A Business Simulation Game for Location-Based Strategies

Abstract

In light of increasing globalization, firms tend to move business functions to strategic regions around the globe to access and secure natural or human resources and benefit from potential agglomeration externalities. Moving business functions to specific locations is often a credible and visible strategic commitment that stimulates the firm’s generic strategy. Therefore, it is an important concept for strategic management, which needs to be tightly aligned to the firm’s corporate strategy. The formulation of a location- based strategy is built of consistent decisions about where and when to move specific business functions. The tradeoffs of these decisions are complex, interrelated, and dynamic. In order to teach and train location-based strategy formulation in an engaging, hands-on activity, this article describes the concept, learning outcomes, and architecture of a business simulation software program for moving specific firm functions to selected regions. It simulates an organizational lifecycle and agglomeration externalities such as knowledge spillovers resulting from labor pooling and specialized suppliers. The simulation is designed as a competitive group exercise for a course about location-based strategies in advanced business or management studies to engage students in a risk-free environment.