Game Theory: Business Simulation

Business simulation projects. Photo: Creative Commons: Opensource.com/Flickr

Business simulation is a training tool frequently used in university courses to teach students critical business management and strategy skills through simulated business projects. These business simulations are typically developed as competitive team projects to help students learn about the business environment using an active learning model.

Learn the Team

If you were assigned to a group, actively decide what you want to gain from the business simulation project. Then gauge each team member's expectation and commitment level. Ask members what they view as their strengths and weaknesses are as they relate to business processes and roles. Encourage group communication early in the process by exchanging contact information. Timely asynchronous and synchronous communications are central to the decision-making process and ultimately the team's success.

Key Roles

In a business simulation group project, each member will be assigned a specific role. There are different managerial and executive roles: president or CEO, as well as advertising, brand and sales managers. Product managers handle research and development and product line packaging. The sales manager is charged with developing sales objectives, the sales force and identifying the target market. Advertising managers decide on the appropriate promotional efforts based on the product and sales manager's strategies. Business operations and managerial supervision are within the realm of the president or CEO.

Marketing Research

Product line development and promotional efforts are fueled by information revealed by the market research about the target market. Market research is generally obtained from federal and state government statistics, trade reports and business and trade press. In business simulation projects, however, the market research that can be used is typically limited to the information provided within the simulation project material.

Business Profits

The ability to make profits is impacted by costs associated with production, marketing and sales, as well as the unit price for the product or service. Business simulation projects generally allow participants to set product or service unit cost. Keep in mind that business profits decrease when the price of a product is too low and products priced too high can cause consumers to purchase elsewhere. Consider competitive pricing, price skimming and penetration pricing as options when setting product or service prices.

References: 

• Marketplace Business Simulator: Virtual Business World 
• The Business Strategy Game: A Global Industry Simulation; Arthur A. Thompson, Jr., et al.; 2002