Corporate modelling in the metals industry

Abstract

This is the third of three case studies showing how the systems approach can be used in corporate modelling and strategy development, here in a manufacturing company. First, a rich picture was drawn which described the company's business climate and, from this, influence diagrams were constructed of the factors affecting sales and production costs. A corporate model (consisting of interrelated forecasting, production and financial planning modules) was then constructed and used to forecast future income and production costs, assist with causal and sensitivity analyses and also to facilitate strategic evaluation and choice. Overall, the approach enabled management to develop a clearer understanding of their business environment and so build a comprehensive corporate model which facilitated an enriched strategy evaluation.