Business Location and Engineering Project Study
Business Location
Objective
To achieve a competitive position based on lower transport costs and speed of service.
Selection of Alternatives
The selection process is divided into two stages:
Macro Location Study
This stage involves identifying the general area where the plant will be located, considering factors such as:
- Consumer market and sources of raw materials
- Availability of manpower
- Physical infrastructure and services (water supply, waste disposal, electricity, etc.)
- Economic and institutional framework
Micro Location Study
This stage involves selecting the specific site within the chosen area, considering factors such as:
- Type of buildings
- Access to property
- Availability of utilities
- Wastewater and emissions
- Foundation requirements
Engineering Study of the Project
Technical Identification of the Product or Service
This involves establishing the physical characteristics and specifications of the product or service.
Production Process
This involves defining and describing the selected production process, considering technological alternatives and selecting appropriate technology.
Analysis of Available Technologies
This involves evaluating the feasibility and reliability of different technologies.
Plant Layout
The objective is to optimize the production system by considering factors such as:
- Material handling
- Employee safety
- Production flow
- Machine interference
- Employee morale
- Space utilization
- Flexibility
Selection of Equipment and Technology
This involves gathering information on equipment and manufacturing processes, considering costs, delivery conditions, and acquisition terms.
Selection of Suppliers
This involves establishing a list of potential suppliers based on their impact on productivity, quality, and competitiveness.
Determination of Costs
Cost Types
- **Fixed Costs:** Costs that do not vary with production volume (e.g., rent, salaries).
- **Variable Costs:** Costs that vary directly with production volume (e.g., raw materials, utilities).
- **Incremental Costs:** The additional cost of producing one more unit.
Operating Expenses
These include expenses related to the operation of the establishment, such as:
- Repair and maintenance
- Freight and transport
- Utilities
- Rentals
- Insurance
- Professional fees
- Office supplies
- Financial expenses
Financial Costs
These include costs associated with borrowing, such as interest, amortization, and exchange differences.
Working Capital
This is a measure of a company’s ability to meet its short-term obligations.
Breakeven Point
This is the point at which revenue equals total costs.
Pro Forma Statements
These are financial statements that project future performance, including income statements and balance sheets.