Business simulation

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The term business simulation refers to a learning method for the simplified illustration of the reality ( model ) of a company in a competitive environment . This realistic simulation of business processes means that business simulation games are particularly suitable for training management and leadership skills .

Meaning of business simulation games

About 98 percent of all accredited universities in the United States use business simulation games. The research on this topic is correspondingly extensive. According to Brennan and co-authors, the results of these studies can be summarized as follows: Some studies have shown that simulation games represent a valid representation of reality, in a way that managers experience them in reality. This applies to both the formulation of strategies, the analysis of various factors influencing the result and the improvement of analytical skills and team communication. However, so far it has not been possible to provide clear (objective) evidence that students who learn subject-matter knowledge using a simulation do better in the exam than their fellow students who are taught, for example, with the help of case studies. On the other hand, strong correlations to the subjective assessment of learning success could be demonstrated. These include statements such as “I have improved my analytical skills”, “I can now solve problems better”, “It was helpful in learning new concepts”, “I was able to apply what I had previously learned”, “It was one positive learning experience ". Basically, it can be assumed that most people learn best through experience and application of the knowledge they have acquired - just like a pilot trains his skills in a flight simulator . In the business game you can run through different scenarios, take risks and try out strategies without the risk of destroying real assets or causing other damage. The same applies to management simulation games that particularly emphasize the aspect of leadership behavior and the development of leadership skills in the company. An example of this is the Wharton Teamwork and Leadership Simulation from the University of Pennsylvania .

Figure: Business simulation - management summary

history

The core idea of ​​simulation games comes from the chess game , in which, according to Meyer's Konversations-Lexikon from 1897, it is not a matter of chance and luck, but of caution and acumen that ultimately lead to victory. Two armies of equal strength fight, represented (simulated) by white and black figures (soldiers, officers and king). In 1798, Georg Venturini proposed strategic and tactical behavior for young officers in his textbook on war science based on simulation exercises and replaced the game board with maps. In 1824 Baron von Reißwitz followed with a set of rules for sandpit war games . The military's sandpit was later replaced by the computer. The popularity of war games for the safe (cold) simulation of strategies and tactics continued into the 20th century, especially among the German and Japanese military. For example, the Japanese War Research Institute ran through the possible course of the war for the years 1941 to 1943, taking into account numerous economic, financial, psychological and educational influences. The top management decision simulation developed in 1956 by the American Management Association (AMA ) is considered the first business simulation game in management to provide a better understanding of decision-making processes and to train managers to think analytically. A short time later, the University of California (UCLA) followed suit with the Executive Game . An IBM computer was used in both simulation games ( IBM 650 ). You had to enter the decisions about punch cards; simulating a period could take several hours. Numerous other universities joined with different variants. Greenlaw and his co-authors counted 89 different simulation games in 1962. The rapid development of computer technology since the beginning of the 1970s has led to an unmanageable abundance of business simulation games.

In parallel to the computer-aided simulations, haptic business games (or board business games) were developed (board game simulations). Probably the best known is " Monopoly " in the field of parlor games from 1933. The first haptic business simulation by Gerhard Andlinger , a McKinsey employee, which he published in the Harvard Business Review in 1958, is considered to be. Ohio State University and Yale University used the motivating and activating properties of board simulation games in the early 1960s and developed various other variants for simulating business processes in management training. The Swedish management consultancy Celemi markets a simplified version of this under the name Apples and Oranges .

The breakthrough came with the development of the system dynamics approach, among others by Jay Forrester at the Sloan School of Management at the Massachusetts Institute of Technology (MIT). It was about the simulation of complex systems, in particular world models of the Club of Rome , the forerunners of today's climate models . Their primary concern is to recognize the consequences of decisions more clearly and to run through various scenarios . In order to use such complex systems understand the MIT developed the " beer game " (MIT Beer Distribution Game) as a teaching method for approaching the analysis of complex real systems. The supply chain from retailer to wholesaler and distributor to brewery is simulated on a game board (without a computer). Then you can let various disruptive factors affect the system and examine how it reacts. Numerous variants emerged from the beer game.

The beer game is probably not the first haptic business simulation game. In 1958, a McKinsey employee , GR Andlinger, published a computer-less simulation game in the Harvard Business Review , illustrating the business process, balance sheet, and income statement on a game board. That should have been the first haptic simulation game, from which a vast number of different variants emerged.

practice

At the conference of the Marketing Management Association , the reasons for using business simulation games were outlined as follows:

  • The learners develop more interest and enthusiasm
  • The result is a better overview of essential relationships
  • Models, terms and theories can be better illustrated
  • The participants have the opportunity to better understand the causes of the company's success, to assess decisions and their consequences more precisely and to learn from experience
  • You learn to react more effectively to changes in the environment.

However, these advantages only come into play if a simulation is carried out correctly. You should pay attention to the following aspects in order to overcome the disadvantages:

  • Several consecutive days must be available
  • A simulation cannot replace learning; rather, it has to be integrated into the curriculum
  • The teams must be composed in such a way that the differences in performance between the teams are not too great
  • The trainer must be proficient in several areas (for example accounting and finance as well as marketing and social skills )
  • Extensive accompanying material is required.

An empirical study by Mike Towler and co-authors has shown that there are no significant differences in terms of the target group for which business simulation games are particularly suitable. Among other things, the influence of age, gender, experience and program differences on subjectively perceived learning success was examined. According to the authors, the study provides further empirical evidence for the general usefulness of business simulation games for promoting and facilitating learning, regardless of the type and structure of the target group.

Typical target groups

  • Managers and young managers in business, authorities and administration to train management skills in a management simulation game
  • Employees from technical / scientific fields who need business knowledge for their work
  • Students of business administration and industrial engineering to apply what they have learned
  • Trainees to understand business processes and essential relationships
  • Students to clarify what a company is and how it works

literature

supporting documents

  1. ^ AJ Faria, WJ Wellington: A survey of simulation game users, former-users, and never-users , Simulation and Gaming, 35 (2004), pp. 178-207
  2. ^ Ross Brennan, Roger Willetts, Lynn Vos: Student experiences of the use of a marketing simulation game , London, 2008
  3. ↑ Harvard Business School: Should You Be Using Simulations? , Harvard Management Update, June 2000
  4. ↑ S. Barsade, N. Rothbard: Foundations of Teamwork and Leadership , 2009 (Syllabus)
  5. ↑ KJ Cohen, E. Rhenman: The Role of Management Games in Education and Research in Management Science, Vol 7 (1961), No.. 2, p. 133
  6. ^ W. Rieck: Simulation games in university teaching , Göttingen 1975
  7. ↑ KJ Cohen, E. Rhenman: The Role of Management Games in Education and Research in Management Science, Vol 7 (1961), No.. 2, p. 136
  8. ^ PS Greenlaw et al .: Business Simulation in Industrial and University Education , New York, 1962
  9. ↑ a b R. G. Andlinger : Business Games - Play One in. Harvard Business Review, Vol 36 (1958), No. 2, pp. 115-125
  10. ↑ WR Knechel: Using a Business Simulation Game as a substitute for a practice set ., In: Issues in Accounting Education, Vol 4 (1989), No. 2
  11. ^ PM Senge: The fifth discipline , Stuttgart 1996
  12. ↑ As an example of how such "game boards" look specifically (as a further development of the beer game), a business simulation game designed at the Technical University of Central Hesse is listed under the following link .
  13. ^ A b D. A. Kunz: Using Business Simulation: Ten Questions , Proceedings from the MMA Fall Educators' Conference, 2003
  14. ↑ M. Towler et al .: An exploration of student perception of a business simulation game , in: International Journal of Management Education Vol. 7, No. 2 (2009)