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You are an Independent consultant hired to conduct an quantitative analysis
The American International Automotive Industries decision to broaden its European base has the potential of creating immense amount of opportunities. Europe presents a great deal of prospects for offering distribution channels for a great deal of wealth and development. With three of its key bases in Germany, two in Central Europe with a significant customer base in Prague, and other bases in Eastern and Western Europe; it’s significant that AIAI chooses distribution sites that will contribute to the company’s overall development. It’s in this light that a distribution center located in Hamburg be chosen as one of AIAI premiere location as Germany offers a central location and is increasing in its popularity and convenience.
“The center of gravity of European distribution is shifting a little bit eastwards towards Germany as Europe becomes larger.” (Cullen, 2009) According to the Colliers report, Hamburg ranks fifth in re of its preference for a foremost location. Corriers measures this based on the key elements of infrastructure and accessibility, market access operational Base, costs labor, market capacity, logistics competence and business environment. Based on location and the key factors that are more feasible taking into mind all the important elements need for a lucrative distribution center; the Netherlands along with Germany provides a strong presence within the Western European base. Similarly, Prague and Budapest poses a lucrative channel covering the key distribution points throughout eastern and western Europe. Much of these key areas based on Collier measurement and analysis around a viable distribution center, are more than feasible.
Chart Highlighting more lucrative and progressive European distribution areas.
In addition, there has to be a careful assessment made by which distribution centers are chosen as the particular geographical location has to be assessed differently. For example, countries within eastern Europe fulfills a bridge; meaning they provide some of the more accessible opportunities for trade and distribution. “As a result of the European Union’s enlargement to the east, they are increasingly serving as a bridge. As far back as antiquity and the Middle Ages, important trade routes, including the amber and silk roads, ran through eastern Europe on their way from western Europe to Russia and Asia (logistics in eastern Europe – DHL Logistic, 2008) Nevertheless Eastern Europe still poses some viable opportunities as it pertains to the opportunities it presents for AIAI markets in Budapest.
Conversely, as was stated briefly earlier on in the assessment, Colliers International’s assessment of the factors that would contribute to a lucrative development site within Europe was broken down in six major categories; Infrastructure and Accessibility which refers to the overall accessibility to European ports, Market Access which refers to “the size and depth of the surrounding catchment area in terms of both population, GDP and forecast GDP growth” ( Kiev etal , 2013 ) Operational Base Costs is the base costs, rental and land costs , labor market is by large the size of the employed market and amount of unemployed; Logistics Competence is the level of expertise within the field and the business environment indicates the effortlessness in doing business. The graph below measures how each category within the European market measures up in regards to three major indicators and determinants of an efficient distribution site; that is the overall balance, distribution and manufacturing capabilities.
Overall Germany to date provides one of the more significant distribution sites for AIAI. Germany western, eastern and central positions offers a feasible position of the company’s distribution goals. It is one of the prime sites in regards to location, geography and proximity to the wider European market. Similarly, other key areas within Europe affords strong opportunities in regards to the transportation and accessibility and the overall operational costs. With a careful entry within the proposed markets AIAI will only prove to gain.
Cullen, T. (2009). Where’s the best location for your European distribution centre? Retrieved from http://www.logisticsexecutive.com/wp-content/uploads/2015/01/Wheres-the-best-location-for-your-European-distribution-centre.pdf
Kiev, W., Sooa, B., Athens, I., Belgrade, I., Bratislava, B., Munich, P., … Scenario, B. (2013). MARKETS THAT WERE ANALYSED TOP 10 MARKETS. Retrieved from http://www.portofantwerp.com/sites/portofantwerp/files/Colliers%20Top%20European%20Logistics%20Hubs%202Q13.pdf
Logistics in eastern Europe – DHL Logistik. (2008). Retrieved July 5, 2016, from https://www.dhl-discoverlogistics.com/cms/en/course/trends/europe/europe_east.jsp
Tseng, Y.-Y., Candidate, P., Yue, W. L., & Michael A P Taylor Director. (2005). THE ROLE OF TRANSPORTATION IN LOGISTICS CHAIN. Retrieved from https://www.siam.org/journals/plagiary/1657.pdf