Business Strategy Modeling: System Dynamics Approach

Malgorzata Latuszynska and Anna Borawska

European Research Studies Journal, 2024, vol. XXVII, issue Special B, 657-668

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.

Keywords: System dynamics; simulation modeling; strategic management; decision-making. (search for similar items in EconPapers)
JEL-codes: C63 L21 M21 (search for similar items in EconPapers)
Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:ers:journl:v:xxvii:y:2024:i:specialb:p:657-668

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