real estate 17 –

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.