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  • Writer's pictureRealGame Team

What is a business simulation?

Updated: Feb 15, 2023

Business simulation is a learning tool for acquiring practical knowledge in an interactive environment that is risk-free and close to real life. Business simulation games allow experiencing professional situations and applying theoretical knowledge in practice. Business simulations are proven to foster a more integrated and deeper understanding of the studied area that provides students a better position on the labour market.

Business simulations provide immersive learning experiences and they can be used in higher education, corporate training and independent learning. Universities and other organisations integrate business simulations to develop learners’ skills in various business areas.

Business simulations encourage team work
Image author: fauxels

What skills does business simulation improve?

Business simulations replicate real life situations in a dynamic, virtual space that allows students to apply the course’s theoretical content in an engaging practical environment. Studying with business simulations develops many skills, such as:


In a real company environment, specialists need to make dozens of decisions every day. In a close to reality simulated business case, students make real-time decisions that will directly influence the course of events. The decision making should be done strategically.

Time management

To keep up with a fast corporate environment and be successful in it, time management skills are crucial. Business simulations foster time management skills. Business simulations that operate in a real-time create a platform where learners experience managing project deadlines, arranging supplies on time, and deal with ongoing tasks that require timely reaction.

Risk assessment

In the corporate world, every action has its risks that need to be evaluated. Based on risk evaluation, a decision to act or not should be made. To take actions that bring positive and avoid negative outcomes, professionals need to have risk assessment skills. Business simulations are designed to be very close to reality. Every action in the simulation will impact the final outcome. During business simulation games, students learn to assess risks, manage the results, and cope with the consequences of their actions in a loss-free, virtual environment.


Business simulations are usually designed to be played in teams. This feature creates an environment where students need to collaborate and execute tasks jointly. Each of them contributes to the common task in the business simulation, and every team member gets to see how one's actions impact the result. Sharing a common goal and performing tasks collaboratively are typical circumstances that professionals face in their careers. This way business simulations serve as an outstanding practical exercise for making decisions and overcoming challenges collectively.

Concept understanding

To become a professional in any field, one should have a very deep and wide knowledge of the area. Business simulation courses help students to develop a more integrated, complex, and accurate understanding of business concepts illustrated by the business simulation game.

When studying with business simulations the students' understanding becomes more fine grained and informed about the consequences of their decisions. Business simulations not only add new knowledge but may also correct misconceptions in existing knowledge.

Process understanding and cost awareness

Understanding how business processes evolve on a daily level and how these processes affect profitability and cash flow are valuable skills in the contemporary workplace. Managing daily liquidity and optimising working capital are both skills needed for surviving in the volatile business environment. Abilities to analyse cash flow and to make decisions that improve revenue are in great demand, and business simulations can help to develop them.

Taking advantage of ERP systems

Today, companies manage operations with real-time operated Enterprise Resource Planning (ERP) information systems. These systems offer vast amounts of data that can be analysed for making informed decisions. Extracting and analysing data with different tools, such as Business Intelligence applications adhere to skills that can be developed with business simulations.

Why should educators use business simulations?

Benefits of business simulation in teaching
Image author: Pixabay

Apart from bringing benefits to learners, the business simulations have advantages for educators as well. When using business simulations in the course, an educator can

  • Boost student engagement & excitement

  • Facilitate experiential learning

  • Provide a platform for bringing business theory to life

  • Increase conceptual understanding and knowledge retention

  • Endorse decision making & collaboration skills among students

  • Have the flexibility of running courses in any format: online, blended or in class

In which areas are business simulations used?

Depending on the syllabus of the course, it is possible to use and adapt business simulation to your needs to ensure knowledge development and advancement of professional skills. Business simulations can be used in areas such as

  • Supply chain management and logistics

  • Business and data analytics

  • Operations management

  • Marketing and communications

  • Management accounting

  • Strategy

  • Sales

  • Etc.

This text was created by the RealGame Business Simulation team.

RealGame Business Simulation Logo

RealGame is a Finnish business simulation provider. RealGame creates simulations based on decades of experience and latest academic research. Business simulations by RealGame are created by educators for educators with a purpose of providing hands-on experiences and an understanding of how supply chain operations evolve continuously, hour by hour. RealGame is unique in that it has a clock-driven operational mode, which allows for generating transaction-specific data for business analysis and strategic planning.

Please cite this as:

RealGame (2023). What is a business simulation? Retrieved [Date], from


Kiili, K. & Lainema, T. (2008). Foundation for Measuring Engagement in Educational Games. Journal of Interactive Learning Research, 19(3), 469-488. Waynesville, NC: Association for the Advancement of Computing in Education (AACE). Retrieved January 19, 2023 from

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Palmunen, L. M., Lainema, T., & Pelto, E. (2021). Towards a manager's mental model: Conceptual change through business simulation. The International Journal of Management Education, 19(2), 100460.


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