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a diagram is a a simplified drawing showing the appearance, structure, or workings of something; a schematic representation. while a simulation is a a model or the production of a computer model of something, especially for the purpose of study.

A graph that illustrates the relationship across all sectors of a company, is a Diagram. The replication as well as acting, predicted and otherwise tested, is a Simulation.

  • A term "diagram" seems to be a greatly simplified or systematic graphic that shows how something appears, its construction, as well as its functions.
  • Although a simulation seems to be a standard model or prototype or perhaps the development of anything computational model, often for studying purposes.

Thus the above approach is right.

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