Political And Legal Environment: The Business Simulation

Issue # 3: Political and Legal Environment

How CAPSIM Works: The business simulation is relatively unaffected by external factors such as politics. The only time CAPSIM required additional decision-making was in regards to the ethical dilemma of offshore cost-cutting. Not once did CAPSIM require the teams to make additional decisions in regards to changing labour, tax, regulatory and other legislations. CAPSIM Stakeholder Prioritization: The stakeholders affected by the lack of political changes would be the top management, employees, customers, suppliers and competition. These stakeholders will have relatively predictable expectations about the CAPSIM business environment as there will not be any major changes that will ever disrupt

A major example would be the 2016 US Presidential Election. This election has shown its importance in the global economy by means of the stock market responses, the US-China business relationships, the drastic decline of the Mexican currency and the potential threat to the North American Free-Trade Agreement (NAFTA). A less drastic legal repercussion would be in terms of the Canadian Anti-Spam Legislation (CASL) for email marketers. This is not mentioned in CAPSIM when one is allocating funds to email marketing expenditures, but would require a lot more attention when it was being done in the real world. In short, CAPSIM creates a closed-off, and relatively predictable world when it comes to the political and legal environment. Unfortunately, that makes the simulation quite different from the

While this makes working on the simulation less complicated, it also gives that supplier a lot of bargaining power over how it prices its materials. In regards to the Porters Five Forces Model, this basically means that team Andrews is unable to bargain for cheaper costs for its materials, which means that there is a lower overall profit margin. (Porter, 2008). Customers also have strict preferences about the kind of sensors they want to purchase, which further places Andrews in a worse-off situation. Specifically, when preparing for round 4, (involving the ethical dilemma), having just one supplier became a major weakness for Andrews. Being involved with a supplier that has been known to violate labour laws, brings forth a great social and financial