https://doi.org/10.1016/j.cya.2017.02.005
Paper Research
Executive flight simulator as a learning tool in new
companies’ resource planning based on the balanced scorecard
Simulador de
vuelo ejecutivo como medio de aprendizaje en la planeación de recursos de
nuevas empresas bajo el enfoque del marcador balanceado
Daniela Vidal Flores1
Rogerio Domenge Muñoz2
1Twentieth Century
Fox Home Entertainment, Ciudad de México, México
2Instituto
Tecnológico Autónomo de México, Ciudad de México, México
Corresponding author: Daniela Vidal Floresa, email: daniela.vidal@fox.com
Abstract
In
many cases, a deficient strategic planning in new companies has led entrepreneurs
to take inadequate initial decisions that, in the long term, reflect
consequences in the failure of many new businesses. The objective of this
article is to propose an executive flight simulator, which will help to
identify and evaluate the different development strategies for resources of a
new manufacturing company, under the four perspectives of the balanced
scorecard, educating the user on the impact that these would have in the main
performance indicators. The simulator is designed utilizing the focus of system
dynamics to be used didactically in master's degree programs in administration,
by entrepreneurs or in executive development programs.
Keywords: Executive flight simulator, Entrepreneurship,
Scenario analysis, Resource development, Balanced scorecard, System dynamics.
JEL classification: C63, G31, L26, M13.
Resumen
Una deficiente planeación estratégica en
las empresas de nueva creación ha generado muchas veces que las decisiones
iniciales de los emprendedores no hayan sido las adecuadas y que, a la larga,
las consecuencias se vean reflejadas en el fracaso de muchos nuevos negocios.
El presente artículo tiene como objetivo proponer un simulador de vuelo
ejecutivo que permita identificar y evaluar distintas estrategias de desarrollo
de recursos de una nueva empresa manufacturera bajo las 4 perspectivas del
marcador balanceado, sensibilizando al usuario en el impacto que estas tendrían
en los principales indicadores de desempeño. El simulador está diseñado
utilizando el enfoque de dinámica de sistemas, para ser utilizado
didácticamente en programas de maestría en administración, emprendedores o de
desarrollo ejecutivo.
Palabras clave: Simulador de vuelo ejecutivo, Emprendedores,
Análisis de escenarios, Desarrollo de recursos, Marcador balanceado, Dinámica
de sistemas.
Códigos JEL: C63, G31, L26, M13.
Received: 25/02/2015
Accepted: 28/01/2016
Introduction
One of the main problems
faced by today's entrepreneurs is the design and implementation of successful
strategies ( Domenge & Belausteguigoitia, 2009 ) that allow them to create a
relatively sustainable competitive advantage, identifying the way to invest or
assign their scarce financial resources in the most appropriate manner. These
strategies, due to their holistic nature, should consider the main strategic
resources that the company could require in all its functional areas (human,
technological, operative, and marketing), as well as the manner and speed to
get them, developing and accumulating them in a complementary ( Sterman, 2007) and balanced manner (Warren, 2005).
Another
problem for entrepreneurs is the evaluation of the expected impacts derived from
their possible strategies, visualized in an understandable and synoptic manner,
reflecting the values of different performance indicators considered to
evaluate or compare said strategies with regard to the expected objectives,
such as the Net Present Value (NPV) of each one of them.
The
identification of the relations that exist between the strategic resources
available to the entrepreneur, their balanced development strategy, and the
performance indicators that provide their possible impacts, comprise the bases
of an Executive Flight Simulator (EFS) that could be of use for the
entrepreneur when evaluating and educating itself regarding the design and
determination of the most convenient strategy for their new enterprise.
In
recent years, the trend to make business plans a part of the initial planning
of a new business has increased, due to – among other reasons – the fact that
it is a requirement to request a line of credit or to invite funding or
strategic partners. This action results in a static document comprised by the
addition of data, which does not allow entrepreneurs to understand the
structure of the dynamic system within which the company will operate ( Bianchi, Winch, & Grey, 1998 ).
Business
planning in a learning context enables entrepreneurs to anticipate future
growth scenarios and, therefore, to understand the proper timing to begin
constructing relevant strategic resources that will allow the company to move
toward subsequent desired scenarios. When complemented with an EFS, the
traditional business plan may be considered a learning tool that allows
entrepreneurs – among other things – to detect the growth limits of the
business related to the lack of resources ( Bianchi
et al., 1998; Bianchi, 2002 ). The learning approach in the
development of the business plans enables for the reconsideration of the mental
models ( Senge, 1994 ) of the entrepreneur,
through the generation of new visions regarding the behavior of the business in
the future, as consequence of current ( Bianchi,
2002) and better informed decisions.
Learning
through experience is a feedback process that, many times, is time consuming
and expensive. With this method, decisions are made that affect real results,
information from the feedback is collected and then used to review what is
understood from the process and from the decisions being made to reach the
objectives ( Sterman, 2000 ). The EFS are a
practical way to analyze and make more informed decisions regarding the future
of the business. The high competitive levels and the demands of the market
force entrepreneurs to be more prepared and to have better knowledge to be able
to face the challenges of launching a business. Due to the fact that a new
company should be continually learning and growing, the EFS provide a medium
for the entrepreneur to be aware through immediate feedback on the impact of
his strategies, making it possible to analyze the individual and combined
effects that they could face as a result of the decisions taken on the
resources of the company. Similarly, the interactive systems, among which are
the simulators, help improve the planning and control processes, and play the
part of a practice field for entrepreneurs before they carry out an action in
the real world. Simulators enable entrepreneurs to improve the understanding of
the system as a whole, improve the communication between everyone involved, help
exploit the experience of the entrepreneur and their perception of the
business, identify the policies that affect long and short-term performance,
and improve continuous interaction ( Bianchi
et al., 1998; Bianchi, Bivona, & Landriscina, 2000 ).
This
article proposes an EFS that includes decisional variables regarding the
development of different resources under the four perspectives ( Kaplan & Norton, 1992 ) of the balanced
scorecard (BS). The purpose of the aforementioned EFS is, for the students of
an entrepreneurial strategic subject (whether they are students of a bachelor
or master's degree or executives or entrepreneurs), to be able to apply their
knowledge and experience in the design of an adequate growth strategy for a new
manufacturing company, considering the limitations that their own resources
could represent among themselves when they are not balanced in their
development, and considering the restrictions that could arise when developing
some of them more than others.
The
learning objectives of the EFS proposed in this document are:
For the student
to:
·
Identify the main performance indicators to use in the evaluation of the
impacts that they would have their strategic decisions of resources
development.
·
Identify their resources under the four perspectives of the BS.
·
Explain the relations between the resources and the performance
indicators.
·
Propose and evaluate growth strategies that will adequately develop
their resources, identifying their impact in the performance indicators
considered in the model.
Review of the literature
The process generally
followed by potential entrepreneurs is hard, complicated and, in a few cases,
disappointing. Entrepreneurs—individuals who believe they have the necessary
skills to start a business, those who see the opportunity to launch a business
and who will not be dissuaded from starting a business for fear of failure ( GEM, 2012 )—go through a series of iterative
stages in their entrepreneurial project. These include an initial vision that
is somewhat clear of the new company that they desire to create and the plan or
strategy of how they are going to achieve this, up to the different practical
activities or initiatives that they are going to carry out in order to achieve
a successful implementation of the strategy.
Entrepreneurial
activities comprise a dynamic decision process. Based on available information,
knowledge, talent and experience, entrepreneurs decide to explore a previously
identified opportunity. The process of value creation of a company begins in
the culture, leadership and mentality of the entrepreneur, the implementation
of his creativity and the development of innovative ideas, looking to obtain a
competitive advantage from the identification and administration of certain
strategic resources, that, at a long- or medium-term, will lead to the creation
of wealth ( Pina, 2007).
Strategic
planning allows the entrepreneur to explore possible future scenario for the
growth and development of the business, understanding the right time to build
the entrepreneur's resources (i.e., trained personnel, organizational
structure, manufacturing systems, reputations and value of the brand,
development of client portfolio, etc.) that will enable the company to have a
sound development. The aforementioned growth can also be externally analyzed,
considering the tendencies of the company's environment and defining the value
of what the company offers, according to the characteristics of its current and
potential market's demand. The better the understanding of the entrepreneur of
the structure and functioning of its operating system (his company and his
environment), the better the chances of being successful. Therefore, the
companies need to be in continuous learning, as a pre-requisite for a sound
development ( Senge, 1994).
The entrepreneur and the management of resources
The strategic analysis of the resources
can be based on the Resource Based View, RBV- ( Rugman & Verbeke, 2002
), which is an organization theory focused on the identification and
development of the resources and capabilities controlled by the organization as
sources of competitive advantage. The resources are all the tangible and
intangible assets that the company fully or partially controls and which may be
used to conceive and implement its strategy ( Barney & Hesterly, 2012;
Carroll, 1993; Warren, 2008 ). The capabilities are a subset of the
resources of the company and are defined as the tangible and intangible
advantages that allow the company to obtain all the advantages of the rest of
its resources.
There are several classifications for the
resources in the company or organization: Barney and Hesterly (2012)
classify them into four categories: financial resources, including all the
money that the company uses to develop and implement its strategies; physical
resources, which are all the physical technologies used in the company, such as
the facilities and equipment, the geographical location and the access to raw
materials; human resources, including the experience, training, and relations
of all the workers of the company; and organizational resources, comprised by
the structure of the organization, the planning process, the coordination
systems, culture, incentives, and reputation.
Another approach, more focused toward the
entrepreneur, is by Dollinger
(2008) , which defines six types of resources, known as the “ PROFIT Factors”
scheme:
·
Physical
resources, those tangible assets used for the production and administration of
the company, including machinery and equipment, geographical location and raw
materials.
·
Reputation
resources, comprised by the perceptions of the company that the people in the
work environment have, and it also includes the reputation at a product level,
such as the loyalty of the brand or at a corporate level, such as a global
image.
·
Organizational
resources, considering the entire structure of the company, its processes and
systems.
·
Financial
resources, all monetary assets, as well as representing the ability to request
a loan, the ability to create new capital, and the amount of money generated by
internal operations. The administration of the financial resources (the
organization, the processes, and routines), that help use the resources in a
more efficient manner, is what generates a sustainable competitive advantage,
given that money is a static and inherent resource, but the skill to manage
said resource is dynamic, complex, and creative.
·
Intellectual
and human resources, including the knowledge, training, and experience of the
entrepreneur and his team. These types of resources comprise the creativity,
vision, and intelligence of the members of the organization, as well as the
social abilities and personality of the entrepreneur.
·
Technological
and operational resources of the processes, knowledge generated from experience
and research and development, which is generally protected with patents,
licenses, and copyright.
According to Barney and Hesterly (2012)
and Warren (2008) ,
the resource-based theory proposes that a sustainable competitive advantage is
created when the company possesses and utilizes resources and skills that
follow the VRIO scheme. This means that these are: Valuable: it helps the
organization implement its strategy, enabling it to take advantage of or
exploit an opportunity or neutralize a threat in its environment; Rare: it is
not available to the competition or very few companies control the resource; Inimitable:
the resource is difficult to duplicate or it is very costly; and those used by
the Organization: the company is organized (policies and processes) to fully
exploit the competitive potential of its resources and skills. The most
important and valuable human resource of a business is the entrepreneur, as
each one of them has special characteristics, histories, personality,
experiences, and unique social relations ( Dollinger, 2008; Timmons, 2009 ).
The design of the strategy, under the
resource-based approach, contemplates the decisions that affect the profit and
loss rates of each resource in time, explaining the amount of each resource at
any given point in time, this is the stock-and-flow concept of Akkermans and Oorschot (2005)
. The performance of the system depends on the levels of the resources and
these, in turn, depend on the input and output of each resource. What guides
the flow of the resources and their development or evolution (or possible
involution) are mainly the decisions of the managers, external factors, the
impacts or contributions of each resource on the performance indicators
(sensibility), and the existing relative levels between them ( Warren, 2008).
The resources are built by the flow of
inputs at the level of the resource being considered (for example: new clients,
hires, new products or services, technology, production capability) and by the
losses suffered due to errors, the actions of third parties, decisions taken
(clients that turn to the competition, employees that quit or that are fired,
the loss of brand awareness, discontinued products, depreciation). The
entrepreneur determines the strategy based on the asset-stock accumulation
, this
being the characteristic of the resources to increase and decrease throughout
time. This characteristic is critical for the strategic performance of the
company and is also known as integration in the control theory (Ogatta, 2009 ). The current amount of a
resource is the cause of the initial amount of the following period plus what
is added and taken in the same period ( Warren, 2005).
The increase and decrease of a resource
will also depend on the level of other resources ( Warren, 2008 ), which could limit one another,
causing inefficiencies, restrictions, and a decrease in productivity. For
example, in a consulting firm, the number of senior consultants will depend on
the number of junior consultants and on their promotions. Another example is
the level of production in a manufacturing company, which depends as much on
the physical capacity installed as on the number of employees. In this last
example, the relative level of each resource is important because if it is
unbalanced, then there will be a waste of the resource in a greater degree.
This situation may also be analyzed when developing the resources, given that
if a balance is found at t moment, then when developing them in the
future, at time t + n , it is possible that one of them will
develop faster than the other (one being delayed in its development), reaching
a situation or state of disequilibrium and, therefore, becoming less efficient
or productive.
Other examples of interdependent
development in terms of resources are: development and launching of new
products with their multiple stages, from the conception of the idea until its
launching; the training of the personnel with training stages or levels; in
general, resources with a certain useful life that depend on their own level,
on their shelf life, on their regeneration speed, and on the levels of the
other resources that affect the input and output flows (life cycle of the
product, technology, company, etc.); the levels of adoption of a certain
product by type of client ( Rogers,
1962 ); the distribution chain with its relative levels between
stages from the production up to the client and the whip effect (Juego de la cerveza, Sterman, 2000 ); the standard of living of a
population that depends on resources such as education level, safety, food,
etc. Therefore, the dynamic systems make evident the “complementary” nature
between resources, both tangible and intangible. Complementarity refers to the
way in which the resources are created and interact between themselves,
conditioning the global development of the system at its relative levels ( Sterman, 2007; Warren, 2008).
The dynamic systems do not limit their
analysis to the resources that the company “owns or controls”. To affect
performance, a company only needs to have limited access to the resources that
it needs. A consequence of this is that the clients become a part of the
system, even though they do not belong to the company and it cannot control
them either directly or completely.
The balanced scorecard
The complexity of an organization requires
that the managers are able to design a strategy and monitor the performance in
different areas simultaneously. The Balanced Scorecard is a tool that provides
a reference framework to design the strategy and translate it into action. It
includes financial measures that show the results of the actions taken and
complements them with operational measures that consider the client, the
internal processes, innovation, and human resources ( Kaplan
& Norton, 1992 ). One of the characteristics of the BS is that it
works to bridge different areas, both financial and non-financial ( Akkermans & Oorschot,
2005).
The BS allows to observe the company from
four perspectives: the learning and growth perspective, reflected on the
ability of the company to learn, innovate and improve the products and
processes that already exist, and to introduce new products; the perspective of
internal processes or internal operations done to elaborate the products or to
offer the services to satisfy the needs of the consumer; the perspective of the
client, oriented toward the creation of value and differentiation; and the
financial perspective that provides the performance indicators of the strategy,
its implementation, and its executions from the monetary, growth, yield, and
risk point of view.
The BS facilitates the determination of a
future perspective, to define a structured vision and to establish a path to
reach it (a strategic map), developing the existing resources or those
classified according with the four perspectives, as well as to design a board
with the objectives and actions (implementation) quantifiable in the short and
medium term.
The BS can be captured in a systems
dynamics model ( Bianchi et al., 2000; Warren, 2008 ) that provides an understandable and
measurable representation of the value creation process through time for a
business, identifying the necessary resources from its four perspectives, as
well as the time and speed of their creation or development, in addition to the
necessary actions or decisions and their corresponding impacts measured through
the development indicators, which are also defined in the four perspectives
scheme. The use of BS supports the importance of understanding the relations of
cause and effect and the resources and performance measures between the
components of the company's strategy. All these have an impact on the financial
performance measures ( Capelo, 2009).
The BS may help an organization in several
ways, promoting growth with a clear approach, clarity of objectives and goals,
organizational alignment, monitoring the performance evaluating the efficiency
in the achievement of objectives, and identifying responsibilities and
responsible parties in the expected results ( Gumbus & Lussier, 2006 ). The strategic decision makers can use
tools such as the BS, which will help them define strategies by identifying
their resources from the four perspectives and which will keep them informed on
the progress of their implementation ( Ritchie-Dunham,
2001).
The learning environment
The Interactive Learning Environments
(ILE) are the means by which the learning goals are achieved through the active
interaction of the participant and the focal system ( Domenge, 2009; Domenge
& Vidal, 2015 ). In particular, EFSs are a type of ILE designed
to be used on a computer within the structure of an interactive game, based on
virtual simulators from real systems, which utilize a friendly interface
between the system and the decision maker ( Kopainsky, Alessi,
Pedercini, & Davidsen,
2009; Maier & Gröbler, 2000 ). These systems offer an active learning
environment for the achievement of a set of tasks and objectives, providing the
necessary support to learn and apply one or more specific concepts ( Aleven, Stahl, Schworm,
Fischer, & Wallace, 2003; Choi & Hannafin,
1995 ).
An EFS is any attempt to represent a real
or imaginary environment or system in a computational simulation model. A
simulator has two main purposes: scientific and educational ( Davidsen, 2000 ). The design and use of a simulator
entails one or more reasons whereby the real system is not directly being
experimented on. Some of these reasons are: cost, time, risk or lack of access
to the resources. Scientific simulators provide an outlook on the real system,
this in turns enables developers to establish and improve the existing theory
for a better development of the system. Educational simulators are designed as
a means of virtual learning regarding the structure and functioning of a system
through the evaluation of the results obtained from actions or decisions made,
through the feedback generated by the simulator in real, accelerated or slowed
time ( Rieber, 1996).
The EFS are means to provide learning in
entrepreneurship education, representing “practice fields” or experimentation
for the decision makers in the company ( Fig.
1 )
creating an effective learning cycle as they close the gap between the design
and strategy implementation and their corresponding effects. The EFS allow to
iteratively modify the mental model ( Senge, 1994 ) of the strategist, which in turn allows
to conceptually understand the structure and functioning of the system (company
and environment) in which it finds itself (bottom part of Fig.
1 ),
by experimenting and evaluating the impacts of different strategies before
deciding on the most preferable.
When using an EFS, two types of feedback
and learning are presented, the Single-loop and the Double-loop (Bianchi,
2002 ). The first is the type
of basic learning in which the feedback of the impact of decisions is based on
the experience with the real system, and is interpreted by the existing mental
models. Learning operates in the context of the current decision rules, strategies,
culture and institutions (upper part of Fig.
1 ).
In the double-loop learning, feedback from the real world can also stimulate
changes in the mental models, but said learning involves new concepts of a
situation and lead to new objectives and decision rules, and not only new
decisions ( Lane, 1995; Sterman, 2000 ). Double-loop learning allows the
decision maker to evaluate the consistencies of their mental models, as one of
the most significant risks is to make decisions without having questioned the
consistency of the mental model ( Bianchi
et al., 1998, 2000; Bianchi, 2002 ).
EFSs generate a dynamic environment that
presents one or more situations that require decisions, creating cycles and new
situations with new problems to be solve and decisions to make ( Wawer, Milosz, Muryjas, & Rzemieniak, 2010 ). EFSs represent an effective learning
method on different business aspects and are considered one of the most
interesting learning methods, as it leads the user to get involved and commit
to his decisions as he makes progress in the interactive use of the simulator,
immediately monitoring results, accelerating the learning process and quickly
acquiring experience, experimenting new behaviors, and developing certain
abilities and skills related to the decision making process ( Lane,
1995; Saad, 2013 ). The simulator facilitates the learning
process, as it constantly allows, immediately and iteratively, to review and
evaluate different strategies proposed by the participant, making decisions in
accordance to the new information generated by the simulator in a series of
scenarios.
The EFS makes it possible to connect the
knowledge from the different areas involved in a business in a holistic and
systematic manner; it causes a strong motivation to use active learning or
experience learning (similar to Kolb's learning spiral, 2014: concrete
experience, observation and reflection on the experience, formation of abstract
concepts for mental models based on reflection, test or validation of the new
concepts, and repetition); it combines strategic and analytical thinking and
allows developing the ability for teamwork, improving interpersonal
communication and working under pressure. The process of learning by simulation
leads to the improvement of the mental models of the participants and helps
them reach a shared vision of reality ( Bianchi
et al., 1998).
On the other hand, EFSs have several
disadvantages, as stated by Wawer et al. (2010) : the simulator is a model of reality,
i.e., it is created with certain simplifications that arose from a selective
abstraction of the real system; decisions are made without any responsibility,
so the results reflected in the simulator do not have an effect on the
real-life situation, which could have an influence on the behavior of the players,
differing from what could happen in reality.
Within the literature regarding EFSs there
are different developments that have been of use for the planning and
evaluation of strategies regarding a type of company in particular, companies
in general ( MIT Business Strategy Games ; Blue Ocean Strategy Simulation, BOSS ), as well as in certain operational
areas such as marketing ( Markstrat), operations (Sterman, 2000), and human resources (Warren,
1997). Annex
1
shows a table with different simulators that have been made as learning tools for
decision makers and entrepreneurs. This table shows a summary of the objective
presented for each simulator, the modules that intervene, the decisional
variables that were taken into consideration for the development of the same,
and the performance measures of the model. Some of these EFSs are designed to
simulate specific functional areas such as finances, human resources, sales or
a combination of these, considering the sales or the different elements of the
financial statements as final performance measures. These EFSs do not take into
consideration a global classification of the resources as the BS does, nor do
they explicitly highlight the balanced development of resources according to
their cause and effect relations and sensibility with the performance measures.
The simulators can be used as part of the
strategic planning and learning process of a company, and they help strategists
distinguish between the feedback structure of the system (company) and how to
modify said existing system to affect its behavior, aiming to achieve the
previously established objectives. The planning can be conceived as a means of
learning and the EFS as a vehicle that provides support and a better
understanding of the business system in question ( Bianchi
et al., 1998 )
for a better-informed decision making. EFSs contribute to the development of
the Learning Organization concept in a company. A concept which,
since the beginning of the 90 s, (Senge, 1994 ) has been recognized as an important
element in strategy, evolution, development, resilience, and organizational
change.
The proposed EFS
According to the approach indicated in the
introduction of this document, the proposed EFS has four didactical objectives aimed
at the students of entrepreneur programs in matters of strategic planning,
meaning the goal is for the students to be able to: (1) Identify the
performance indicators to be used; (2) Identify their available resources under
the BS approach; (3) Explain the relations between their resources and the
performance measures; and (4) Propose and evaluate growth strategies that will
adequately develop their resources, identifying their impact on the performance
measures considered in the model.
The first and second objectives—the
identification of the performance indicators and the identification of
available resources in the company under the BS perspective—are illustrated in Figure
2 ,
which shows the four blocks that comprise the structure of the EFS. The blocks
correspond to each of the four perspectives of the BS. Each block indicates the
decisional variables that the EFS considers, and which are directed toward the
resources included in the EFS. Performance indicators are fundamental in the
financial results (NPV and utilities). The resources to develop are: employees,
productivity training, production capability, inventories, and publicity. The
levels of the resources can also be used as performance measures, given that they
indicate the performance of each of them throughout time.
The third objective, the relations between
the resources and the performance measures, is presented in the path diagram of
Figure 3 . Included in this are the decisional
variables, the resources considered, and the main performance measure, that is,
the Net Present Value (NPV) of the flows generated per period.
The functional capability is limited by
the installed K O functional capability and the desired
inventory I D , Eq. (4).
(1)
(2)
(3)
(4)
The desired inventory I D is a function of the demand D and of the missing inventory coverage C F , which in turn depends on the desired
coverage C D minus the current coverage C. The desired inventory coverage C D is achieved in time T C , Eqs. (5)–(7).
(5)
(6)
(7)
The inventory is comprised by the produced
units Q minus the units sold V , which in turn depend on the demand D , on the stock, and on the time available
to supply the orders T S , Eq. (8).
(8)
The missing production capability K F depends on the desired capability, the
installed functional capability, and the time that it takes to build capability
T K , Eq. (9).
(9)
The remaining employees E F depend on the number of employees desired E D , the current employees E and the time that their hiring and
training last T E Eq. (10).
(10)
The model proposed considers an expected
exogenous demand D . The administrator of the EFS can program
different scenarios by manipulating the tendency variable ( m ) of the environment to estimate the
tendency of the demand, following a linear function in relation to the number
of net clients U N , Eq. (11) . It is possible to gain or lose clients
through the increases or decreases in three areas, Eq. (12) : in the rate of satisfaction of client τ s estimated
through a proxy variable, number of clients among employees, Eq. (13), through the desertion rate τ f , Eq.
(14) , and through the rate of marketing
effort τ m due
to the investment M in this area, Eq. (15).
(11)
(12)
(13)
The NPV was defined as the final
performance measure that assesses each strategy, considering the net flows F generated per period (including sales,
fixed and variable costs, expenses, depreciation, taxes and investments), the
amortization A of the debt per period that could have
emerged from the proposed strategy, and the discount rate α, Eq. (16).
(16)
The EFS was designed under an evaluation
perspective of balanced growth strategies for the resources of a manufacturing
company with only one product; this comprises the fourth didactical objective.
The decisional variables (in italics) in the model, which are the workforce
that is desired to carry out the production process, are: the investment in
publicity (market perspective), which affects the new clients through its
capture rate; the desired production capability (process perspective), which
represents the period of time during which the company wants to be covered in
ordered to fulfill the demand and thus avoid a shortage of product; and the
investment in productivity (learning perspectives), which directly affects the
annual productivity of the employees and the desired employees.
It is expected for each participant to
propose a base or reference strategy, and to subsequently experience or
simulate different strategies in order to build up a mental model that will
allow them to relate their resource development decisions with the performance
indicator. The objective is not only to achieve a greater NPV, but for the
participants to be educated on the relative impacts of their decisions
(sensibility analysis on the relative development of the resources) as they
experiment with the EFS, modifying their mental model regarding the structure and
functioning of the model and considering the four perspectives of the BS. The
model was built and simulated on the Vensim ( Ventana Systems ) software package based on the systems
dynamic approach ( Sterman, 2000).
Investment P in productivity has a growing behavior up
to a maximum point in which a decrease begins, as it is considered that there
would be saturation, Figure 4A. The functions for τ s , τ d , τ m are defined
through the LOOKUP tool of Vensim. When increasing
the level of satisfaction, the number of clients increases and desertion
decreases, Figures 4 B and C. When investing in the marketing
effort M, the number of new clients increase until it becomes saturated and the
effects decrease, Figure 4D.
The five decisional variables that reflect
the strategy of the entrepreneur may be modified through an input control
panel, Figure 5 , considering the four perspectives of
the BS.
Six scenarios were simulated, considering
extreme values from the five decisional variables, as shown in Table
1 .
The simulation context was of 25 years.
Figure
6
shows the behavior of the production and demand for the base scenario. The
production for all scenarios is limited by the production capabilities or by
that of the employees. The demand was fulfilled until period 12.
Figure
7
shows the production for the six scenarios considered. In the first couple of
years there is a transition period caused by the combined effects of the
adjustments in capacity, inventories, workforce and productivity, defined by
their corresponding correction times. Production is obstructed in a different
manner for each one of the scenarios due to the unbalanced development of the
different resources considered in the EFS.
The intensive scenario in workforce is
what is later reduced, due to the fact that at first there is an excess
capacity in this area. This also explains that if there is investment made in
productivity or employees—scenarios two and three—this investment goes to waste
and its corresponding NPV decreases. In scenario five, production is not
reduced. These limitations are due to the unbalanced growth between the
different resources, a result of the strategies defined by the EFS user. If the
capacity construction time is shortened, then the restriction that reduces
production is loosened, making it possible to satisfy demand in a more adequate
manner.
As shown in Table
1 and Figure
8 ,
the lower NPVs correspond to scenarios three and two, which are intensive in
the productivity and workforce areas. The greatest NPV corresponds to scenario
six, which is intensive in publicity. In the first couple of years the flows
are negative for all the scenarios, which means that it is necessary to go into
debt to finance the strategies.
As progress is made in the simulation, the
flows become positive and start growing, which enable the amortization of the acquired
debt in previous periods and makes it possible to increase the retained
earnings that resulted from the operation and from the yields obtained through
their corresponding investments.
When simulating a seventh scenario,
considering an aggressive strategy when investing in each resource the maximum
amounts presented on each of the previous scenarios, an NPV lower than 9974 M$
is obtained, due to the excess and imbalance in the relative development of the
resources and the high costs that this entails. The maximum NPV of 33,829 M$ is
achieved with the strategy determined by [26,000; 104,000; 2.2; 13,000; 12], in
accordance with the order of the decisional variables of the panel in Figure
4 .
This last NPV would be the objective to be accomplished by the participants after
doing their sensibility analysis, simulating several of their proposed
strategies.
Figures 6–8 help identify that the unbalanced
development of the resources considered in the four perspectives of the BS,
reduces or limits the total use of all these resources. These restrictions are
the result of having invested excess financial resources in some resources
while having a lack of these in others, deriving in the decrease of the
performance indicator.
When using the EFS, it is possible to
identify the impact that each of the resources has on the NPV through a
sensibility analysis. It is worth recalling that the cause and effect relations
of the resources and the performance measure are complex and non-linear. Figure
9
shows the sensibility graphs for each of the decisional variables (resource
development), considering a variation of ±20% for each of them in relation to
their corresponding initial value. This sensibility analysis allows the user to
gain a sense of relative importance for each of the resources, and could be a
guide for the user's decisions when prioritizing the development of certain
resources in relation to others.
As can be observed in Figure
9 e,
the least sensible resource – the one with the least dispersion – is investment
in publicity. The resource that shows the most sensibility is inventory
coverage, Figure 9c. Figure
9 f
shows the sensibility of the five combined resources, which is higher than each
of them individually.
According to Warren
(2008 ,
Ch. 4), the unbalanced development of resources in a company with multiple
resources leads to a situation of inefficient growth, which is the result of a
deficient strategic planning. The levels of the resources must be adequately
built as they are interdependent in the company (see section “The entrepreneur
and the administration of resources”). The development of a resource depends on
the management decisions, their own level, and the relative levels of the other
strategic resources of the company ( Warren,
2008 ).
In the case of companies with multiple resources ( Grant,
2013 , ch. 5 and 6), the lack of coordination capability,
integration, and assignment of amounts and investment times, involve intangible
aspects, such as the learning capability of the company and the organizational
culture, as well as tangible and more formal aspects, such as the
organizational structure, the assignment of positions and inter-functional
responsibilities, the design of the administrative, incentive and information
systems, and the evaluation and assignment of financial resources for the
development of the different strategic resources. Resource development is a
strategic activity that involves an adequate strategic planning, explicitly
including the determination of the competitive advantage, as well as the
contribution of each resource for the achievement of this, to the profitability
of the company and the actions of the competition ( Kunc & Morecroft, 2010).
Conclusions
The creation of a new company represents a
dynamic process, during which entrepreneurs evaluate their strategies according
to the results that they have as their project evolves, taking into
consideration that the best strategy to implement in their company will depend
both on internal factors, such as the development of their resources, and
external factors, such as the characteristics and tendencies of their
environment and target market.
The proposed EFS could allow the
entrepreneur to create awareness about the strategic planning process, looking
to achieve a more informed decision-making than the traditional perspective,
identifying and analyzing the main resources available and the causal relations
with the strategic objectives and their performance indicators. By framing this
analysis within the four perspectives of the BS that comprise the new business
(human resources, processes, market, and finance), the entrepreneur is able to
know and discuss with other interested parties the existing relations between
these resources and their performance indicators, analyzing the possible effect
of their decisions.
The EFS considers the accumulation of
resources throughout time and allows modifying and evaluating different
strategies as the strategists better understand their structure and
functioning. The proposed EFS allows the connection of all areas involved in
the business, with the possibility of modifying the mental model of the
strategist from a holistic, systematic and balanced vision, which could also be
of use as an explicit interactive learning method between the entrepreneur and
other participants interested in the strategic planning process of their
company project.
In accordance with the training objectives
to be achieved using the EFS, it is possible to add more decisional variables
to the EFS, such as the construction time of the production capability, the
adjustment time of the inventory, the time to supply orders, and the hiring and
recruitment time of new employees, among others. Adding these decisional
variables would imply expanding the input control panel of the proposed EFS.
With the objective of implementing the
proposed EFS, it is necessary to design a learning environment that is adapted
to the profile of the participants or users, under the experience learning
scheme ( Domenge, 2009 ). It is recommended to develop a
training case that will place the participant as a part of the team of
strategists in a company, with the information that he will require regarding
the industry in which he is working. The aforementioned training case will
require information that shall enable the discussion and identification of the
strategic resources of the company, as well as the causal relations with the
performance indicators (NPV), as shown in the diagram of Figure
3 .
Finally, the recommendation is to include a series of strategic cases that will
lead the users, through the use of the EFS, to identify the relative importance
of developing the resources of the company in relation to their impact on the
NPV, as well as to present a concrete strategy for its development.
Acknowledgement
We are grateful to the Asociación
Mexicana de Cultura, A.C., for its support in the
elaboration of this investigation.
Annex 1: Executive flight simulators
Comments |
It covers the different areas involved in the
creation of a new company and how the decisions taken impact on the growth of
the new company. |
It focuses on the development of a specific business
plan. Look for a balance between the commercial and the production. |
Players do not have the flexibility to choose the
industry. In addition, it does not focus on the initial planning, but on how
to manage a new company. |
It focuses a lot on the development of the business
plan, which is very positive, but the simulation only applies for 1 year of
operations. |
The program includes the planning stage, the
establishment of the company and the development of the company and involves
the personal goals of the players. A complete program, but that focuses a lot
on personal life. |
The program is conducted online. The results depend
on the users and not on the simulator itself, which adds some of the reality.
But, entrepreneurs only use the network to sell their products, which takes
away the opportunity to generate their own marketing strategies. |
It focuses solely on the company's finances, so its
scope is very limited. |
Players do not decide what kind of business to
establish, but it turns out to be a good program for business selling
products. |
There is not much information available for this
program. The simulator allows the user to choose their position in the
company. |
The simulator focuses on developing a large company
rather than a new company, so it does not cover the goal. |
References
Akkermans, H., & Oorschot,
K. (2005). Relevance assumed: A case study of balanced scorecard development
using system dynamics. Journal of the Operational Research Society, 56(8),
931–941. http://dx.doi.org/10.1057/palgrave.jors.2601923
Aleven, V., Stahl, E., Schworm,
S., Fischer, F., & Wallace, R. (2003). Help seeking and help design in
interactive learning environments. Review of Educational Research, 73,
277–320. http://dx.doi.org/10.3102/00346543073003277
Barney,
J., & Hesterly, W. (2012). Strategic
management and competitive advantage: Concepts (4th ed.). Upper Saddle
River, NJ: Prentice Hall.
Bianchi,
C. (2002). Introducing SD modelling into planning and control systems to manage
SME’s growth: A learning oriented perspective. System Dynamics Review, 18,
315–338. http://dx.doi.org/10.1002/sdr.258
Bianchi,
C., Bivona, E., & Landriscina,
F. (2000). Promoting entrepreneurship through open-distance-learning
management flight simulators EcoRoll educational
package.
Bianchi,
C., Winch, G., & Grey, C. (1998). The business plan as a
learning-oriented tool for small/medium enterprises:A
business simulation approach.
Blue
Ocean Strategy Simulation, BOSS. Available at:
http://web.stratxsimulations.com/simulation/business-strategysimulation
(accessed 08.09.15).
Capelo, C. (2009). A system dynamics-based
simulation experiment for testing mental model and performance effects of using
the balanced scorecard. System Dynamics Review, 25, 1–34.
http://dx.doi.org/10.1002/sdr.413
Carroll,
G. R. (1993). A sociological view on why firms differ. Strategic Management
Journal, 14, 237–249.http://dx.doi.org/10.1002/smj.4250140402
Choi,
J., & Hannafin, M. (1995). Situated cognition and
learning environments: Roles, structures, and implications for design. Educational
Technology Research and Development, 43, 53–69.
http://dx.doi.org/10.1007/bf02300472
Davidsen, P. (2000). Issues in the design and use
of system-dynamics-based interactive learning environments. Simulation
Gaming, 31, 170–177. http://dx.doi.org/10.1177/104687810003100204
Dollinger, M. (2008). Entrepreneurship
strategies and resources (4th ed.). Illinois,
IL: Marsh Publications.
Domenge, R.
(2009). Importancia de los factores de transferencia de contenido en una
escuela de negocios: Percepciones de estudiantes y profesores. Cuadernos de
Estudios Empresariales, 19, 75–104.
Domenge, R., &
Belausteguigoitia, I. (2009). Nuevas PyMEs: Problemas y recomendaciones. Dirección
Estratégica,29(8), 25–27.
Domenge, R., &
Vidal, D. (2015). Mejora de la planeación estratégica mediante los simuladores
de vuelo ejecutivos. Dirección Estratégica, 53.
GEM, Global Entrepreneurship Monitor.
(2012). Monitor Global de la Actividad Emprendedora México 2012.. Available at:
http://www.gemconsortium.org/docs/3076/gem-mexico-2012-report (accessed
19.02.14)
Grant,
R. (2013). Contemporary strategy analysis (8th ed.). Wiley.
Gumbus, A., & Lussier,
R. (2006). Entrepreneurs use a balanced scorecard to translate strategy into
performance measures.
Journal
of Small Business Management, 44, 407–425.
http://dx.doi.org/10.1111/j.1540-627x.2006.00179.x
Kaplan,
R., & Norton, D. (1992). The balanced scorecard-measures that drive
performance. Harvard Business Review,70, 71–79.
Kolb,
D. (2014). Experiential learning: Experience as the source of learning and
development (2nd ed.). Pearson.
Kopainsky, B., Alessi,
S., Pedercini, M., & Davidsen,
P. (2009). Measuring knowledge acquisition in dynamic decision making tasks.
Kunc, M. H., & Morecroft,
J. D. W. (2010). Managerial decision making and firm performance under
resource-based paradigm. Strategic Management Journal, 31(11),
64–1182. http://dx.doi.org/10.1002/smj.858
Lane,
D. (1995). On a resurgence of management simulations and games. The Journal
of the Operational Research Society, 46, 604–625.
http://dx.doi.org/10.1038/sj/jors/0460505
Maier,
F. H., & Gröbler, A. (2000). What are we talking
about?—A taxonomy of computer simulations to support learning. Systems
Dynamics Review, 16(2), 135–148.
http://dx.doi.org/10.1002/1099-1727(200022)16:2<135::aid-sdr193>3.0.co;2-p
Markstrat. Available at: http://web.stratxsimulations.com/simulation/strategic-marketingsimulation/
(accessed 08.09.15).
MIT
Business Strategy Games. Available at:
http://web.stratxsimulations.com/simulation/overview/ (accessed 08.09.15).
Ogatta, K. (2009). Modern control engineering
(5th ed.). Prentice Hall.
Pina,
M. (2007). Entrepreneurship as decision making: Rational, intuitive and
improvisational approaches. Journal of Enterprising Culture, 15,
1–20. http://dx.doi.org/10.1142/s0218495807000022
D.
Vidal Flores, R. Domenge Mu˜noz
/ Contaduría y Administración
62 (2017) 577–599 599
Rieber, L. (1996). Seriously considering play:
Designing interactive learning environments based on the blending of microworlds, simulations and games. Educational
Technology Research and Development, 44, 43–58.http://dx.doi.org/10.1007/bf02300540
Ritchie-Dunham,
J. (2001). Informing mental models for strategic decision making with ERPs
and the balanced scorecard: A simulation-based experiment.
Rogers,
E. M. (1962). Diffusion of innovations. Glencoe: Free Press.
Rugman,
A. M., & Verbeke, Al. (2002). Edith Penrose’s
contribution to the resource-based view of the strategic management.
Strategic
Management Journal, 23,
769–780. http://dx.doi.org/10.1002/smj.240
Saad, F. (2013). Modeling and comparing a
startup dynamics in the US and Egypt.
Senge, P. (1994). The fifth discipline: The
art and practice of the learning organization. Doubleday.
Sterman, J. (2007). Getting big too fast:
Strategic dynamics with increasing returns and bounded rationality. Management
Science, 53(4), 683–696.
http://dx.doi.org/10.1287/mnsc.1060.0673
Sterman, J. (2000). Business dynamics: Systems
thinking and modeling for a complex world. Boston, MA: McGraw-Hill.
Timmons,
J. (2009). New venture creation: Entrepreneurship for the 21st century (8th
ed.). New York, NY: McGraw-Hill.
Ventana Systems. Vensim.
Available at: http://vensim.com/ (accessed 08.09.15).
Warren,
K. (1997). The professional service microworld.. Available at:
http://www.strategydynamics.com/microworlds/professional-services/ (accessed
08.09.15)
Warren,
K. (2005). Improving strategic management with the fundamental principles of
system dynamics. System Dynamics Review, 21(4), 329–350.
http://dx.doi.org/10.1002/sdr.325
Warren,
K. (2008). Strategic management dynamics. Chichester,
England: John Wiley & Sons.
Wawer, M., Milosz, M., Muryjas,
P., & Rzemieniak, M. (2010). Business simulation
games in forming of student’s entrepreneurship. International
Journal of EuroMediterranean
Studies, 3(1),
49–71.
Peer review under the
responsibility of Universidad Nacional Autónoma de
México.
Copyright © 2015 Universidad Nacional Autónoma
de México, Facultad de Contaduría y Administración.
Métricas de artículo
Metrics powered by PLOS ALM
Enlaces refback
- No hay ningún enlace refback.

Este obra está bajo una licencia de Creative Commons Reconocimiento 4.0 Internacional.
CONTADURÍA Y ADMINISTRACIÓN, año 70, 2025, es una publicación trimestral editada por la Universidad Nacional Autónoma de México, Colonia Ciudad Universitaria, Delegación Coyoacán, C.P. 04510, México, Ciudad de México, a través de la División de Investigación de la Facultad de Contaduría y Administración - UNAM, Circuito Exterior, s/n, Colonia Ciudad Universitaria, Delegación Coyoacán, C.P. 04510, México, Ciudad de México., Tels. (55) 56 22 84 57, (55) 56 22 84 58 Ext. 144 y (55) 56 22 84 94, http://www.cya.unam.mx, correo electrónico: revista_cya@fca.unam.mx, Editor responsable: José Alberto García Narváez, Reserva de Derechos al Uso Exclusivo No. 04-2016-071316434900-203, otorgada por el Instituto Nacional del Derecho de Autor, ISSN 2448-8410, Responsable de la última actualización de este Número, División de Investigación de la Facultad de Contaduría y Administración-UNAM, José Alberto García Narváez, Circuito Exterior, s/n, Colonia Ciudad Universitaria, Delegación Coyoacán, C.P. 04510, México, Cd., Mx., fecha de última modificación, 29 de enero de 2025.
Las opiniones expresadas por los autores no necesariamente reflejan la postura del editor de la publicación. Se autoriza la reproducción total o parcial de los textos aquí publicados siempre y cuando se cite la fuente completa y la dirección electrónica de la publicación.
Contaduría y Administración by División de Investigación de la Facultad de Contaduría y Administración is licensed under a Creative Commons Reconocimiento- 4.0 Internacional.
Creado a partir de la obra en http://www.cya.unam.mx.
Correo electrónico: revista_cya@fca.unam.mx
ISSN: 0186-1042 (Print) 2448-8410 (Online)