Universities are often known for teaching very theoretical content and not adequately preparing students for the real world of work. They are accused of graduates lacking the knowledge to put what they have learned into practice.
To counter this, many study programs – especially in the field of business administration – use business games as a teaching method.
What exactly business games are, where they originated, how they can be classified, and how a typical business game might proceed will be explained in more detail in the following paper. In addition, the advantages and disadvantages of this teaching method will be discussed.
Table of Contents
Introduction
1. Definition
2. History
3. Taxonomy of Business Games
4. How a Business Game works
5. Benefits and advantages
6. Weaknesses and limits of Business Games
7. Conclusion
List of Graphics
List of Figures
Figure 1 Steps carried out in a business game of the type of CoCos
Figure 2 Areas of the quarterly information given in CoCos
Figure 3 The experiential learning cycle according to David Kolb
List of Tables
Table 1 Hard and soft skills acquired in a business game
Table 2 Dimensions for the classification of business games
Table 3 Analysis of CoCos and Monopoly according to the classification dimensions of a business game
1. Introduction
Universities are often known for teaching very theoretical content and not adequately preparing students for the real world of work. They are accused of graduates lacking the knowledge to put what they have learned into practice.
To counter this, many study programs - especially in the field of business administration - use business games as a teaching method.
What exactly business games are, where they originated, how they can be classified, and how a typical business game might proceed will be explained in more detail in the following paper. In addition, the advantages and disadvantages of this teaching method will be discussed.
1. Definition
A business game is a simulated game, also known as business simulation or business simulation game (BSG), that is used to teach students or employees various skills about different economic and business aspects. In order to better understand the concept behind it, it helps to look at the separate definitions of “game” and “simulation” (Birknerova 2010, 203). According to Oxford dictionary, the word “game” describes a competitive activity, which is played following rules and ends in a final result. Two or more parties are involved, which are either individuals or teams, and these perform various tasks within their assigned role(s) to accomplish the goal of the game (Stevenson 2010, 718). “Simulation” stems from the Latin verb “simulare”, which can be translated to “recreate, reproduce, depict” or “imitate”. Thus, a simulation is an imitation of reality that has a relevant similarity to what it represents but can be abstracted, simplified and/or accelerated.
In a business simulation game, a real business environment is imitated, for example the German market of car manufacturers, and modified to lower the complexity, for instance by limiting their operations to the domestic market and reducing their product portfolio to a single product. In this environment, a game then takes place, in which the participants play certain roles, like the general manager or the marketing manager, within which they have to fulfil tasks according to the game rules to reach the goal of the business simulation game. It usually consists of several rounds, after each of which the participants can view and react to the results of their decisions.
From the definition of a game, four basic elements of a business game can be derived: the game goals, the game base, roles and game rules (Birknerova 2010, 207f).
The former tell players what the point of the game is, what they are striving for in the course of it, and motivate them to continue and be the first to achieve them. The base of the game explains the content, what it is about, and the conditions that prevail in the game. From this, roles can be derived, that are assigned to individual players. A role can be in form of a person like a manager, a function or department. The role that a player performs provides the framework for his desired behaviour in the game and his relationships with fellow players. The person playing the CEO, for example, should have the best overall view over all business units, be able to mediate between other players, and take the lead of the team. Finally, there are the rules of the game, which set limits to the freedom of action of the participants through obligations, things players have to do and must adhere to, and prohibitions, activities which are not allowed (Birknerova 2010, 207f).
Business games have different fields of application. They can be used to teach economic and business topics in universities, business schools and also companies. Topics can be anything from general management of a company to finance, human resources, production, marketing, founding a company or a mix of these. On the other hand, there are also business games available for engineering, biosciences and occupations associated with a high risk like military, aviation and medicine (Lin and Tu 2011, 1160).
According to research carried out by the British firm “The Careers and Enterprise Company”, there are six criteria which decide about the quality of a business game: the game's design, its authenticity, the autonomy players have, the element of teamwork, the participation of employers and the availability of feedback (Hanson et al. 2017, 2).
Regarding its design, the game should have a topic relevant to the players with clearly defined goals to make it more enjoyable and to motivate. The difficulty level must be adapted to the players' abilities and neither bore nor overwhelm them. There should also be a clear display of the results of individual sections so that participants can monitor and reflect on their decisions well. Furthermore, the game must be authentic. This is achieved by a design that depicts the real world as well as possible. Likewise, the consequences of game decisions must be comprehensible and logical, but the outcome of the game should still be kind of uncertain, since the players can only influence their own actions, not those of the opponents. Moreover, unpredictable elements should be added, that can also occur in reality, such as extreme weather conditions or pandemics, which influence the economy and thus also the success of the company. Next, players should retain autonomy by playing roles with their own responsibilities and by not getting too much assistance by instructors like teachers, lecturers or employers. In addition, players should be organised in teams rather than playing as individuals, to encourage the ability to work in a team. Here, instructors should consider the pros and cons related to teams chosen by the players themselves versus pre-set groups. The latter add to the authenticity of the game, as employees in normal life cannot choose their colleagues either. The game should be designed in a way that members of a team have to cooperate and communicate with each other in order to get the best results, rather than having one person of the team do all the work, or having each player enter only their own decisions without discussing the whole strategy. When talking about business games which are used in companies, another criterion is the involvement of employers, who should act as coaches or mentors. The last factor, stated by The Careers and Enterprise Company, is feedback. It should be provided throughout the game, especially after each round and after the end. Feedback helps participants to better reflect on decisions they made and to understand what they could have done differently.
Another aspect to be considered are the costs associated with developing and playing a business game. A really good game which is not affordable for universities is worthless for education purposes; therefore, cost effectiveness plays a role, too.
Now that it is clear how business games are defined, where they are used, what elements make up a business game and what criteria distinguish a high-quality simulation game, the question arises as to what goals such a game pursues.
Playing a business game and using it as a teaching method has two primary goals: first, to teach the participants business-related hard and soft skills and second, to assess the players' performances (Greco et al. 2013, 649). Hard skills are technical knowledge and abilities gained through education and training and they are jobspecific, whereas soft skills are personal attributes and characteristics, which are important to possess regardless of the occupation and enable a person to interact effectively with others. The following table gives an impression of some skills that can be acquired by undergoing a business game:
Table 1 Hard and soft skills acquired in a business game
Abbildung in dieser Leseprobe nicht enthalten
In addition to acquiring new skills or improving existing ones, simulation games also aim to assess the players' performance quantitatively and/or qualitatively. The quantitative assessment can be carried out by reviewing key performance indicators like the market share or the net profit gained at the end of the game, numbers which can be measured directly, whereas for qualitative assessment the focus lies on the quality of the players' performance, which cannot be measured objectively but only observed by the instructor. In the qualitative performance review the simulation manager could for instance look at how well the team members interacted with each other.
2. History
At the end of the 1950s, the first business games were developed, whose origins can be found in war games, which were designed to train soldiers (Wells 1990, 4). The history of such war games goes back much further. Already the Romans used miniature figures to reconstruct battlefields and to think through strategies. Later in the 17th century, the German Christoph Weickmann developed a board game called the "Grosse Königs-Spiel" (Great Kings Game), which was one of the greatest advances among war games before the computer age (McLeroy 2008). This game was similar to chess, but also included a council of state and a council of war (Weickmann 1664). Three centuries later, the Japanese used war games at the Total War Research Institute and the Naval College of Japan to train Japanese soldiers for the Second World War (Hanafiah 2016, 28). In the post-war period, completely computer-based war games were developed at the Johns Hopkins University in Maryland, US: the "Air Defence Simulation" in 1948 and the "Carmonette" series in 1953. Compared to board games, this was a great development, as computers took away a lot of manual work, like moving figures around, and players could focus more on tactics (McLeroy 2008).
In 1955, the Rand Corporation in the US developed a game for the US Air Force logistics system and a year later, the American Management Association launched a well-known game, that was now genuinely designed for companies: the Top Management Decision Simulation (Hanafiah 2016, 28).
In the 1960s, American universities established the use of board games as business games to train their students and in the year 1962, the University of Chicago developed the International Operations Simulation (INTOP), one of the first business simulations focusing more on international business (Thorelli et al. cited in Hanafiah 2016, 28). During the following decade, the production of computer-based business games for educational purposes for students in the US increased, three journals on business games were published, and two new associations were founded: the Association for Business Simulation and Experiential Learning and the North American Simulation and Gaming Association. In the following years, also more than 400 articles about business games were published and associations were formed not only in the United States, but also overseas, such as the German Management Gaming Association (Wolfe 1997, 360f).
When the Warsaw Pact and the Cold War ended in mid-1991 and the former member states, which included the Soviet Union, Romania, Poland, Bulgaria, Czechoslovakia, Hungary and East Germany, opened up to the Western world, there was a new market for Western business games, which then also helped the Eastern countries with their market reforms (Wolfe 1997, 361).
Another important development was the invention of the personal computer (PC), which eventually replaced the mainframe computer as main device used to conduct business games. This resulted in cost savings on the one hand because PCs became affordable for personal users and on the other hand easier administration because they did not have to be shared with others and their use was no longer limited to computer experts, technicians and scientists. In the beginnings of computer-based business simulations, university and company technicians used to develop their own, unique games. That led to a great diversity among games, which were very specific towards what they trained their players, but at the same time it was more difficult to put the games on the market because of different operation systems, which were not compatible with each other. In order to spread the games over the market and to make some profit, they were eventually commercialised. In the 1980s, the number of games available decreased again due to many M&As, which reduced the number of simulation providers. Another reason for the reduction - which still characterises business games today - was the long shelf life of the games, as instructors needed much time to get to know the game well, so they usually hesitated to switch to another one, although it might have had better features (Wolfe 1997, 362f).
A survey by Faria from 1989 “reported that over 200 business simulation games were being used in approximately 1,733 business schools by nearly 8,600 university professors in USA alone” (Faria and Dickinson 1989 cited in Hanafiah 2016, 29).
The rapid development of computer technology during the 20th century and in the presence led to a fast spread of business games, so that nowadays they are a common teaching method in universities and companies all over the world.
3. Taxonomy of Business Games
The market for business games offers a lot of different types of games. They can be classified according to multiple dimensions. The following distinction aspects are based on Biggs classification (Biggs 1990, 25ff):
Table 2 Dimensions for the classification of business games
Dimension
Description
Subject matter: functional or total enterprise
Business games can focus on one functional area of an organisation, for example the production, and on solving problems and making decisions in this particular area only. Or they take a whole enterprise into account and give an overview about the different areas of a business, of how they interact and are interlinked. Then they focus more on making decisions as part of the top management.
Topic width: industry specific or generic
An industry specific simulation aims to imitate the industry as closely as possible, whereas a generic simulation looks more on the general business and general economic foundations. There exist variations in-between, where the product type is indicated, for example, but the focus does not lie on the industry associated with it.
Difficulty/complexity
Simulations vary in their level of difficulty, which can be adjusted through different means. Characteristics which determine the difficulty are for instance the number of decisions to be made each round, the number of rounds to be played, the time allowed for one round of decisions, how close the game is to reality and how high the degree of simplification is, how many areas are to be managed, etc.
Competition: competitive or non-competitive
It is possible that the decisions of one group influence other groups, for example, the price of the product of one group influences the sales of the other groups. On the other hand, in a non-competitive environment, decisions of single groups do not influence other groups and every group is playing against the computer only.
Interaction with the simulation: interactive or non-interactive
In an interactive simulation, the players receive immediate feedback from the simulation about their decisions entered and are then given new tasks straightaway. In contrast, in a non-interactive simulation, the players submit their decisions, which then must be reviewed by the simulation manager. After the review, feedback is released, so there is a time gap
between the final decisions and the feedback. This type of simulation can often be found when teams' decisions influence each other. Real-time feedback is then not possible as the simulation must wait for the decisions of all the other teams.
Group size: individuals or teams
Business games can be played by individuals or in teams. If played individually, it is easier to assess the performance of the player and therefore grading will be fairer. Unlike individual players, teams offer the chance to develop certain soft skills, like teamwork or effective communication.
Participants' roles: specific character or bird's eye view
While participants in some games play a specific role and the game emphasises the journey of this character, who learns along the way, others have the players act more as outside observers. The former is especially used for customer service training.
Type of user
Business games can have different target groups. They can be designed for pupils, students or employees. Between the last two, a further distinction can be made as to which subject area they are in, for example a business-related subject or another area such as medicine.
Logic: deterministic or stochastic
If the game does not include any random elements, it is considered to be deterministic. In the converse, games that involve random events that cannot be influenced by the players, such as natural disasters, are considered stochastic.
Time period simulated
One round of a business game can represent different time durations, for instance, a day, a week, a month, a quarter, a year, etc. The time period influences the strategies players have to apply, as they have to distinguish between short- and long-term strategies.
Just as large as the number of different criteria for classifying a business game is the range of games. That they can be very different in nature, gets clear when looking at two completely different examples of business games: Monopoly and the business simulation CoCos.
CoCos was developed to train students in business administration and management and is based on the business game OPEX, which was created by Prof. Dr. Jörg Biethahn and Prof. Dr. Dr. h.c. Jörg Baetge (Company Competitions GmbH). In CoCos, participants are grouped into teams and each team represents one company. The companies sell chocolate pralines to a simulated customer base on a domestic market. The game consists of several rounds in each of which the players have to make decisions about different parameters. For example, they have to decide on a sales price, on a production quantity, on marketing and R&D expenditures. After every round, results and the success of the company are reviewed. The winner is the company with the highest equity. How the game works in detail, will be described in chapter 5 “How a Business Game works”.
Monopoly on the other hand is a popular board game with the goal to build a land empire, own the most money and drive opponents to bankruptcy. Each player acts individually. The playing field consists of 22 land squares and some other special squares, which are arranged in a circle. You start on the starting square, from which you may move your token by the number of dice eyes rolled. When your token lands on land not yet purchased by someone else, you can buy it. Once you own all properties of one colour, you can build houses on your property. Whenever another player lands on your own property, he or she has to pay rent for it. The amount increases according to the number of houses placed on the property.
The following table compares the two games according to the previously defined dimensions to get a better taste about how different both are:
Table 3 Analysis of CoCos and Monopoly according to the classification dimensions of a business game
Abbildung in dieser Leseprobe nicht enthalten
4. How a Business Game works
As can be seen from the previous chapter, simulation games cannot be generalised because there are so many dimensions in which they can differ from each other. Nevertheless, in order to give an impression of how a simulation game can run, the following describes the general course of a simulation game which belongs to the same categorisation as the CoCos simulation game and explains the exact structure of it in more detail. Explanations about CoCos are completely based on the player's guide (Hochschule für angewandte Wissenschaften Würzburg-Schweinfurt 2020).
The flow chart below gives an overview over the single steps which are usually carried out when playing such a business game:
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