Strategic Modelling and Business Dynamics: A Feedback Systems Approach

7.10. Conclusion

7.10.1. Overview of Policy Structure

The model diagrams presented earlier in the chapter (Figure 7.14, Figures 7.15 and 7.18) are quite detailed and show all the concepts used in the equations. As mentioned in Chapter 5, sometimes it is useful to stand back from the formulation detail and compress all the symbols contained within a given policy (the grey regions in Figure 7.14, Figures 7.15 and 7.18) into a single macro policy function. This overview of policy structure gives a feel for how dominant information flows (arising from bounded rationality and characteristic traits of decision making in the organisation) translate into feedback structure.

Figure 7.31. Overview of policy structure driving growth

Figure 7.31 is an overview of policy structure driving growth. It shows four main policies: sales force hiring, sales force budgeting, order fulfilment and customer ordering. The management team of any manufacturing company employing a professional sales force will recognise these processes of decision making individually and be able to discuss them in depth without the need to think algebraically. What the management team and the modeller need to discover is how these processes fit together, without losing sight of the processes themselves. This particular diagram shows clearly how the reinforcing sales growth loop arises because sales force hiring is driven ...