JURNAL TEKNOLOGI, Edisi Khusus No. 4: Teknik Industri, Tahun XVIII, Desember 2004, 1- 10 ISSN 0215-1685
Design of Geneshoes Business Simulation Game With System
Dynamics Approach
Akhmad Hidayatno1 and Yosep Halim2
Industrial Engineering Department, Faculty of Engineering, University of Indonesia
Kampus Baru UI Depok 16424, Indonesia
E-mail: 1akhmad@eng.ui.ac.id, 2yosep_h2000@yahoo.com
Abstrak
Kecepatan perubahan dalam kompetisi di industri, memaksa suatu perusahaan untuk memperhatikan
kapabilitas sumber daya yang merupakan kunci utama dalam membedakan dirinya dengan
kompetitornya. Sumber daya manusia yang memiliki kapabilitas untuk cepat belajar dan beradaptasi
terhadap dinamisme dunia bisnis dan industri. Permainan simulasi yang merupakan bagian dari metode
pembelajaran ekperensial dapat digunakan untuk mempercepat proses pembelajaran manusia.
Permainan simulasi bisnis dapat memberikan lingkungan yang interaktif, motivasi dan bebas resiko
dalam mempelajari dinamika sistem di industri, selain juga dapat untuk melakukan uji coba keputusan
berdasarkan teori yang telah didapatkan di perkuliahan. Dalam penelitian ini, kami merancang sebuah
studi kasus dan diagram kausal-loop sebuah permainan baru berdasarkan dari permainan-permainan
simulasi yang telah beredar di pasar dengan menggunakan pendekatan sistem dinamis
Permainan simulasi yang digunakan sebagai landasan penelitian ini adalah management and
Economic Simulation Exercise (MESE) miliki Hewlett Packard (HP) Corp. dan Construction Contracts
in A Competitive Market (C3M) oleh khaled Nassar dari Bradley University. Diagram kausal dari kedua
permainan ini dikombinasikan sedemikian rupa untuk menyusun sebuah permainan simulasi baru yang
berbasis pada industri sepatu, yang diberi nama GeneShoes Simulation Game (GSG)
Kata Kunci : Bisnis, Manajemen, Pembelajaran dengan mengalami, Permainan simulain dan Sistem
dinamis.
Abstract
In this competitive industries that change rapidly nowadays, a company that wants to survive and
succeed must concern on its human resources capabilities as one of its most important assets. The human
resources must be able to learn quickly to adapt with dynamism in business world and industries.
Simulation games as part of experiential learning methods could be used to accelerate learning process
of human resources.
Business simulation game can give an interactive, motivating, risk-free environment to learn the
dynamics of system in business world and industries as well as to test decisions based on theory which
has been studied. In this research, we design a case and causal loop diagram of a new business
simulation game from existing simulation games. Design of business simulation game in this research
was conducted with System Dynamics approach that can support comprehensive and integrated thinking
process.
Two simulation games that been used as basis in this research are Management and Economic
Simulation Exercise (MESE) by Hewlett Packard (HP) Corp. and Construction Contracts in A
Competitive Market (C3M) by Khaled Nassar from Bradley University. The design is initiated by making
causal loop diagram of both simulation games. After that, a case and causal loop diagram of a new
business simulation game, called GeneShoes Simulation Game (GSG) is designed.
Keywords: Business, Management, Experiential learning, Simulation games and System dynamics.
1
A. Hidayatno and Y. Halim
1. Introduction
Nowadays, company that wants to
survive and succeed in competitive
industries that change rapidly must concern
on its human resources capabilities as one
of its most important assets. The human
resources must be able to learn quickly to
adapt with changes in business world and
industries. Many teaching and learning
methods have been developed to accelerate
human learning process. One of the most
effective methods for business and
management education is experiential
learning. The use of experiential learning
methods in education and training has many
benefits beyond traditional forms of
instruction [1]. Experiential learning is a
participatory method of learning that
involves a variety of a person’s mental
capabilities [2]. Through this method,
learners will be involved actively in the
learning process.
Type of experiential learning that has
been used widely is simulation game.
Simulation game is a combination of two
types of experiential learning methods:
simulations that can imitate a behaviour or
process, and games which is a competition
activity. Integrating standard formal
teaching methods with simulation games as
a laboratory to test and reinforce relevance
of theories can be a very effective teaching
methods [3]. Teaching using a business
simulation game can give an interactive,
motivating, risk-free environment to learn
the dynamics of system in business world
and industries as well as to test decisions
based on theory which has been studied.
Design of business simulation game in
this research was conducted with System
Dynamics approach, which can support
comprehensive and integrated thinking
process and it can simplify complexity
without losing essence of object that been
observed [4]. This approach also
appropriate to analyse mechanism, pattern,
and tendency of system based on analyses
of structure and behaviour of system that
complex, changing rapidly, and contain
uncertainty.
Nowadays, there are so many
simulation games that have been developed,
such as Markstrat by StratX, Management
and Economic Simulation Exercise (MESE)
by Hewlett Packard Corp., Loreal Estrat
Challenge
by
Loreal,
Construction
Contracts in A Competitive Market (C3M)
by Khaled Nassar from Bradley University,
StratSim by Interpretive Software, Inc., etc.
This research aimed to get a case and
causal loop diagram of a new business
simulation game by analysing from the
existing simulation games.
2. Research Methodology
Originally, the word simulate meant to
imitate or feign. Simulation generally
involves some kind of model or simplified
representation [5]. For an activity to be a
simulation, in their terms, it must [6]:
•
•
represent an actual situation drawn
directly from real life, or an imaginary
situation that could be from real life;
and
be operational. It must be an ongoing
process with no predetermined end
point.
Game consists of interactions among
players place in a prescribed setting and
constrained by a set of rules and procedures
[7]. For an activity to be a game, in their
terms, it must [8]:
•
•
involve overt competition of some sort,
either directly between individuals or
teams; and
have rules. The players must operate
under a set of arbitrary constraints
specific to the particular game.
Simulation games combining some
representative aspects with a highly
competitive and time and rule driven
process [9].
In system dynamics, there are several
diagramming tools that have often been
used to capture the system structure. One of
them is causal loop diagram. A causal loop
diagram consists of variables connected by
arrows denoting the causal influences
among the variables [10]. The important
2 JURNAL TEKNOLOGI, Edisi Khusus No. 4: Teknik Industri, Tahun XVIII, Desember 2004, 1- 10
Design of Geneshoes Business Simulation Game With System Dynamics Approach
feedback loops are also identified in the
diagram. Causal loop diagram symbols are
shown in table 1 [11].
Table 1.
Causal Loop Diagram Symbols
Symbol
Meaning
The arrow is used to show causation.
The item at the tail of the arrow causes
a change in the item at the head of the
arrow
The + sign near the arrowhead indicates
3.
that the item at the tail of the arrow and
the item at the head of the arrow change
in the same direction. If the tail
4.
increases , the head increases ; If the tail
decreases , the head decreases .
5.
Table 1.
Causal Loop Diagram Symbols (continued)
Symbol
Meaning
The - sign near the arrowhead indicates
that the item at the tail of the arrow and
the item at the head of the arrow change
in the opposite direction. If the tail
increases , the head decreases ; If the tail
decreases , the head increases .
This symbol, found in the middle of a
closed loop, indicates that the loop
continues going in the same direction,
OR
6.
involves committing to paper the
important influences believed to be
operating within a system. Systems
may be represented on paper in several
fashions, the three most commonly
used are: causal loop diagram, plots of
variables against time, and computer
flow diagram.
Model representation. In the third phase
of the model-building process, models
are represented in the form of computer
code that can be “fed into” the
computer.
Model behaviour. In the fourth phase,
computer simulation is used to
determine how all of the variables
within the system behave over time.
Model evaluation. In the fifth phase,
numerous tests must be performed on
the model to evaluate its quality and
validity. These tests range from
checking for logical consistency, to
matching model output against
observed data collected over time, to
more formal statistical tests of the
parameters used within the simulation.
Policy analysis and model use. In the
sixth phase, the model is used to test
alternative policies that might be
implemented in the system under study.
often causing either systematic growth
or decline , behaviour that unstably
moves away form an equilibrium point.
OR
This is called a positive feedback loop
This symbol, found in the middle of a
closed loop, indicates that the loop
changes direction, causing the system to
fluctuate or to move toward
equilibrium . This is called a negative
feedback loop .
There are six phases in process of
building a computer simulation model with
system dynamics approach as shown in
figure 1 [12] :
1. Problem definition. The first phase in
the model-building process involves
recognizing and defining a problem to
study that is amenable to analysis in
systems terms.
2. System conceptualization. The second
phase in the model-building process
Figure 1.
Phases in the model-building process
In this research, we used MESE
simulation game by Hewlett Packard (HP)
Corp. and C3M simulation game by Khaled
Nassar from Bradley University as basis to
design a new simulation game with system
dynamics approach.
JURNAL TEKNOLOGI, Edisi Khusus No. 4: Teknik Industri, Tahun XVIII, Desember 2004, 1- 10
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A. Hidayatno and Y. Halim
MESE or The Hewlett Packard Global
Business Challenge (HPGBC) is a webbased business simulation competition that
is aimed at senior high school students and
undergraduate students. In this simulation
game, we have a role as a manager and also
a company owner that produces Echopens.
In the simulation, we and our competitors
will make five decisions that will affect the
operations of our company. The decisions
are [13]:
1. Set a price for the Echopens.
2. Decide how many Echopens should be
produced.
3. Spend money on marketing efforts.
4. Invest in capital equipment for our
factory.
5. Decide how much money to put into
research and development.
Each team’s performance is measured
by a measurement index, namely MESE
Performance Index (MPI). The company
(team) with the highest MPI at the end of
simulation period is declared the winner
We consider MESE simulation game as a
basis in the designing because it has a
comprehensive concept and touch many
aspects in business and industry which are
needed to illustrate system and dynamism
in business world and industries. C3M is a
four-team simulation game which helps in
presenting concepts of market share and
competitive bidding in construction
industry. Four teams representing four local
contractors play C3M. The contractors are
competing for construction contracts of the
local apartment of Transportation (DOT)
over a period of 12 quarters [14].
Each quarter, the local DOT puts out a
call for bids for a number of pay items.
Each of the contractors has to make a
decision on the value of the mark up it
provides for each of these pay items in
order to win more work and also to secure
its market share [15]. The game only
considers one pay item, namely cu.yd
(cubic yard) of excavation. The player with
the most profit is declared the winner [16].
We consider C3M simulation game as a
basis in the designing because it has a
simple concept to develop a more complex
business simulation game concept. C3M
also has a clear and understandable
calculation concept that can be modified to
meet our purpose in this research.
This research consists of three main
steps:
1. Making causal loop diagram of MESE
simulation game.
2. Making causal loop diagram of C3M
simulation game.
3. Making a case and causal loop diagram
of a new business simulation game.
Step 1: Making Causal Loop Diagram of
MESE Simulation Game
In making causal loop diagram of
MESE, we start by defining the purposes of
making the causal loop and then we study
the collected data about MESE. Afterwards,
we identify key variables in the simulation
game. There are two types of key variables
in the game. The first type is input variables
which are decisions that we have to make in
each period. The second type is output
variables that we get from the company and
industry report.
After identifying the key variables, we
make hypotheses about the behaviour and
causation of the key variables and then we
develop initial causal loop diagram using
the input variables. Based on the initial
causal loop diagram, we develop a more
complex causal loop diagram using output
variables from company and industry report
until all of the key variables have been
included in the diagram. During the
development of the causal loop diagram, we
also consider if we should add additional
variables in order to clarify a causal
relationship.
Step 2: Making Causal Loop Diagram of
C3M Simulation Game
In making causal loop diagram of C3M,
we start by defining the purposes of making
the causal loop and then we study the
collected data about C3M. Then, we identify
key variables in the simulation game. There
are two types of key variables in the game.
4 JURNAL TEKNOLOGI, Edisi Khusus No. 4: Teknik Industri, Tahun XVIII, Desember 2004, 1- 10
Design of Geneshoes Business Simulation Game With System Dynamics Approach
The first type is input variables which are
decisions that we have to make in each
period. The second type is output variables
that we get from calculation concepts of the
game.
After identifying the key variables, we
make hypotheses about the behaviour and
causation of the key variables using the
calculation concepts of the game and then
we develop the causal loop diagram using
the key variables. Building the causal loop
diagram of C3M simulation game is easier
than MESE simulation game because it has
fewer key variables and more simple
calculation concepts.
Step 3: Making a Case and Causal Loop
Diagram of A New Business Simulation
Game
In making a case and causal loop
diagram of a new business simulation
game, we start by defining the purposes of
the business simulation game and then we
develop a new case of simulation game by
describing its characteristics. Then we
develop initial causal loop diagram of the
new simulation game using modified key
variables and causal loop diagram of C3M
as a basis. From the initial causal loop
diagram, we develop a more complex
causal loop diagram by referring to key
variables and causal loop diagram of
MESE. We develop the causal loop
diagram until all of the key variables that
have to be considered have been included in
the diagram.
3. Results and Investigations
Using research methodology that has
been explained above, we start by making
causal loop diagram of MESE. The
purposes of making causal loop diagram of
MESE are:
1. To get understanding of relationship of
the key variables in the simulation
game.
2. To get understanding about how the key
variables interact each other in the
system
and
affect
company
performance.
From the study of the collected data, we
have identified key variables in the MESE
simulation game. The input variables are
shown in table 2. The output variables of
the simulation game that have been
identified from company and industry
report are shown in table 3 and table 4.
Table 2.
Input Variables of MESE Simulation Game
Input Variables
Price
Unit
$/Unit
Production
Unit
Marketing
$
Investment
$
R&D
$
After identifying the key variables, we
develop the initial causal loop diagram start
from the input variables. Figure 2 shows the
initial causal loop diagram of MESE
simulation game.
From the initial causal loop diagram, we
develop a more complex causal loop
diagram using output variables from
company and industry report. We develop
the causal loop diagram until all of the key
variables have been included in the
diagram. Figure 3 shows the final causal
loop diagram of MESE simulation game.
We develop causal loop diagram of MESE
Performance Index (MPI) separately as
shown in figure 4 in order to simplify the
diagram.
There are two feedback loops in the
causal loop diagram, increase of inventory
loop and inventory balancing loop. Ending
inventory of a company depends on the
domination of one of the feedback loops. If
the increase of inventory loop dominates,
then the company will have a lot of
inventories. If the balancing inventory loop
dominates, the company will have a small
number of inventories.
After causal loop diagram of MESE
simulation game have been developed, we
move to step 2 by making causal loop
diagram of C3M simulation game. The
purposes of making causal loop diagram of
C3M are:
JURNAL TEKNOLOGI, Edisi Khusus No. 4: Teknik Industri, Tahun XVIII, Desember 2004, 1- 10
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A. Hidayatno and Y. Halim
Cash
Flow
Balance Sheet
Unit
$
$
$
$
$
$
$
$
$
$
Unit
%
%
$/Unit
Unit
Person
Unit
Unit
Unit
$
Unit
Dollar
Unit
$/Unit
$/Unit
Total Employees (All Company)
Person
Total Capital Investment
Industry Capacity Utilization
Prime Rate
Loan Limit
Tax Rate
Tax Paid in Period (All
Company)
Tax Paid to Date (All Company)
$
%
%
$
%
Market Share
%
MESE Performance Index (MPI)
-
$
$
Unit and $
$
$
$
$
$
$
$
$
$
$
Figure 2.
Causal Loop Diagram of MESE Simulation
Game: Initial Development
Unit
1. To get understanding of relationship of
the key variables in the simulation
game.
2. To get understanding about how the key
variables interact each other in the
system and affect amount of work
(sales) that is secured by the contractor.
Unit
Unit
Unit
Unit
Unit
$
$/Unit
$
From the study of the collected data, we
have identified key variables in the C3M
simulation game. The input variable of the
C3M is bid price because the only decision
required from the players is the bid price
for a cu.yd of excavation. All of the key
variables of C3M that have been identified
are shown in table 5.
Table 4.
Output Variables of MESE Simulation Game
from Industry Report
Output Variables from Industry
Report
Total Orders
Total Unit Produced
Total Sold
Total Capacity
Total Inventory
Industry Sales
Average Price
Total Production
Output Variables from Industry
Report
Average Production Cost
Average Total Cost
Interest and Loan Productivity Dollar
Operation Reports
Income Statement
Output Variables from Company
Report
Sales
Cost Of Good Sold (COGS)
Gross Margin
Depreciation
Layoff Charge
Inventory Charge
Interest
Profit Before Tax
Tax
Net Profit
Factory Capacity
Capacity Utilization
Capacity Utilization Efficiency
Production Cost / Unit
Beginning Inventory
Employees
Orders Received
Unit Sold
Unfilled Orders
Net Investment
Factory Size Next Period
(Capital Investment)
Ending Cash
Ending Inventory
Total Assets
Loan
Retained Earnings
Capital
Liabilities and Equity
Beginning Cash
Inventory Change
Net Loan
Table 4.
Output Variables of MESE Simulation Game
from Industry Report (continued)
Compe
tition
Table 3.
Output Variables of MESE Simulation Game
from Company Report
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Design of Geneshoes Business Simulation Game With System Dynamics Approach
Figure 3.
Causal Loop Diagram of MESE Simulation Game: Final Development
Table 5.
Key Variables of C3M Simulation Game
Key Variables of C3M
Simulation Game
Relative Cost of Pay Item
Figure 4.
Causal Loop Diagram of MESE Simulation
Game: MPI
Bid Price
Average Bid Price
Price Factor
Market Share Factor
Amount of Work Secured by
The Contractor (Sales)
Total Work Secured by All
Contractors (Total Sales)
Profit
Total Profit
Unit
cu.yd
excavation
$
$
cu.yd
excavation
cu.yd
excavation
$
$
JURNAL TEKNOLOGI, Edisi Khusus No. 4: Teknik Industri, Tahun XVIII, Desember 2004, 1- 10
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A. Hidayatno and Y. Halim
Figure 5.
Causal Loop Diagram of C3M Simulation Game
After identifying the key variables, we
develop the causal loop diagram of C3M
simulation game using the key variables.
Figure 5 shows the causal loop diagram of
C3M simulation game that has been
developed.
There are two feedback loops in the
causal loop diagram, effect of sales in the
preceding period loop and market saturation
loop. Value of market share factor of the
contractor depends on domination of one of
the feedback loops. If effect of sales in the
preceding period loop dominates.
The contractor will acquire higher
market share factor. If the market saturation
loop dominates, the contractor will acquire
lower market share factor.
In the last step, we develop a case and
causal loop diagram of a new business
simulation game. The purposes of the new
simulation game are:
1. To give understanding to the participants
about system and dynamism in the
competitive business world and
industry.
2. To give understanding about how
decisions of each team as an owner of a
company will affect performance of the
company.
After defining the purposes of the new
simulation game, we develop a new case of
simulation game, namely GeneShoes
Simulation Game (GSG). In GSG, we act
as a manager and also a company owner
that produces GeneShoes. GeneShoes is a
revolutionary product that combines the
latest technology in sport shoes. As the new
owner and manager, have to make a variety
of important decisions that will determine
the company’s performance. The decisions
are:
1. Set a price for the GeneShoes.
2. Decide how many GeneShoes should be
produced.
3. Spend money on marketing efforts.
4. Decide how much money to put into
research and development.
GSG is a four-teams game that will be
played over 12 periods. All teams begin on
an equal basis. Each period, each team will
receive report that shows how our company
and our competitors performed. The winner
of GSG is determined by accumulated
profit (retained earnings) from beginning
until end of simulation period. The team
with most retained earnings at the end of
simulation period is declared the winner.
Figure 6.
Causal Loop Diagram of GSG: Initial
Development
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Design of Geneshoes Business Simulation Game With System Dynamics Approach
Figure 7.
Causal Loop Diagram of GSG: Final Development
After developing a new case of
simulation game, namely GSG, we develop
initial causal loop diagram of GSG using
modified key variables and causal loop
diagram of C3M as a basis. Figure 6 shows
initial causal loop diagram of GSG.
From the initial causal loop diagram of
GSG, we develop a more complex causal
loop diagram by referring to key variables
and causal loop diagram of MESE. Figure 7
shows the final causal loop diagram of
GSG.
4. Conclusion
1. The steps of designing of business
simulation game can be supported by
system dynamics approach. With the
system dynamics approach, the
relationship between decisions (input
variables) and outcomes (output
variables) can be mapped out. This map
should be given at the end of the game
to enhance the understanding of the
players on what chain-of-effects
occurred when they make their
decision.
2. GeneShoes Simulation Game (GSG) is
a business simulation game that
illustrates system and dynamism in the
competitive business world and
industry. In this simulation game, we
act as a manager and company owner
that will compete with other three
companies. Decisions that have to be
made in this simulation game are
pricing,
amount
of
production,
marketing
expenses,
and
R&D
JURNAL TEKNOLOGI, Edisi Khusus No. 4: Teknik Industri, Tahun XVIII, Desember 2004, 1- 10
9
A. Hidayatno and Y. Halim
expenses. The team (company) with
most retained earnings at the end of
simulation period is declared the
winner.
References
1. Feinstein , A.H., Stuart Mann dan
David L. Corsun, 2002, “Charting the
Experiential Territory – Clarifying
Definitions and Uses of Computer
Simulation, Games, and Role Play”,
Journal of Management Development,
Vol. 21, No. 1, p. 742.
2. Ibid., p. 733.
3. Nassar, Khaled, 2003, “Construction
Contracts in A Competitive Market:
C3M, A Simulation Game”, Journal of
Engineering,
Construction,
and
Architectural Management, Vol. 10,
No. 3, p. 172.
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5. Roberts, Nancy, et al., 1983,
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6. Leigh, Elyssebeth dan Jeff Kinder,
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7. Feinstein , A.H., Stuart Mann dan
David L. Corsun, Op. Cit., p. 736.
8. Leigh, Elyssebeth dan Jeff Kinder,
Op.Cit., p. 24-25.
9. Ibid., p.26.
10. Sterman, John D., 2000, Business
Dynamics : System Thinking and
Modeling for A Complex World, The
McGraw Hill Companies, Inc., USA,
p. 138.
11. Roberts, Nancy, et al., Op.Cit., p. 56.
12. Ibid., p. 8-9.
13. Noer, Muhammad, 2002, “Manual
Simulasi: Management and Economic
Simulation Exercise (MESE) dan The
Hewlett Packard Global Business
Challenge”, Prestasi Junior Indonesia,
www.simulasibisnis.com/downloads.p
hp
14. Nassar, Khaled, Op.Cit., p. 174
15. Ibid.
16. Ibid., p.176.
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