Unit 1 – Managerial Decision Making + Research Design, Part 1
Discussion Board
January 10, 2008
The decision to engage in radio advertising by airing a jingle during peak listening hours of a top local radio station for one month straight resulted to an increase in customers coming into the establishment and in revenue derived by the firm for the last two weeks of the advertising period and the next month after the advertising venture. The decision is a success relative to the achievement of the pre-determined objectives for engagement in radio advertising.
Using the six steps for self-analysis of decisions (Bazerman, 2006), the problem that spurred the decision to engage in radio advertising is the progressive decline in the number of customers of the business firm and the decrease in the revenue generated by the firm, within the six-month period after the entry of a competitor in the immediate vicinity or market. The decline in customers and revenue finds attribution to the entry of a competitor, closely resembling the business structure and operations of the firm and located near the firm’s distribution establishment. The promotional activity of the competitor was to offer their products at an introductory price that is less than the price of counterpart products of the firm. Faced with the presence of a business threat the firm needed to devise a means of taking the attention of customers from the competitor back to the firm. The criteria for determining the means of drawing the attention of customers back to the firm, according to rating are 1) cost optimization, 2) customer base expansion and retention, 3) enhancing brand equity, and 4) establishing company values. These criteria represent the factors that the firm needs to focus on in order to gain an upper hand over the new competitor and secure the competitiveness of the firm despite other new entrants. In weighing these criteria according to importance in addressing the problem of decreasing customers and concurrent decline in revenue generation, the most important criterion is cost optimization, which represents venturing into activities to achieve the greatest possible result at the least possible cost (Porter, 1998). The next and closely important criterion is the expansion and retention of customers by maintaining consistency in the value of products and services so that customers continue purchasing from the firm even though there are other firms offering similar commodities at a lesser price (Ries and Trout, 1997). Enhancing brand equity and establishing company value also constitute important criteria that have something to do with creating a positive impression and reputation of brand and the company by consistently providing customers with quality products and services (Porter, 1998). These criteria generated a number of alternatives, according to rating including 1) advertising, 2) price reduction, 3) menu revamp. These options constituted the top three alternative solutions to the problem on declining customers and revenue. Rating the three alternatives using the criteria shows that price reduction would definitely increase the number of customers but this is not sustainable as this could create a price war or strain the finances of the firm when revenues generated are not within the expected level. Menu revamp involves the greatest cost from product development and testing, this could even affect brand equity and company reputation, and there is no certainty that this would draw and retain customers. Advertising also involves costs but developing a carefully designed advertisement could create effective communication links to customers that justifies the cost and the effect could also be long-term. Calculating the optimal decision shows advertising as the most optimal solution by having the least value. Since the weighing of the alternatives occurs with 1 as highest weight, the alternative with the least value constitutes the optimal decision calculation.
Weight
Cost Optimization
Market Expansion/Retention
Brand Equity
Value
Optimal Decision Calculation
Advertising
1
1
2
3
4
10
Price Reduction
2
1
2
3
4
20
Menu Revamp
3
1
2
3
4
30
A calculation of the optimal decision shows that there is no discrepancy between the favoured decision and the calculated optimal decision, which supports the option to engage in advertising as the best solution. However, some problems were encountered in completing the six steps, particularly the weighing of the criteria since the selected criteria all constituted important considerations in the decision-making process. This means that if it is possible not to rate, all these criteria will be equally considered in making the decision. The rational model of decision-making requires prioritization but there are instances when a number of objectives need completion simultaneously. The only reason that an optimal decision calculation was derived was because of the distinct variances in the implication of the different alternatives resulting to the ease in determining the effectiveness ranking of these alternatives. In instances when the alternatives have similar implications, it would not have been that easy to rate the alternatives.
Although the rational model of decision-making effectively works in some instances, this also have limitations so that decision-making should be based on a number of models depending upon the needs context of business firms.
Reference List
Bazerman, M. H. (2006). Judgment in managerial decision making (6th ed.). Hoboken, NJ: John Wiley & Sons, Inc.
Porter, M. E. (1998). Competitive Advantage: Creating and Sustaining Superior Performance. New York: Free Press.
Ries, A., & Trout, J. (1997). Marketing Warfare. New York: McGraw-Hill.
Unit 1 – Managerial Decision Making + Research Design, Part 1
Individual Project – Preliminary Research Design
January 10, 2008
Proposal for Juicy Red Tomato Company
Introduction
The research design constitutes an important aspect of the research process because this provides a framework for the completion of the research investigation. The research design captures the problem and objectives of the research process and provides a guide to direct the research activities towards the identification of solutions to the problem and the achievement of the pre-determined objectives (Creswell, 2002). In the case of the research process for Juicy Red Tomato Company, the determination of the research design appropriate to the investigation constitutes the core aspect of the proposal. The research design determined for application to the case of the company adheres to the research process by Sekaran (2003).
Problem Definition
Juicy Red Tomato Company has maintained progressive growth at an annual rate of 5 percent in the first decade of operation by keeping control of costs. However, the firm started to experience increases in internal costs in the previous three years that affected the continued growth of the firm. Reasons for the increase in internal costs fall under the two categories of natural causes and labour-related causes.
Natural causes include sudden temperature drops and pests. Although these constitute expected risks in growing tomatoes, the occurrence of these causes is largely beyond the control of the company. As such, these are natural hazards in the industry requiring whatever due preparatory actions exists such as planning the planting and harvesting seasons to keep tabs of the periods when temperature drops or rises. In the case of the sudden and unexpected drops in temperature and pest infestation during unexpected periods, the company has no other option but to assess its losses and develop a strategy that enables the firm to experience the least adverse impact and move forward with new plans. An important area of investigation is an evaluation of the coping strategies of the company and the development of coping competencies and strategies.
Labour-related causes include the rise in labour costs because of the decline in the supply of workers, both skilled and unskilled, with the growth in other manual work or skilled work dependent industries. With demand for workers remaining the same because of the manual work involved in tomato production, the cost of labour increased, translating into greater costs for the company. Another labour-related problem is the high attrition rate of key long-term personal of the firm. This increases internal cost because the retention of the key employees involves lesser cost than the recruitment of new employees or training of present employees to take on the key positions vacated. The primary reason cited by the long-term personnel in leaving the firm is their perception of not having any future with the company. This means that the current motivation, job satisfaction, and employee commitment strategies of the company were not effective in encouraging key personnel to remain working for the company as core contributors. Although the company practices in-house promotion so that present employees comprise the first choice in promoting personnel to higher positions, which is an incentive for employee retention, there are factors that adversely influenced the decision of key personnel to leave the company. These factors include the lack of uniform performance measures or performance measures perceived as unfair or inconsistent as bases for promotions so that even with in-house promotions, the personnel who decided to leave the company do not expect the recognition or reward of their valuable contributions. Human resource management constitutes a core area requiring investigation and change in the company.
Nevertheless, even if the firm has experienced a number of problems that contribute to the increase in costs and impending decline in growth, Juicy Red Tomato Company face promising opportunities for expansion of its business operations to usher in an increase in the growth rate of the firm. This would have significant implications for the firm since an increased growth rate would offset the increases in internal costs brought about by the natural and labour-related problems as well as secure the sustainable operations of the business firm. A thorough investigation of the opportunities for expansion and the impacts to the firm deserves consideration as an underlying context for the investigation.
Objectives
Juicy Red Tomato Company has commissioned this human resource consultant to investigate two specific issues. First issue is the determination of the effectiveness and efficiency of the firm’s present organizational structure. Second issue is the selection and maintenance of managerial personnel. Although the company has specified the focus of the investigation on the human resource management issues, looking into the holistic operations of the firm would allow the investigation to derive context-based data necessary in supporting customized human resource solutions for the firm. Internal and external research applies in effectively collecting preliminary and additional information on the objects of investigation. Internal research covers data collection from parties forming part of the firm with direct information on the objects of the study and key internal documents while external research covers industry reports and existing papers on the experiences of similar firms to support data collection and analyses.
Theories/Hypotheses
Preliminary information derived from observations of the operations of the firm and informal conversations with some personnel provided support for the hypotheses determined for investigation, which are:
1) The firm needs to rationalize and re-organize its firm structure to capture the core competencies needed by the firm;
2) The firm needs to introduce a fair and uniform performance measurement system as bases for promotion and rewards;
3) The firm needs to enhance incentives for managerial and front-line employees;
4) Develop open communications and collaborative working environment; and
5) Invest in appropriate information and communications technology (ICT).
Rationalization and re-organization of the business firm is necessary for the company to update its organizational structure and adjust to changes in the present business environment (Hornsby and Kuratko, 2005). It appears that the firm has not made any changes in its organizational structure in ten years. This contributed to the rise in internal costs since there could be tasks that have become redundant with the engagement in emerging technologies or un-upgraded skills making it difficult for existing personnel to accommodate new task demands. There is need for the company to assess its existing organizational structure to identify key positions, merge positions, create new positions, and remove outdated positions. Although this involves the removal of positions, existing personnel can fill new positions through training and skills augmentation. (Hornsby and Kuratko, 2005) Even if training involves cost, returns are long-term.
Establishing a fair and uniform performance measurement system known to employees and represent employee expectations supports job satisfaction and employee retention because the personnel know exactly what they need to achieve in order to qualify for promotions and rewards (Houldsworth and Jirasinghe, 2006). Together with a rational organizational structure, sound performance measures enable the firm to draw expected contributions from personnel with personnel holding knowledge that achieving these expectations would result to expected positive results. This working environment would deter key personnel from leaving the firm.
Enhancing incentives for personnel involves both monetary and non-monetary encouragement such as fair wage and wage increase standards together with benefits, good working environment, and productivity-driven business values (Bratton and Gold, 2000). Key long-term personnel who left could have developed the impression that the company would never change its existing human resource system.
Developing open communications and collaborative working environment are important in minimizing internal costs and preventing attrition among long-term personnel. Multi-level communications allows top management to determine issues emerging among managers and front line employees for the immediate implementation of solutions. Communications also build collaboration and information sharing that minimizes delays and errors. (Mathis and Jackson, 2006)
Information and communications technology works in large business firms handling complex business issues (Scullion and Collings, 2006). Since the company faces promising expansion, ICT investments could benefit the company but it should identify and develop the appropriate ICT tools that meet its specific business needs.
Research Design
In investigating the hypotheses mentioned above, the study employs the appropriate data collection method, data analysis, and interpretation of results. Data Collection
The primary data collection method is interview with key informants from the company including a sample from the managers and front line employees. Interview constitutes the data collection tool intended to elicit insights, expand the understanding of concepts, search any exceptions to existing general rules, and record differences in experiences and situations (Rubin and Rubin, 2005). Applying the interview method enables the derivation of in-depth information from the key informants, since the interviewer has control over the data collection process and can direct the interview process towards the derivation of salient data for the thorough investigation of the issues subject to investigation. A semi-structured interview works well in the study by having a set of guide questions made up of both closed and open questions (Rubin and Rubin, 2005). As a guide, the interviewer can request respondents to elaborate on particular answers to achieve rich data. Closed questions allow the interviewer to derive quantitative information while open questions enable the collection of qualitative data. Analysis of results using both quantitative and qualitative data leads to valid and reliable conclusions, generalizations, and recommendations for the company.
Analysis and Interpretation
Analysis of results involves the use of both statistical and non-statistical tools with the data presented through tables, graphs and figures to facilitate easy reading. Statistical tools appropriate to the study include the derivation of means, comparison of means through t-tests, and standard deviation. Means determine the concentration of answers to determine the common experiences and answers, t-tests determine differences in the experiences, and perceptions of managers and front line employees, and standard deviation determine the extent of differences in the answers and experiences of the respondents. Non-statistical tools include tabulation of answers to determine similarities and differences, comparison of answers, and thematic classification of the answers. Interpretation of analyzed data involves whether the study has achieve the 1) derivation of recommended solutions to the issues faced by Juicy Red Tomato Company, 2) the achievement of the objectives set for the investigation, 3) the collection of the appropriate and sufficient data to support an understanding of the problems faced by the company, 4) the identification of alternative solutions, and 5) the derivation of learning from the previous experiences of the business firm.
Expected Outcomes
After the collection, analysis and interpretation of data, the investigation should result to a clear, reliable and valid report that explains to Juicy Red Tomato Company the underlying reasons for the increase in internal cost, decline in growth, and attrition among key personnel as bases for the recommendations given on how the company can effectively address these problems, particularly the labour-related issues.
Reference List
Bratton, J., & Gold, J. (2000). Human Resource Management: Theory and Practice (2nd ed.). London: Macmillan Press Ltd.
Creswell, J. W. (2002). Research Design: Qualitative, Quantitative, and Mixed Methods Approaches (2nd ed.). Thousand Oaks, CA: Sage Publications.
Hornsby, J. S., & Kuratko, D. F. (2005). Frontline HR: A handbook for the emerging manager. Mason, OH: Thomson.
Houldsworth, E., & Jirasinghe, D. (2006). Managing & Measuring Employee Performance. London: Kogan Page.
Mathis, R.L., & Jackson, J.H. (2006). Human Resource Management (11th ed.). Boston, MA: Thompson South-Western.
Rubin, H., & Rubin, I. (2005). Qualitative interviewing: The art of hearing data. Thousand Oaks, CA: Sage Publications.
Scullion, H., & Collings, D. G. (eds.) (2006). Global Staffing. London: Routledge.
Sekaran, U. (2003). Research Methods for Business (4th ed.). Hoboken, NJ: John Wiley & Sons, Inc.
Credit:ivythesis.typepad.com
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