Combining system dynamics and conjoint analysis for strategic decision making with an automotive high-tech small–medium enterprise

This article describes the use of system dynamics in combination with conjoint analysis to assist a high-tech small–medium enterprise explore robust strategic policies in a context where customer preferences were critical to strategic decision making. Conjoint analysis served an important role in eliciting customers' underlying choice preferences and had a significant impact on the structure and parameterization of the final simulation model. The combination of methods was quite powerful in this case, and the authors feel it could be successfully applied to a broad class of problems where behavioral policies of decision makers include tradeoffs among multiple attributes. Methods developed to address the multi-attribute choice problem (e.g., conjoint analysis) add needed precision to model formulation and validation. The alternative is to employ formulations that are not empirically derived or grounded in the extensive choice theory literature, and it is suggested that this alternative is not viable when model behavior is sensitive to choice preferences.