Game Scenario in Detail
Strategic options and tactical decisions
As you increase the game's complexity The Global Business Game
allows players to design and implement any one of a complete range
of generic business-level strategies within a single-business corporate-level
strategy.
Firms can engage in a differentiation generic strategy by investing
heavily in product research and development efforts. If successful,
they can apply a patented technological breakthrough to all its
TV sets.
A firm could implement a generic strategy of cost-leadership by
(1) using inexpensive but low quality raw materials, (2) employing
high degrees of supervision, quality control programs, and assembly
line robots to minimize human error that causes warranty charges
to be required on returned defective sets, (3) lowering distribution
costs by creating a company-owned and operated wholesaling operation,
or (4) shifting manufacturing operations to low labor cost countries.
A focused cost-leadership generic strategy can be implemented in
a number of ways - by tailoring the firm's television sets to only
one market segment or by concentrating sales in only one country
or one economic zone. A focused differentiation generic strategy
could be implemented by making only one set size and having that
set appeal to just one of the industry's user segments.
The integrated cost-leadership/differentiation strategy would be
based on unique firm strengths such as efficient and well-located
factories and a loyal and productive sales staff.
If all three of the world's major economic zones are available
players can implement strategies that are either multi-domestic,
global or transnational. When they do this they are able to use
a large number of market entry modes.
Regardless of the level of dynamism
and complexity that you chose, all firms can expand their existing
Home Country factory. They can also increase this plant's productivity
by installing automated equipment, conducting quality training programs
with quality circle meetings, use higher amounts of supervisory
attention and assembly line worker training programs. Quality Control
inspection programs can also be implemented which ultimately reduce
warranty work charges. Firms can also build new facilities in foreign
countries. They can also move a domestic operation's capacity to
these offshore sites. They can also sell excess or unwanted automated
and assembly line equipment to other firms in the industry. As a
last resort, if capacity is not needed, firms can either sell off
or decommission their plant(s).
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Financial
options
Each firm's external finances are tied to the financial centers
associated with its home country. For NAFTA-based companies this
would be New York City. In the EU it is Frankfurt and London. In
Asia it is Tokyo. Companies can obtain outside capital through short-term
loans, bonds, and common stock issues. They can call their bonds
and purchase Treasury stock on their own account. If you choose
the "Dynamic" option, all economic
factors change throughout the exercise. This entails quarterly changes
in exchange rates, the stock market's activity level, long-term
and short-term interest rates, raw materials costs and assembly
line worker wages.
Market
information
In each decision round, firms receive the Global Industry Report,
which comes in the form of a trade newsletter. It summarizes the
general activities engaged in by the competitors while also informing
students about future events. In addition, students can purchase
market research reports with the information on the industry's major
competitive elements such as comparative sales promotion budgets,
near-term unit sales and estimates of competitor product quality.
Finally, each firm also receives a set of confidential reports such
as the operations report, income statement and balance sheet.
Strategic
alliances and business negotiation
Student teams can negotiate joint-venture arrangements and strategic
alliances through patent licensing, subcontracting of TV sets, and
sale of production capacity. Students learn to build and maintain
business relationships and balance short-term and long-term interests.
At the same time, the negotiation element turns the game into even
more exciting and realistic exercise.
Human
factors and ethical issues
GBG exercise also covers human factors and ethical issues faced
by those making real-world strategic decisions. Your students respond
to a number of critical incidents presenting some of the "softer"
problems faced by managers. These critical incidents are presented
in mini-case format and you can optionally introduce them at any
point during the exercise. They include challenges in sales promotion
considerations, employment practices, culture clashes, organizational
change strategies, technological enhancements, and alternative structures
for global competitiveness. Other human factors involve the work
ethic and job satisfaction and aspirations of the workers in each
of the simulated countries.
How
to use in your course
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