At the beginning of Year 11, the company has production facilities to make athletic footwear in
All four geographic regions where the company markets its footwear (North America, Europe-Africa, the Asia-Pacific, and Latin America)
Latin America (Merico) and the Asia Pacific
Latin America (Brazil) and the Asia-Pacific (India).
Latin America (Brazil) and the Asia-Pacific (India).
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the Asia-Pacific region and North America.
The Correct Answer and Explanation is:
Correct Answer:
Latin America (Brazil) and the Asia-Pacific (India).
Explanation:
At the beginning of Year 11 in the Business Strategy Game (BSG) simulation, each team-managed company starts with production facilities located in only two geographic regions:
- Latin America (specifically Brazil)
- Asia-Pacific (specifically India)
These two regions are where the company initially manufactures its athletic footwear before expanding operations to other global regions such as North America and Europe-Africa.
1. Strategic Starting Points:
The decision to place the initial plants in Brazil and India is strategic. These locations offer:
- Low labor costs, reducing overall production expenses.
- Access to emerging markets in their respective regions.
- The ability to export products to other regions at a competitive cost, albeit with some shipping and tariff considerations.
2. Why Not All Four Regions Initially?
Although the company sells footwear in all four regions — North America, Europe-Africa, Asia-Pacific, and Latin America — it does not manufacture in all of them at the outset. Setting up facilities in all four regions would incur higher initial fixed costs and complicate early strategic decisions. The simulation encourages participants to:
- Strategically decide when and where to expand production.
- Evaluate costs of building new plants or expanding current ones.
- Balance production capacity with projected demand.
3. Implications for Gameplay:
Understanding this setup is crucial because it affects:
- Inventory management: Deciding how much to produce and ship.
- Delivery times and shipping costs.
- The timing of plant expansion into North America or Europe-Africa for strategic advantages.
In summary, knowing that the company starts production in Brazil and India helps set a foundation for planning competitive strategies related to cost management, capacity planning, and regional demand forecasting.