Business Simulation Games

(Advantexe, 2017)

History of modern business simulation games

First known use of modern business simulation game can be trace back to 1955. The Rand Corporation developed a simulation program, called Monopologs, for U.S. Air Force. This game simulated the Air Force’s supply system (Jackson, 1959). In 1956, well known business game, Top Management Decision Simulation, was developed and it is known to be the first business game ever used in a university class, in 1957 at the University of Washington (Watson, 1981).

General Electric, IBM, Procter & Gamble were among early business users of simulation games. Faria and Schumacher (1984) stated that, by mid 1960s, aerospace giant Boeing had three business simulation games for different levels of managers.

Why Simulations Games?

Effective and efficient strategic decision making is the most important factor for the success of an organization. These decision-making processes determine whether the business will continue to survive or not.

In real life, each business organization is considered as a player and rivalry among the organizations is like a game.  Each organization makes strategic decisions based on some uncertain information. Organization sometimes can’t predict the output when it changes some of its variables. Eg: If price and marketing were increased, organization should know how these variables would affect the consumer demand.

Sometimes, organization should be able identify the moves that other players in the market could make as a reply to its tactics. This helps the organization to choose the best strategy and prepare itself for rivals’ moves. Himmelweit et al. (2001) stated that Coca-Cola’s president Doug Ivester once mentioned as;

"I look at the business like a chessboard. You always need to be seeing three, four, five moves ahead; otherwise, your first move can prove fatal’’.

Therefore, it is vital to train employees to handle different decision-making situations they face in their day-to-day work activities (Lainema, 2003). This could even be trained from when they were in the business school. Unfortunately, most of the business schools are not sufficiently preparing students to understand and cope with the levels of ambiguity and uncertainty they will inevitably face when they take up positions in organizations (Aram and Noble, 1999).

This trend has been changing in positive manner. With the advancement of technology and mathematical modelling, simulations can represent the real-world business environment perfectly. According Faria (1998), more than 1700 business schools in USA have been using simulations. Wolfe and Roberts (1993) argue that simulations represent the real-world issues faced by the managers and, the simulation environment is the most realistic one offered in an off the job training. Simulations can be general purpose or specialized one particularly designed for an industry or organisation (Fripp,2004).

Finally, Doyle (2000) identified following advantages in Business Simulation Games

1. Motivating and entertaining
2. Provides risk free environment
3. Analyse different scenarios and strategies
4. Experimental learning.

References

Advantexe (2017) How Business Simulation Models for 2025 Can Build Skills Today. Available at: https://www.advantexe.com/blog/how-business-simulation-models-for-2025-can-build-skills-today (Accessed 7 Nov. 2019).

Aram, E. & Noble, D. (1999) ‘Educating prospective managers in the complexity of organizational life’, Management Learning, 30(3), pp. 321-342.

Doyle, D. and Brown, F. W. (2000) ‘Using a business simulation to teach applied skills - the benefits and the challenges of using student teams from multiple countries’,  Journal of European industrial training, 330-336.

Faria, A.J. (1998) ‘Business simulation games: current usage levels – an update’, Simulation and Gaming, 29, pp. 295-308.

Faria, A. J. and Schumacher, M. (1984) ‘The Use of Decision Simulations in Management Training Programs’, Developments in Business Simulation & Experiential Exercises, 11, pp. 220-225.

Fripp, J. (1994) ‘Why use business simulations?’, Executive Development, 7(1).

Himmelweit, S., Simonetti, R. and Trigg, A. (2001) ‘ Neoclassical and institutionalist perspectives on economic behaviour’. UK: Thomson Learning.

Jackson, J. R. (1959) ‘Learning from Experience in Business Decision Games’, California Management Review, 1, pp. 23-29.

 Lainema, T. and Makkonen, P. (2003) ‘Applying constructivist approach to educational business games: Case REALGAME’, SIMULATION & GAMING, 34(1), pp. 131-149.

Watson, H. J. (1981) ‘Computer Simulation in Business’, New York: John Wiley & Sons Publishing Company.