What a business simulation is and how is it used

A business simulation (business game or management game) provides people to learn about business in an accelerated, risk-free and fun way.

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A business simulation is the business training equivalent of a pilot's flight simulator. But instead of flying a virtual aircraft, the learners run a virtual business.

Our Business Simulations (Business Games or Management Games) involve teams of managers working on a business problem, simulated by a computer-base model and coached by a tutor. These Business Simulations allow participants to experience and explore a simulated problem in a practical and pragmatic manner. As describe on our Business Simulation Types page, they include business games, planning simulations, simulations exploring management techniques and computer enhanced role-plays.

The terms "business game" or "management game" were used at their inception when the idea of the "war game" was perceptively transferred to the field of business training in the 1950s. Although one does not question the seriousness of war games (especially when they use live ammunition), the term game in management development can suggest a non-serious activity. To avoid this connotation, I prefer to use "business simulation" instead.

THE BASIC PROCESS

Typically, the training session has three stages - briefing and preparation, simulate business activity and review and discussion (Figure 1).

Figure 1: Basic Process

After a short briefing participating managers are split into small groups (of three to six depending on the simulation). These familiarise and prepare for the activity. Next, the major segment of time is used for simulation - for the learners to run a complete or part of a business for several periods (Figure 2). Finally, the teams combine to compare, discuss and review their results. This allows participants to apply their business knowledge to a dynamically "real" problem in an accelerated manner and without risk (except to their ego's!).

BUSINESS SIMULATION PERIOD-TO-PERIOD PROGRESSION

Typically a business is run for several simulated periods - depending on the simulation these represent weeks, months, quarters or years (Figure 2). During this progress, learners explore issues and overcome problems as they build their business knowledge, experience and wisdom

Figure 2: Simulating several periods

The length of each period (P) depends on the simulation. For a complex business simulation, it may last several hours. For a simple business simulation it may be a few minutes. Often, to  ensures the work pressure is maintained, .the time allocated to each period shortens as the simulation progresses (so period P1 is longer than period P6). Alternatively, work pressure can be maintained by exploring new issues and introducing new decisions and reports as the business simulation progresses.

Typically between six and ten periods are simulated. A simple simulation may run in as little as two hours but a complex one may last several days and a very complex one several weeks.

BUSINESS SIMULATION DECISION-MAKING CYCLE

Each period, decisions are submitted to a simulation model that computes their impact and produces results that are returned to the learners for them to analyse before making the next decision (Figure 3).

Figure 3: Decision Cycle

Reference
A PDF discussing this and types of business simulation can be downloaded from Corporate Cartooning

2011 Jeremy J. S. B. Hall

Most recent update: 26/03/12
Hall Marketing, Studio 11, Colman's Wharf, 45 Morris Road, London E14 6PA, ENGLAND
Phone  +44 (0)20 7537 2982 E-mail
jeremyhall@simulations.co.uk