Business Strategy

Business Strategy involves the formulation and implementation of the longer-term major goals and initiatives taken by a company's top management, based on availability of resources and an assessment of the internal and external business environments in which the company competes.

Business Strategy Challenges
- To compete in the global market
- To best achieve synergies when amalgamating businesses
- To decide on the location of warehouses/plants
- To decide when to make to stock or make to order
- To decide when to fulfill orders internally or sub-contract

Simulation modelling in a Business Strategy sense mainly refers to the simulation of the flow of orders, goods and services. These orders, goods and services are processed in blocks that approximate steps (in terms of capacity and lead time and storage). Steps might be deliveries, factory lines, warehouses, and customers. In a simulation model:

  • Blocks can be modelled in detail or approximated depending on the availability of data and the questions being asked of the model
  • Plants/warehouses can be opened or closed
  • Demand can be seasonal, monthly, weekly or daily
  • Real or forecasted customer demand can be imitated
  • There are no data limitations
  • In fact, anything that can be described can be modelled

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BEFORE YOU DO IT - MODEL IT

Simulation has been used to:

  • Guide a company moving from make to stock to make to order
  • Select where to locate plants/distribution centres
  • Evaluate the synergies of two businesses if amalgamated
  • Size plant capacity to match potential increase in customer base (include USA market)
  • Evaluate the impact of sub-contracting 50% of the manufacturing process


  • Business Process Re-Design
  • Make or buy
  • Capacity - whether to lead, match or lag demand?
  • Supplier Integration
  • Distribution