A dynamic interactive simulator for competitive managment in mobile communications market

Abstract

In this research, market share competition between two firms in mobile telecom munication industry is examined. Companies’ decisions on pricing and investment strategies affect each other and create complex dynamic behaviors for market struc tures. Contrary to most economic theories, firms in reality make sub-optimal decisions in response to a competitors’. In this context, feedback mechanisms exist between the decision making processes of the parties. System dynamics methodology is thus suit able to model and investigate the complex dynamics of mobile communications market. An oligopoly market is assumed where two major competing firms are explicitly mod eled. To reveal insights about the market dynamics, a simulation model is built and analyzed under different scenarios to ensure the realism and validity of the model. Fi nally, a web-based interactive simulation game is designed where a player periodically makes eight strategic decisions, such as price, service and features investments and advertising. The counterpart decisions for the competitor firm are accordingly made by the decision rules in the simulator. The purpose of the player is to maximize some performance measures like profits, revenues and market share. Experiments and ex tensive tests with the interactive game indicate that it is a promising tool for real-life decision makers to test their business strategies against a competitor.