Question

Suppose that you are invested in a software development firm that designs automotive radar software for robotics systems in cars. Your offices and most of the key employees who helped to start the company are in Tampa, but given expansion plans, your current location is no longer sufficient, and you need to decide on a location for your new headquarters. Now, your business is faced with a difficult decision: where do you locate your new headquarters?

Option 1: Lansing, Michigan You could move to Lansing, Michigan to be closer to the demand for your product for such as the Ford assembly plants in Dearborn, Flat Rock, and Wayne, Michigan, and the General Motors assembly plants in Detroit, Flint, and Lansing, Michigan.

Option 2: San Jose, California You could move to San Jose, California to be closer to other technology companies in the Silicon Valley area and benefit from agglomeration economies. Additionally, you would be closer venture capital in nearby San Francisco which may be necessary to fund your expansion.

Option 3: Tampa, Florida You can stay in Tampa where your key employees will most likely be happiest. Although Tampa does not offer the comparative advantages of demand conditions, agglomeration economies, or the factor condition of capital, it does have a relatively good quality of life, and is home to your current employees.

Which option is the best fit for the business and what factors would be most important in making the decision? Specifically comment on the comparative advantages that the location you chose has to offer.

Explain Why?

Answer 1

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Comparative Advtanges of Firm Location

The choice of location is very crucial when it comes to business expansion and growth. The nature of the company and the trends in the industry are very crucial when it comes to production and company operations. In this case, the company is an IT based firm with current location being in Tampa, Florida. The current location offers the employees the best working condition. Critical evaluation of the prevailing situation shows that there is no need to relocate, but the business should remain at Tampa. Relocating to the other localities may have some upper hand when it comes to logistics and distribution, but the nature of the firm relies heavily on technology hence the main emphasis is on human capital.

Tampa offers the best working conditions in relation to employee demands and operational conditions. The main input according to the nature of the company is human input. The labor force is the most critical factor when it comes to the level of efficiency of the company. Human capital is very crucial in relation to this company. The main focus should be on productivity and innovation level of the workers . Moving to the other localities will negatively affect the productivity of the workers, something which will lead to reduced level of income sue to demotivated workforce. Since the main competitive advantage is based on the input, changing the location will lead to decline in the level of output. In this case, highly motivate employees are very much productive and lead to high quality commodities which fetch good market prices and control of the commodities.

Good locality which favors working conditions of the employees can be said to be a key input in course of production. The company operations depend on the value and quality of the human resource which is the most valued asset of the company. Location at Tampa will stimulate high level of motivation and innovation leading to good level of returns and market command. Decline in the level of human efficiency can negatively lead to decline of the company level of production. In this case, Tampa is one of the most ideal locality which will ensure high level of output and reduce the level of outsourcing, employee turnover and attrition rates.

References:

DeLorme, D. M., & Gray, K. A. (2008). U.S. Patent No. 5,848,373. Washington, DC: U.S. Patent and Trademark Office.

Schmenner, R. W. (2012). Making business location decisions. Prentice Hall.

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