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Business Simulations: Learning to Run a Better Business by Playing Pretend

Jun 27, 2008
Growing up, we've all had dreams of being a fighter pilot, astronaut, space explorer, ancient warrior, or any of a million different occupations throughout history. Unfortunately for most of us, we don't ever get to live out our childhood dream, instead settling for a simulated experience in a video game.

Sometimes the simulations are so real they have a place in real life. Prospective pilots, for example, train on realistic simulators in order to help them improve their skills. The effectiveness of simulations for training hold true in our real-world roles as businessmen and managers as well. Just like a pilot training in a simulator doesn't have to worry about dying in a fiery crash should he or she make a wrong move, business simulations are a perfect way to practice management skills; you know, for those of us that never made it to our fantasy occupation.

A business simulation is a great method used by manager trainers today to allow managers and business owners to practice different scenarios and discover potential outcomes for their actions. There are two main types of business simulations that are often used. The first is called scenario based and the other numeric based.

Numeric-Based Business Simulations

Numeric simulations have less of an interactive role as the trainee is presented with items such as income sheets, employee counts, cash flow statements, and so forth. The trainee must make decisions that result in the numbers being changed. For example, incoming cash flow is down so the trainee must decide on the best way to decrease expenditures, whether it be through decreasing the number of employees, closing locations, shutting down specific departments, or even increasing expenditures by pouring more money into marketing.

Each decision is run through an algorithm and results for each decision displayed. Numeric based scenarios are designed more to provide how decisions made at a high-level affect a company's numbers, thereby giving the trainee experience on making high-level decisions.

Scenario-Based Business Simulations

Just as the military uses war games to help officers develop strategic thinking, battlefield analysis, situational awareness and other skills necessary to leading and managing a military operation, business trainers use scenario-based simulations to develop a business owner's or manager's financial analysis, market analysis, teamwork, leadership skills, and more.

A scenario-based business simulation is sometimes also called role playing due to the fact that trainees act out situation with the trainers. Throughout the scenario, the role playing may be interrupted to allow the trainers and trainee to discuss the situation, review the actions of the trainee, and talk about the outcome and why it happened that way.
About the Author
Executive Perspectives (http://www.epsims.com) helps businesses learn and improve by training them through business simulations. The author, Art Gib, is a freelance writer.
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