Thursday, July 14, 2011

Games managers play in classrooms: Simulation tools getting popular with B-schools

The meeting is a long drawn one. Understandable, as the CEO of this medical motor manufacturer is busy finalizing the company’s go-to-market strategy. The meeting is also trying to figure out what the manufacturer needs to do to acquire and retain customers for sustainable revenues and profits.

But this is a meeting with a difference as the venue is a classroom in a B-school and the CEO and other top brass are students. Called marketing simulation, such “meetings” help students understand the link between marketing-strategy formulation and effective execution.

Similarly, in a classroom elsewhere, students are imitating the acquisition of Celanese AG, manufacturer of chemicals and intermediates, by the Blackstone Group. Students play the role of either Celanese or Blackstone and conduct due diligence, establish deal terms, respond to bids and counter-bids, and consider interests of other stakeholders. The simulation offers chat functionality so that students can negotiate online in addition to in person.

Business simulation games are the new teaching tool Indian B-schools are implementing in their classrooms. Prof. Satish Duryodhan at the Europe Asia Business School (EABS) says after he introduced the same, the attention span of his students has gone up from 20 to 80 per cent.


“Simulations provide you a very immersive experience. There are challenges involved which help you make a superior decision. It makes people think how to apply things in real life. It is both, part of our full time programmes and for Executive MBA programmes.” EABS, in fact, has been approached by other B-schools to help them integrate simulations as part of their curriculum.

Simulation is an imitation of some real thing or state of affairs and involves representation of key characteristics of a selected system or topic. While international B-schools have been using simulations for awhile, the trend has begun catching up with Indian B-schools recently.

According to Harvard Business Publishing (HBP), a wholly-owned subsidiary of Harvard University, the number of Indian B-schools using simulations has doubled over the last one year to 25. While 12 B-schools were using simulations last year, only four had introduced the tool in 2009.

HBP, which creates and sells simulations to B-schools worldwide, says earlier constraints such as internet bandwidth, access to simulations and availability of local support, resulted in limited reach. But now, it is a mainstream learning tool for most MBA courses. For example, a typical simulation like Blackstone/Celanese, developed by HBP, is based on the acquisition of Celanese AG, manufacturer of chemicals and intermediates, by the Blackstone Group in 2003.

The simulation, allow students to play the role of either Celanese or Blackstone and conduct due diligence, establish deal terms, respond to bids and counter-bids, and consider interests of other stakeholders. The simulation offers chat functionality so that students can also negotiate online. Topics covered include: Valuation methods, including capital cash flow and equity cash flow methods, deal structuring, due diligence, mergers and acquisitions strategy, and negotiation.

“At present, over 25 Indian B-schools are using our simulations on topics ranging from leadership, supply chain management, strategy, marketing and finance, among others. Several other schools are evaluating internally before introducing simulations in their courses starting next month. I believe, in the next year or so, almost every quality business school in India will be able to include simulations in its courses. Simulations are fun, bring tremendous energy to the class, and results in experimentation, sharing and integrated learning.,” said Vinay Hebbar, Managing Director, HBP India.

Arun Pereira, professor at Hyderabad-based Indian School of Business (ISB), echoed Hebbar’s views. “Simulations allow you to see the cause and effect of a decision in real time. It mimicks real life with time compression. So more and more B-schools are using it.” ISB, for the first time, will be developing two simulations in-house: Simulation on information space and supply chain. The institute plans to sell the products to other B-schools. “We not only use simulation as ateaching tool but also for research and development of faculty members. Vendors are also a part of it who take care of the technical part of the games,” says Pereira.

Companies, including Tata Consultancy Services, Infosys Technologies, Larsen & Toubro, PepsiCo, Asian Paints, Kotak Mahindra Bank, Dell and AlcatelLucent use simulations as part of their business training programmes. Other B-schools which use simulations include IIM-Ahmedabad and Bangalore, Xavier Labour Relations Institute, SP Jain Institute of Management and Research, and Indian Institute of Foreign Trade.

Source: Business Standard, July 14, 2011
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