2009]
Q&A - What is a sales forecast? [31 May 2009]
Q&A - What are the main things to consider when obtaining finance for a start-up? [26 May 2009]
Q&A - How can a business handle a loss? [26 May 2009]
Q&A - How is profit used by a business? [26 May 2009]
Swine Flu Vaccine - An Interesting Example of Batch Production in Action [1 May 2009]
Video case study - Wind turbine production is stalled [1 May 2009]
Small businesses in the middle of the crunch - insights for students [22 Apr 2009]
International trade in action - on board the container ship [14 Apr 2009]
Are we motoring towards electric avenue? [5 Apr 2009]
Football finances under the spotlight [5 Apr 2009]
Customer Service and Capacity Utilsation: Stenna Line versus Ryanair [3 Apr 2009]
Hotels feel the squeeze from low capacity utilisation and pricing [9 Mar 2009]
Revision Quiz - Capacity Management [8 Mar 2009]
Video case study - inside the Easter egg factory [27 Feb 2009]
How the car makers responded to the downturn [17 Feb 2009]
Cost-cutting made simple for small businesses [17 Feb 2009]
Flexible employment at Mini - the upside and the downside [16 Feb 2009]
Video case study - Living Salads [9 Feb 2009]
Video case study - flexible storage is a boom business [8 Feb 2009]
Could 2009 be a boom year for UK holiday destinations? [2 Feb 2009]
Q&A - What is meant by production capacity? [2 Feb 2009]
A good example of the capacity utilisation calculation [23 Jan 2009]
Cutting capacity in the service sector [17 Jan 2009]
Excess stocks build as car demand falls [17 Jan 2009]
Ripple effects of a brutal outlook for the car industry [16 Jan 2009]
Highest Productivity in the Industry - But Still Crippled by the Crunch [8 Jan 2009]
A Devastating Blow for the Irish Economy [8 Jan 2009]
Video case study - warehouse expansion for fashionable growth [21 Dec 2008]
Video case study - Tourist town reinvents its economy [10 Nov 2008]
Revision Quiz - Operational Decisions [9 Nov 2008]
Here’s a useful short video about a start-up business [22 Sep 2008]
For sale: airport with 1 runway and 35.1 million customers [17 Sep 2008]
Capacity management in action at Toyota [4 Sep 2008]
Cutting capacity to weather the housing slump [25 Aug 2008]
Not enough customers to break the daily grind at Beanscene [14 Aug 2008]
Marketing strategy - making the pier stand out from the crowd [13 Aug 2008]
Start-ups and small businesses abandon their traditional offices [12 Aug 2008]

BUSINESS TEACHER RESOURCE NEWSLETTER
Get first news of business teaching resources, ideas and other materials from tutor2u. Over 9,400 business teachers from the UK and around the world receive our regular teacher email newsletters. Sign up for free here!