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Published in:
2015 | OriginalPaper | Chapter
24. A System Dynamics (SD) Model of Post-Merger Integration
Author : Shyam Sethi
Published in: Systemic Flexibility and Business Agility
Publisher: Springer India
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Abstract
The managerial problems are becoming complex due to rapid socioeconomic changes. Managers find it difficult to cope with the complex problems with the ‘traditional management’ approach. To manage the complexities and contradictions, system dynamics (SD) is a methodology that judiciously combines the traditional management with cybernetics and computer simulation so as to carry out a sound policy analysis.
This chapter discusses the concept of SD methodology and its effectiveness as a modern management tool. The post-merger integration of Kelvinator and Whirlpool is analysed and a SD model is developed taking ‘market share’ and ‘profit before tax’ (PBT) as key parameters. A causal loop diagram for the market share and PBT is developed along with stock and flow diagram. From the closeness of simulation results with that of reality, we found that the policies assumed for formulating the SD model have been more or less corroborated by the actual results.