Simulation: Growing in Popularity

According to a recent study more than 40% of companies have used a management tool called “simulation.” The same survey also identifies this tool as one of the “Top 5 Tools of Successful Companies.”

What simulation does
Simulation helps you learn the dynamics of your business in a short space of time, by providing a hands-on way of testing business and competitive decisions.

In a successful simulation, you can pre-test how a proposed business strategy will stand up under the moves and countermoves that competitors might make in the marketplace.

Can simulation help you?

Simulation may be a tool worth considering if you answer yes to any of the following questions:

• Have new competitors appeared, old competitors withdrawn, or current competitors changed their behaviours?

• Have cost factors or he market environment changed significantly, or do they appear about to do so?

• Has your industry’s product or process technology changed significantly in a way that could affect your cost or investment structure, perceptions of your product or service quality or competitive behaviour?

Holding a simulation session

Simulation can vary from simple paper and pencil “role play” exercises to modelling complex scenarios using business simulation software.

To conduct your own business simulation, you’ll need to develop a full understanding of your current situation by gathering all the relevant information you can about your business, including your market, your industry and your competitors.

Using this information, you can then hold a simulation session with your team to test 4–6 different strategies under a variety of scenarios.

Simulation can give you the chance to test possible short and long-range consequences of your decisions, without the ‘real-world’ risks.