1877-0428 © 2010 Published by Elsevier Ltd.doi:10.1016/j.sbspro.2010.03.881

Procedia Social and Behavioral Sciences 2 (2010) 5403–5407

Available online at www.sciencedirect.com

WCES-2010

Educational aspects of business simulation softwares

Maziar Mahboubiana * aSheikhbahaee University, Behesht Blvd., Baharestan, Isfahan, Postcode: 8144100000, Iran

Received November 11, 2009; revised December 1, 2009; accepted January 22, 2010

Abstract

Simulation refers to any procedure that is meant to imitate a real-life system. It is especially useful in examining situations that are too complex, difficult, or costly to explore in reality. Business simulation refers to exercises that represent processes involved in productions and services. These exercises may be used to study the processes themselves, to enhance their teaching, or to assess proficiency in their management. This article, first defines the concept of simulation and its various dimensions, particularly computerized simulation. Business Simulation from the view of history, targets, importance and means of application are studied and practical issues are also evaluated in two software. © 2010 Elsevier Ltd. All rights reserved. Keywords: Business games; business simulation; e-learning; simulation; simulation softwares.

1. Introduction

Years have passed from creation and introduction of simulators for business simulation on international scale. After awareness of the advantages on application in various fields such as teaching in academic institutions, organizations and evaluation of competition, these tools did draw good attention very quickly.

This article, studies various dimensions of business simulation with educational approach. At the end, two different types of business simulation softwares are introduced with their features.

2. Simulation

Simulations are used to teach a specific process (the practice) within a specific environment (the context). This is the goal of simulation (Hall, 2003). Simulation replicates aspects of real environments through models. They can be used for extrapolating theory, validating hypotheses, or revealing emergent behavior (Washington, 2007).

Simulation as a social science research tool is defined by Dawson (1962) as the construction and manipulation of an "operating" model, that is, a physical or symbolic representation of all or some aspects of a social or psychological process. For the social scientist, simulation leads to building a model of an individual or group process and experimenting with the replication of this process by manipulating the variables and their inter-

* Maziar Mahboubian. Tel.: +98-912-186-4006; fax: +98-912-186-4006 E-mail address: Mahboubian@Gmail.com

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relationships within the model. By developing a model, the components and relationships which are hypothesized as crucial are abstracted from reality.

Simulation tools permit the experimenter to study processes in ways nature prohibits, because the simulation can be run many times with the values of the parameters modified between runs and the changes in outputs observed. The possibility to experiment with variables which can be manipulated is particularly useful in management research because moral and physical factors often prohibit experimenting with real people, systems and organizations (Berends & Romme, 1999).

Although simulations aren't the answer for every situation or type of content, the use of simulations in blended learning often yields impressive results (Hall, 2003). A combination of an experiential approach and lectures enables students to examine the process of business decision making in a practical manner and enhances their ability to apply concepts and tools presented in class (e.g., Alderfer, 2003; Benek-Rivera & Mathews, 2004; Hedges & Pedigo, 2002; Kern, 2000; Ledman, 2001; Licari & Ovedovitz, 2002; K. S. McDonald & Mansour-Cole, 2000; McKone & Bozewicz, 2003; Muir, 2001; Trefry, 2002).

3. Simulation Advantages

As for simulation, many advantages have been explained which appears in various fields. Some of the major advantages are referred to in the following.

The closer the simulation resembles a learner's actual environment, the greater the retention. Simulations provide a safe environment in which to make mistakes. Simulations allow learning to take place without pulling expensive equipment offline. Creating the simulation can help to streamline the processes that are being taught. Well-designed simulations often reduce the learning time significantly.

4. Computer-Based Simulations

A computer-based simulation replicates an environment through a computer program designed to consider multiple variables, interactions, and system constraints. Computer-based simulation methods can advance organization studies research in many ways. They can be used for extrapolating theory, validating hypotheses, or revealing emergent behavior (Washington, 2007). This is probably the most common type of simulation and about 60% of commercial e-learning courses available today deal with software application or IT topics (Hall, 2003).

5. Business Simulations

This kind of simulation is generally used to help people understand the dynamics behind the choices people make when running a business. Some of these can be very life-like and complex; others can be as simple as a tutorial that uses simple math to teach basic business skills (e.g., how to perform an inventory). The better ones use complex algorithms and include virtual characters with life-like back-and-forth conversation that challenge learners to understand how decisions can affect a large organization's success or failure.

Although the history of business games has been traced to the use of board games and war games in China nearly 5,000 years ago (Wolfe & Crookall, 1998), the modern business simulation game dates to 1955. In 1956, the first widely known business game, Top Management Decision Simulation, was developed by the American Management Association (AMA) (Meier, Newell, & Pazer, 1969) for use in management seminars administered by the AMA. This was followed in 1957 by two pioneering events: Greene and Andlinger’s Business Management Game developed for the consulting firm of McKinsey & Company (Andlinger, 1958), and the Top Management Decision Game used by Schreiber in a business policy class at the University of Washington (Watson, 1981). From this point, the number of business simulation games grew rapidly. By 1961, it was estimated that more than 100 business games were in existence and that more than 30,000 business executives had played at least one business game (Kibbee, Craft, & Nanus, 1961). The Business Games Handbook (Graham & Gray, 1969), published in 1969, listed nearly 190 business games, whereas The Guide to Simulation/Games for Education and Training (Horn & Cleaves, 1980), published in 1980, described 228 business simulation games.

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Another usage of business simulation is evaluation of personnel in the organizations. If correct designing is made, it helps employment evaluation tests for selection of better and more qualified personnel. It helps in preventing loss due to low experienced employees and also causes reduction of expenses and increase of organization efficiency (Hunter et al., 1982).

Business Simulation can also be used in training and educating the specialists. In a wide research in year 2004 from a number of professors who use simulation softwares in their teachings, they were asked what targets they were aiming at by using such simulations. Table 1 indicates the details of this research (Faria & Wellington, 2004).

Table 1. What are your teaching objectives with regard to the business game(s) that you use?

Objective n %

To give students decision-making experience 162 48.8 To integrate theory with practice 120 36.1 To introduce students to planning 88 26.5 To have students experience teamwork 65 19.6 To have students engage in critical thinking 49 14.8 To measure comprehension and understanding 48 14.5 To have students experience business competition 31 9.3 To interest and motivate students 20 6.0 To have students experience uncertainty/pressure 14 4.2 To have students develop writing/communication skills 8 2.4 No objectives 7 2.1

6. Online Business Simulation Software: Informatist

Business Simulations is made further to the result of development of "Case Method". This method was figured out in 1912 in the business faculty of Harvard University. Informatist Business Simulation simulates the process of Harvard's Case Method with a difference which has put together thousands of participants, in an online joint learning of business skills and its techniques like a fun.

Informatist can be accessed from the URL address Http://www.Informatist.net. Informatist provides a free online business simulation system. In this virtual business world, each person is considered as a businessman and the set goal is to obtain the maximum possible INFO and to become the greatest Informatist.

The ranking of the participants depends on the number of their INFO's savings. In this regard, it is required for a user to start a business, arrange needed real-estate for his business, employ staff, allocate work and sale forces, pricing the products and even purchase and sell shares in the stock market. In Informatist, all of the competitors are actual participants. The rule is the supply and demand in this game. The rate of Energy is very important when one wants to learn new skills and or to employ new staffs. A user should do anything for more income and apply such income for increase of Image of the Districts which could then be followed with obtaining more INFO. The more is the rate of obtaining INFO, the higher rank the users can get among the participants.

Companies performing in various fields of business should always take note of active competitors in similar fields of business. It is required to allocate proper salary to staffs in order to keep them while for having a profitable company, suitable competitive pricing must also be done. The participants can put their capital together and

establish a joint stock company. One of the duties of the participant is to look for best territories for establishing business. This task is done with

Figure 1. Part of the joint stock companies list, available in the stock market and ready to trade their shares; Informatist.

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the support of statistics and reports which are provided for each territory. Employment and firing of the staffs when it is required, deciding the feasible and competitive price for sales of products and evaluation of tables and graphs from the statistics menu for precise and intelligent actions in future is other duties of each participant.

7. Business Simulation Software/Game: Capitalism II

Trevor Chan's Capitalism II was created by Enlight, and published by Ubisoft Entertainment in 2001. In Capitalism, the player creates and controls a business empire. This in-depth strategy game covers almost every aspect of business that could be encountered in the real world; including marketing, manufacturing, purchasing, importing, and retailing. Capitalism provides the chance of competition of user teams with each other and or competition of the user with the already allocated artificial intelligent of computer. There is also the ability for the user to deal with various possible scenarios of the market and evaluate his performance. Approximately most of the conditions which exist on a real business and market are simulated, such as mines and fields, various firms from super markets up to car show rooms and toys shops.

Advertisement, warehouse, purchase and sales, Research & Development units under the supervision and control of the user, do their obligations in the organization. With regard to the available raw material in the market, factories have the capacity of production and sales of various products. The possibility of quality control of the products, improvement of the product's brand, Layout formation for the units and many other challenges which exist in an actual firm are provided to the user for management and control.

Stock market is one of the other interesting sections, which by showing information, graphs and news relating to this market, assists the user in better analysis for stock trading. Figure 2 shows an image from this software.

8. Conclusions

The poor quality of teaching and training of business managers, especially in the third world and developing countries, is one of the main reasons for low or in-efficient businesses. Since old time, education has been considered as one of the most essential foundations for promotion and expansion of the economy in any country. Moreover, Investment in the area of organizational training shall disclose positive results in improvement of a

country with effective up-grade of operational level of the managers and employees in business and trade sectors. From the other side, with regard to the current difficulties in educational sector of many countries due to for

Figure 2. Overall outlook of the inside of a Discount Megastore; Capitalism II.

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example shortage of facilities and allocated budgets, the universities professors are bound to teach mostly on theoretical base to the students. This has caused the students not to practically be familiar or understand the concepts, which is followed with down grading of the quality of education and no job success of the students. One of the advantages of business simulation is the opportunity for experiencing the business environment, even if it is on simulation base for the user before entry to the actual business market.

Usage of the business simulation systems such as the given sample (Informatist), which by its potentiality engage a big number of users in its virtual market, can raise the idea of making similar local systems. Also another introduced sample (Capitalism), if localized, and with regard to the artificial intelligent in its structure, can be used as an individual complete exercise for the students and those who are active in business fields.

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