Purpose: The goal of this study is to emphasize the use of business simulation as a learning tool in educational institutions.  For instance, the two master’s programs (marketing & entrepreneurship, provided by Umeå Business School at master’s level), comprised of four core courses each, but only one module out the four provided utilized simulation for learning purpose. Generally self study, class lectures and case studies are used as the main pedagogy tools in the class room setting. In case of Umeå Business School, the use of simulations and gaming was rather limited in Umea School of Business (USBE) despite the fact that simulations are used to the point of saturation in American universities. This research is focused towards exploring the perceptions of students who undertook a business simulation at Umeå Business School, Sweden. Furthermore, it also provides a model for an effective simulation from educational point of view. Method: Hypotheses were developed to investigate the perceptions held by the students at USBE regarding their perceived effectiveness of simulation as a learning tool. A deductive approach was followed by using theories and scientific research by which hypotheses were generated and tested for answering the literature gaps. Quantitative research strategy was used and questionnaires were sent only to qualified respondents (those students of USBE who had already taken simulation at least once in any modules of their study tenure). Hypotheses were generated to find out correlations between the variables and tested through Pearson coefficient using SPSS testing methods. Findings/conclusion: The findings revealed that students consider simulation the most learning tool compared to others. Simulation is considered practical learning, learning through a gaming approach, an exercise that replicates realistic environment in class room. It provides an enjoyable way of learning and the retention of learnt concept is in high to medium range. Empirical findings show that there is a positive correlation between the variable students who would like to use simulation again with the variable that students will register a course which provides simulation. There is a strong positive correlation among variable of perceiving simulation as exciting and variable perceiving it as a fun way of learning.   Positive correlation exists among variables of being excited to know of simulation in a course and variable of considering simulation being a learning experience.   Lastly we found that there is positive and highest correlation in perception of students regarding likeness and learning with regards to simulation.  This means that compared to other tools there is more likeness of simulation amongst students and they perceive it as most learning tool compared to class lectures, guest lectures, self study and group discussions.    The study concluded with providing a basic model of an effective simulation which was developed in line with literature review and empirical findings from this research