The Benefits Of Business Simulations

“Education is not the learning of facts, but the training of the mind to think”

– Albert Einstein

Instructors have felt the pull away from traditional teaching methods such as pure theory and case studies thanks to technological advancements in ICT and education. The student of today has been raised in an environment of connectivity with access to PCs, laptops, smartphones, and phablets. It is a part of their social context (Canaleta, Vernet, Vicet & Montero, 2009). Technology has permeated into everything we do, shaping our minds and affecting the way we teach (Carr, 2010). Today’s student may be inseparable from technology in itself (Canaleta et al., 2009; Woollaston, 2013); it is then fair to say their learning environment naturally requires ICT for any form of meaningful engagement. Not only in education but in daily life, the consumer and the student seek to gain a more active role within their environment (Prahalad & Ramaswamy, 2004). Teaching methods therefore are moving away from the student as a passive learner, limited to taking notes and listening. Emerging from this is a new focus on learning surrounding the students actively constructing their own knowledge (Canaleta, Vernet, Vicent & Montero, 2009) and the instructor fulfilling the role of facilitator.As facilitators, the instructors’ role changes from simply distributing facts and theories to allowing the construction of a student experience. This is consistent with increasingly popular experiential learning theories purported by scholars such as Kolb (1984). With this in mind, it is easy for us then to state that online applications like business simulations rightfully occupy a pivotal place in learning environments.

Benefits of Business Simulations

Business simulations allow students and instructors to interact meaningfully. Further, by making various decisions for their simulated firm, students are tasked with transferring learned knowledge from class into a relevant and new scenario which is a requirement for engaging and memorable learning (Dirkx, 2001).

Stumpf and Dutton (1990) recognised that simulations resonate on both cognitive and emotional levels. Students gain the ability to apply learnt theory in action, validating that what they studied is relevant and applicable in the real world. At the same time, they develop communication and analytic skills which will be relevant to their future careers. On the other side of the spectrum, facilitators often feel that they made a positive difference to students’ learning, which is both relevant and required in today’s business world.

Anderson’s (2009) framework outlines three major outcomes from business simulation and cognitive learning:

Learning – Students gain first-hand experience of how business management decisions are interrelated. (e.g. how marketing decisions can affect manufacturing or finance decisions). Executing these concepts themselves, students learn skills such as:

  • Performing under pressure;
  • Analyzing environments to develop and implement a business plan;
  • Collaborating with teammates and managing conflict; and
  • Reflecting upon their performance and identifying areas of improvement to fare better.

The desired learning outcomes of a course are a major factor in the decision of whether or not to incorporate it as part of the course. Over several decades, scholars such as Bloom (1959) and; Gentry and Burns (1981) have provided descriptions of learning and the assessment process:

Cognitive Domain: Bloom’s Taxonomy of Learning Objectives

Learning Objective Description of Learning Assessment Process
Basic Knowledge Student recalls or recognises information Answering direct questions/tests
Comprehension Student changes information into a different symbolic form Ability to act on or process information by restating his or her own terms
Application Student discovers relationships, generalizations, and skills Application of knowledge to simulated problems
Analysis Student solves problems in light of conscious knowledge of relationships between components and the principle that organizes the system Identification of critical assumptions, alternatives and constraints in a problem situation
Synthesis Student goes beyond what is known, providing new insights Solution of a problem that requires original, creative thinking
Evaluation Student develops the ability to create standards of judgement, weigh and analyze Logical consistency and attention to detail

Source: Bloom, Englehart, Furst, Hill & Krathwohl, as cited in Anderson & Lawton, 2009.

It is our cognitive comprehension that allows us to adapt to what we have learnt in one situation to other situations”

– Anderson (2009, p. 199)

Attitudinal – Students engaging in the simulated learning experience gaining an appreciation for business and its nuances. The experience leads to applying learnt concepts to make effective decisions, leading to higher academic/executive performance. How does the engagement start? In his 2015 article, Gove identified that the reason simulations are able to hold learner attention is because they are immersive! Students have to navigate a complex environment and make decisions for interrelated functional areas. This complexity creates a need for students to actively engage with their simulated exercise on multiple levels such as product level, firm level and market level.

Behavioural – Tying in with student attitudes are their behaviours. As immersive as the backdrop of simulations are, they are competitive and instil in students, motivation to succeed and outperform their peers. Add to the fact that they are in a safe, risk-free environment, and you have the makings of a structure where students are willing to spend their time and energy to make well-informed and competitive decisions.

To summarize, as technology became prevalent, so did our ability to co-opt it as a method of teaching and learning. Online applications like business simulations have benefits like allowing teachers to become advisors and moderators in their own classrooms.  Meanwhile, student minds are trained how to think, adapt attitudes and behave competitively to succeed in business decision making.

Contact us if you would like more information on simulations or access to a free demo account.

– Danny Master

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