System Dynamics Modeling the Impacts of Management Policies on Business Performance in Department Store Industry

Abstract

For last a few decades, business performance of department stores had been worse as compared with shopping malls or convenience stores, while there is not a little difference of business performance among each company in department store industry. In this article, we develop a dynamic model which can explain the impacts of department store company's management policies such as (1) outsourcing the purchasing and selling operation (i.e. tenant), (2) targeting the specific customer segment and pricing; on business performance. We develop a system dynamics model which consists of department store model and market model. Moreover, we validate the developed model by comparing the simulation results with trends of actual department stores' business performance.