Location, Location, Location

…that’s what they say in Real Estate

Federal Express



Take a look at the $255 million (phase 1 costs) NEW Exelon Tower under construction in Baltimore City.


The headquarters for Baltimore Gas & Electric / Constellation Energy has gained support from Mayor Stephanie Rawlings-Blake as part of a project to build a new bridge to the site along Central Avenue and will erect a public plaza that will showcase the Exelon Tower.  Read more


Hard Rock Café Video (see MyOMLab multimedia – 8:36 minutes)
The Senior Director for Worldwide Café Development has a significant amount of personal authority to determine future locations.  Although the firm certainly performs a significant amount of analysis, the Hard Rock approach seems to be somewhat less scientific and based partly on a “feeling” for the right city to go to and the right part of town in which to locate. The firm also carefully considers how the city is evolving and what it might look like in 10-15 years, because the leases are usually signed for that length of time. For Hard Rock, location begins with a global view of which country to go into (the U.S. market seems to be fairly well saturated from Hard Rock’s point of view). Hard Rock considers country factors such as political risk, currency risk, social norms, brand fit, social costs, and business practices. After good potential countries are identified, Hard Rock then focuses on regions, followed by cities. Important city factors include population, disposable income, visitor income, and whether it would be good to locate in the city center (which Hard Rock usually prefers) or the suburbs. Once potential cities are identified, Hard Rock performs breakeven analysis to determine if purchase and construction or remodel will be profitable.

Ask students, “have you eaten at any Hard Rock Cafés? If so, in what part of the city were they located? Was the location chosen primarily to attract tourists or local residents? Compare the factors that are important for Hard Rock with your perception of another well-known international restaurant chain: McDonald’s. Would a McDonald’s typically be located next to a Hard Rock? If not, why not? A different discussion stream could focus on Hard Rock’s list of country factors. Under what circumstances do the students think that political risk might play a factor? Also, what did the Senior Director mean by “social costs?”

KSFs affecting Location

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