Abstract:

The paper starts from the assumption that the concept of value based management can be improved through the application of system dynamics. Research has led to the conclusion that there is a conceptual and methodological alignment between system dynamics and value based management, as both concepts perceive and study business activities as systems with interconnected elements, using the methodology of cause-and-effect relationships and feedback loops. The application of system dynamics enhances the traditional analysis of value based management because it allows the discovery of the structure of a company through the use of feedback loop diagrams, as well as the study of stock and flow variables.

Simulating the time evolution of a company enables dynamic monitoring of the system's behavior, while simulating scenarios of changes in key variables allows prompt understanding of their impact on the company's value. The introduction of system dynamics in the analysis and management of value creation represents a part of the development and improvement of this concept and, consequently, the enhancement of business analysis for entities in general.

The application of system dynamics in the solution of value based management problems is necessary, given all the reasons mentioned above, as it can genuinely enhance the management process of companies, leading to better understanding of system behavior and more effective management decision-making. The scientific contribution achieved by this work lies in verifying and confirming the justification for a paradigm shift in the long-standing understanding and functioning of a company.