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Entrepreneurs would benefit from more effective education that would improve the
quality of the decisions making.
and competitors
portrays the cognitive limitations on the
information gathering and processing power
of human mind
facilitates the practice of considering
opinions
supports building of "What if" scenarios.
Example of management
simulation game
What if customers
do not pay on
time?
Retaining
profit
Borrowing
money
from the
bank
Strategy 1
Strategy 2
Strategy 3
Strategy 4
Chose
Delay
customers paying to
that are
suppliers
better
payers
/Lose the
market!
Lets simulate!
Crystal ball
Turnover Profit
Average
(local
margi aging of
currency
n
accounts
in
receivable
millions)
(months)
Scenario 1
4.53
Scenario 2
Average
aging of
debt to
suppliers
(months)
Negative
cash
position
(local
currency in
millions)
No
2.08
3.00
4.53
16.7
%
9.0%
13.60
3.00
Scenario 3
4.53
3.8%
13.60
3.00
Scenario 4
3.88
5.86
3.00
Scenario 5
3.88
15.5
%
15.5
%
Yes (39.19)
Yes (10.60)
Yes (-0.84)
5.86
5.94
No
1
45
1 23 4 51 2 3 4 5 1
45
45
4 51
451
45 1
3
2
-8.5 M
-19 M
2
2
-29.5 M
2
2
-40 M
1
51
101
Time (Month)
150
200
Local currency
Local currency
Local currency
Local currency
Local currency
3M
2M
51
1M
0
5
12
12 34 5
34
51
512 3
12 3
12 3
12 3
4
12 3
4
1
4
4
4
101
Time
(Month)
1
150
1
1
2
2
3
4
5
1
2
3
4
1
2
3
4
200
4
5
DEM
DEM
3 DEM
DEM
DEM
amount repay ed
taxes
Cash
acc rec collected
interest pay ed
inf low
outf low
amoutn borrowed
pay ment in adv ance
prof it pay out
pay ing
admin and sell costs
decrease in debt
to suppl
Debt to suppliers
buy ing price in
f oreign currency
increase in debt
to suppl
products receiv ed
decrease in debt
to suppl
Final effect
Symptomatic
"solutions" (delaying
payments)
Problem symptom
(nonliquidity)
Fundamental solution
(increase efficiency of
legal system)
How to do it?
Philosoph
y
Methodol
ogy
Tools
System
Approach
Simulation
Modelling
System
Dynamics
Software
The Fifth
Discipline: The
Art & Practice
of the Learning
Organization
Business
Dynamics:
Systems
Thinking and
Modeling for a
Complex World
Vensim, Stella,
iThink