Evaluate the strategic choices of declining manufacturing businesses with a system dynamics approach

Document Type : Original Article

Authors

1 PhD in Production and Operations Management, Faculty of Management and Accounting, Shahid Beheshti University, Tehran, Iran

2 PhD Student in Technology Management, Faculty of Management and Accounting, Allameh Tabatabai University, Tehran, Iran

Abstract

Focusing on financial performance indicators, the present study simulates possible strategic choices of businesses in managing organizational processes in a situation where the industry is experiencing a decline (demand decline) using a system dynamics approach. The system model and causal relationships of its variables are modeled according to the experimental foundations of the research and are simulated and analyzed using the system dynamics approach in the software environment.
The results of research consistent with previous studies indicate that strategic decisions in the management of organizational processes should be made according to financial indicators. Implementation of different scenarios regarding the location of consumption of resources derived from business activities, focusing on financial indicators of return on equity, total fixed capital, amount of borrowed cash and asset index minus debt indicates that the cost of this Resources in internal processes (short-term investment), resource extraction and profit sharing, and finally, investments in equipment and machinery can be given the highest priority, respectively.

Keywords

References

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