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.

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