System dynamics models in the process of corporate and public policy

The thesis is a contribution to the literature on policymaking in business and government. By a critical examination of relevant published work in the field and by specific examples it seeks to demonstrate how the system dynamics modelling methodology can contribute to an improvement in the process of corporate and public policy design. It is argued that the relative lack of use of models in the policy process may now be reversed. This is, in part, because of the development of user-friendly interactive modelling software on personal computers together with large screen colour projection facilities. But the most important stimulus to the fulfilment of the potential of modelling work in these areas will come with a realisation by policy makers of the proper role of the model in the overall process. This is a central tenet of the thesis: the model provides a fulcrum for debate and enhanced understanding and should never be viewed as an 'answer generator'. All too often miscasting models in this latter role has, in the author's view, seriously affected their adoption at the strategic policy level. Three specific examples are used to support the above line of argument. These are concerned with: M Technology policy and planning in the steel industry. A model is devised which addresses the crucial role of the blast furnace in an integrated steel works. The pursuit of economies of scale has led to larger and larger furnaces being installed. Given the often cyclical nature of customer demand for steel, together with forced interruptions to production in order to periodically reline the furnaces, it is argued that larger production units are not necessarily advisable. (ii) Public policy considerations arising from the AIDS epidemic. The spread of AIDS and the implications of this for health planning has taxed governments worldwide. A model is presented which captures the spread of HIV disease within the U. K. homosexual population and policy issues arising from model runs are discussed. This is in contrast to some other models which attempt to 9forecast2 the progress of the epidemic. (iii) Financial policy in a firm which failed (Laker Airways). This example differs from the other two in that the policy issues surrounding the firm's financial management are directed at students. They are the 'clients' who would want to use this model in order to explore the implications of alternative strategic policies. System dynamics models of a real-life case study can be usefully harnessed in such a pedagogic role.