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Business Strategy Modeling: System Dynamics Approach

Author

Listed:
  • Malgorzata Latuszynska
  • Anna Borawska

Abstract

Purpose: The article aims to analyze the applicability of computer simulation models built using the system dynamics methodology for studying the effects of various business strategy options. Design/Methodology/Approach: The article focuses on the application of system dynamics simulation, which enables the consideration of feedback loops, time delays, and nonlinearities in enterprise operations. Based on a case study of a transport company, the potential of using a simulation model to support the selection of an investment strategy is presented. Findings: System dynamics models facilitate a comprehensive analysis of various business strategy options, allowing for the evaluation of their impact on the company's key economic and technical indicators. This approach accounts for both macroeconomic and microeconomic aspects, leading to a better understanding of enterprise dynamics and supporting strategic decision-making. The presented simulation experiments demonstrate that implementing the appropriate investment strategy enables a company to achieve business goals more effectively. Practical Implications: The proposed approach supports decision-making in dynamic and complex business environments. It can be employed by both managers and analysts to evaluate and plan business strategies. The presented case study may be particularly useful for decision-making regarding the selection of delivery vehicle brands, including electric models. Originality/Value: The application of system dynamics in designing business strategies captures multi-level interactions and long-term effects of actions, distinguishing this method from traditional analytical tools.

Suggested Citation

  • Malgorzata Latuszynska & Anna Borawska, 2024. "Business Strategy Modeling: System Dynamics Approach," European Research Studies Journal, European Research Studies Journal, vol. 0(Special B), pages 657-668.
    • Handle: RePEc:ers:journl:v:xxvii:y:2024:i:specialb:p:657-668
    as

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    File URL: https://ersj.eu/journal/3669/download
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    References listed on IDEAS

    as
    1. John N. N. Ugoani, 2017. "Strategic Management and Business Success in Nigeria," Business, Management and Economics Research, Academic Research Publishing Group, vol. 3(3), pages 26-33, 03-2017.
    2. Federico Cosenz & Guido Noto, 2016. "Applying System Dynamics Modelling to Strategic Management: A Literature Review," Systems Research and Behavioral Science, Wiley Blackwell, vol. 33(6), pages 703-741, November.
    3. H. Igor Ansoff, 2007. "Strategic Management," Palgrave Macmillan Books, Palgrave Macmillan, edition 0, number 978-0-230-59060-1, May.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    System dynamics; simulation modeling; strategic management; decision-making.;
    All these keywords.

    JEL classification:

    • C63 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Computational Techniques
    • L21 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Business Objectives of the Firm
    • M21 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Economics - - - Business Economics

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