What Is A Business Simulation? (With Benefits And Types)

By Indeed Editorial Team

Published 6 July 2022

The Indeed Editorial Team comprises a diverse and talented team of writers, researchers and subject matter experts equipped with Indeed's data and insights to deliver useful tips to help guide your career journey.

Professionals can strengthen their business acumen and familiarise themselves with corporate surroundings and situations through a range of exercises and practices. Business simulations are immersive learning experiences that allow individuals to experience and respond to various scenarios without the risk of negative outcomes. Understanding what these learning tools are and how they might enhance professional development can assist individuals in deciding suitable business simulations and utilising them for their potential benefits. In this article, we answer ‘What is a business simulation?', list its benefits and look at some common types of such simulations.

What Is A Business Simulation?

Understanding ‘What is a business simulation?' can help you explore its potential application and benefit in an organisation. Business simulations are interactive learning environments that allow participants to experience real-world business situations and systems and develop their industry-related skills. Along with focusing on theoretical business principles, participants get to enhance their conceptual knowledge and assess their comprehension of practical scenarios. Business simulations mimic real-world market variables and conditions to help participants strengthen their engagement with a course by exposing them to situations they may encounter in the job. Business simulation often helps professionals gain the following skills and competencies:

  • Time management: Business simulators can help individuals with an interest in pursuing a career in a fast-paced corporate environment learn time management skills and gain experience handling project deadlines and other high-pressure scenarios. This can assist them in comprehending how to assess a range of aspects and determine the most effective business approach.

  • Decision-making: Business professionals rely on their decision-making skills to lead teams of experts and assess multiple options before deciding the most effective course of action. Participants can gain these skills in a business simulation, motivating them to undertake risk assessments and consider potential advantages while analysing a situation.

  • Collaboration and teamwork: Individuals can learn how to work with other team members through business simulations as they have a shared professional objective. Simulating situations can help them carry out their job responsibilities. These learning activities may empower participants to make group decisions and collaborate to overcome obstacles.

Benefits Of Using A Business Simulation

The following are some common ways that business simulations can help organisations:

Creating a risk-free environment

A business simulation allows participants to experience various workplace situations without the accompanying risk. This means that participants can learn from their mistakes without facing the repercussions of their choices, allowing them to deal with such obstacles in their future roles as business professionals. Simulations enable individuals to observe the effects of various activities on the organisation without suffering the long-term consequences of these events, thus strengthening their risk assessment and benefit evaluation skills.

Related: What Is Risk Management? (Crucial Steps And Strategies)

Facilitating experiential learning

Business simulators allow students to engage in experiential learning. Though the courses may provide information regarding theoretical corporate structures, simulations allow them to get practical experience. Participants get access to various instructional approaches, which can be helpful for students with different learning styles. Experiential learning can also provide participants with a greater depth of understanding, which can help them retain what they have learned better than in a standard classroom setting.

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Maintaining levels of engagement

Business simulations can help maintain students' interest throughout the learning process. Participants can engage and maintain focus throughout the session by imagining a scenario, discussing the circumstances and potential solutions with colleagues and using actual business techniques. Participants also receive feedback from their instructor or supervisor, which helps them to take an interest in the content and learn from their decisions throughout the simulation.

Creating a model of real-world scenarios

Business simulations replicate real-world settings and prepare professionals for challenges they may face in their jobs. Although they might lack all the specific details, organisations can still customise many processes to create a relevant and successful business simulation for their employees. It can also help colleagues learn more about one another and how to react in a situation.

Related: Psychology Of Learning And Behavioural Learning Theory

Inspiring collaboration among participants

While solitary learning and group debate of theoretical frameworks benefit participants, business simulations encourage them to collaborate and work as a team. This is a necessary talent for business professionals and employers often look for people who are comfortable working in groups. Such simulation exercises often enable professionals to discuss ideas and possibilities with one another and come to a group decision on a business endeavour or solution.

Related: Collaboration Vs. Cooperation (With Main Differences)

Improving learning efficiency

Business simulations enable participants to learn faster than many conventional methodologies. It also helps them comprehend difficult circumstances thoroughly. By giving them an overview and broad understanding of an organisation's processes, they can grasp various concepts and approaches in a short amount of time. When professionals return to the job with the knowledge from the business simulation, they can respond more effectively to similar events or situations.

Related: Difference Between Supervised And Unsupervised Learning

Common Types Of Business Simulations

Based on industry, an organisation may use various business simulations to assist professionals in advancing their business understanding and skills. The following are some examples of commonly used business simulations:

Project management simulations

Many organisations use project management simulations to educate new professionals and assist current employees in enhancing their industry-related skills. These skills apply to businesses in many areas, such as IT, construction, infrastructure and software development. Participants experience virtual scenarios requiring them to assess the functionality and relevance of a product, risk management or end-user adoption and satisfaction. Such simulation can assist teams in preparing for the launch of a new product or service.

Related: Programme Management Vs. Project Management (Definitions)

Process simulations

Process simulations enable experts to investigate a particular business process or system, such as inventory planning, sales performance review or statistical forecasting. Participants can learn many practical components of quantitative business analysis by understanding how to use raw data or information when deciding on a professional method or strategy. During the simulation, participants face multiple types of data and work with teams to learn the significance of various information.

Related: What Is Process Control? (Definition, Benefits And Examples)

Business knowledge and acumen simulations

These simulations assess and improve the business understanding of participants. They comprise a fictitious competition or a challenging situation in which professionals engage. These exercises may help develop time management and teamwork skills, as they are likely to require participants to reach a consensus within a limited amount of time. Participants in these business simulations may confront clients or marketplaces subject to constant change, requiring them to demonstrate their adaptability with their industry knowledge.

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Planning simulations

Planning simulation helps business professionals encounter virtual clients and projects. Participants may work with other professionals to construct business plans. This allows individuals to study the company and rehearse how to respond to various situations. Professionals may have many weeks or months to build a strategic strategy in a real-world situation. These simulations often have tighter time schedules, requiring participants to work efficiently together to create crucial layouts and plans.

Related: What Is Project Planning? (How To Create A Project Plan)

Team management and leadership simulations

Team management and leadership simulations can help develop an individual's ability to collaborate with other professionals and contribute to team activities and projects. It can assess participants' capacity to form a successful team and make crucial decisions as a group within a limited timeframe. Learners encounter tasks that require them to adapt to change and support team members, with scenarios that may arise because of business growth. They also divide into teams and convince shareholders or executives to support their group's goals or ideas.

Strategic management simulations

Simulations of strategic planning and management are beneficial for current and future leaders within an organisation. These simulations may involve performing multiple administrative duties or making managerial choices for various departments, such as marketing, finance or design. Groups of participants may discuss and work together to imitate different management teams throughout the departments of a business. These simulations can help individuals strengthen their critical thinking and interpersonal communication skills by requiring them to consider many such elements and discuss their strategic options with others.

Related: What Is Strategic Marketing? (With Benefits And Tips)

Business appreciation simulations

Business appreciation simulations are often less complex than other simulation exercises and help participants increase their financial literacy. These simulations stress the significance and influence of an organisation's internal financial decisions. They can also help employees to improve their business acumen. Business appreciation simulations can assist participants in comprehending how an organisation can apply various cost-cutting techniques without sacrificing quality or efficiency.

Banking and financial services simulation

Such simulations help professionals develop an understanding of the office operations of a bank, their interaction in a competitive environment and the cultivation of a holistic and fact-based management culture. It helps develop analytical skills and create an awareness of the current operating environment of the banking industry. Participating teams manage a virtual bank with multiple front and back-office functions within a single geographic area in such simulations.

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