A system dynamics model as a decision aid in evaluating and communicating complex market entry strategies

Developing a market entry strategy is a critical activity for any firm but all the more so for those firms that wish to successfully compete in todayʹs challenging global economy. Unfortunately, developing a market entry strategy is an ill-structured and complex activity for which structured approaches have proven inadequate. In less structured situations, data driven and model based decision-support systems (DSS) have been shown to be of significant help to decision-makers faced with such tasks. Getting managers to use such systems, however, is a major challenge that has been the subject of considerable research in the field of DSS. As far back as the 1970ʹs scholars identified reasons why managers are reluctant to use such systems. Among the most often cited reasons why managers are reluctant to use these systems are: they do not understand the model inherent in the DSS; they do not know when to use them; they are unable to extend the use of the DSS; or they are unable to explain the model or its output to others. This paper describes the process of building a system dynamics model that can be employed by marketing managers to help them test the effectiveness of different market entry strategies, and equally important to help them to explain the systemʹs logic and output. The model was built in a bottom-up fashion with the help of a team of marketing managers. In this way the team that helped build the model not only felt a sense of ownership concerning the model, but were also be able to better explain and defend their proposed strategy.