Reference no: EM133038676

Company A

Karen May, a single parent, is starting a food catering and event decorating business. To save money, she intends to operate the new venture out of her house in upstate New York. Initially, her services would focus on planning for wedding receptions and other special events, designing floral arrangements, decorating the venues, and even cooking and serving meals.

She is concerned that her home may be too far away from the larger cities from which she is likely to get most of her business and that her kitchen equipment will not be adequate to support the catering side of her work. Also, being in a rural area, she is worried about finding an adequate labor supply. May realizes that renting a commercial space in town would alleviate some of these concerns, but since she has limited funds, she decides to give her home-based location a try.

Company B

Kevin Janzen lives in a small town, which is experiencing a major growth spurt since the announcement that a large manufacturing plant would be opening nearby. This has created explosive growth in home construction, so now lumber is in short supply and selling at a premium price. He discussed plans with local officials to open a sawmill to meet the rising demand for building materials. The officials not only approved the idea, they also offered financial incentives in the form of significant tax breaks if Janzen would agree to locate his mill operation near the town. Janzen's dilemma, however, is that the nearest available timber is 300 miles away.

Shipping enormous logs over that distance is very expensive. And much of the wood is cut away and discarded in the process of turning logs into lumber, so that adds to the inefficiency. Ultimately, he decides to locate his sawmill near the timber supply and ship the finished product, which will be much less expensive.

Which company chose the best location?