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CHAPTER 4 · Foundations of Decision Making
certain taste and consistency. At the juice bottling plant, "blend
technicians carry out Black Book instructions prior to bottling."
Discussion Questions
The weekly OJ recipe they use is "tweaked" constantly. Black
4-21 Which decisions in this story could be considered unstructured
Book also includes data on external factors such as weather pat-
problems? Structured problems?
terns, crop yields, and other cost pressures. This is useful for
4-22 How does the Black Book help Coke's managers and t
Coke's decision makers as they ensure they'll have enough sup-
employees in decision making?
plies for at least 15 months. One Coke executive says, "If we have
4-23 What does Coke's big data have to do with its go
a hurricane or freeze, we can quickly replan the business in 5 or 4-24 Do some research on revenue analytics. What i
10 minutes just because we've mathematically modeled it."
help managers make better decisions?
in base-
Tuctured
decision-
jantita
do you
College
deci-
CASE APPLICATION
Decision Making, Saudi Style
#3
on.
ass of
Barangan line distante de cultura
usinesses operating in the Middle East often fail to
appreciate the distinctive cultural differences in many
te
a
r
Ahmed Youssef of the global management consultancy Booz
& Company believes that a major issue facing Saudi family
take longer because many of the companies are family owned,
businesses is making the choice as to who traditionally takes
and the tradition is for the family to thoroughly discuss a
leadership positions in the business and those who may be more
particular proposition before committing the business to it.
capable of fulfilling such roles. This problem cuts to the heart of
Equally, the chief executive is often also the head of the family,
the issue of decision making. Added to this are the issues of the
and securing time with this individual may be difficult.
business being expected to support an ever-increasing number of
Saudi Arabia has what could be called a merchant, or trad-
family members and that many businesses have diversified well
beyond their original core competences
ing, culture. Long before the discovery of oil, the Saudis were Decision making, according to Youssef, will have to be
shrewd negotiators. Saudi company hierarchies can be fairly faster and more focused, especially given the fact that many of
rigid, and employees operate with clear lines of authority. In the countries in which these merchant family businesses operate
recent years, the pace of busi-
are now more open to competition
ness has accelerated, but de-
from overseas business than ever
cision making can still be a
"Saudi Arabian businesses..
before. A survey carried out by
slow and deliberate process. difficulties in navigating Booz discovered that many of the
Decision makers will consult
the Gulf!"
Saudi businesses were involved in
widely within the organiza-
as many as three different sectors
tion if they are unsure about
of industry; this diversification too
how the decision will affect the best interests of the company. made it difficult to coordinate decision making and planning.
In this respect, navigating several layers of approval and support The suggestion from the consulting firm is that businesses should
divest themselves of some of the ventures unrelated to core ac-
may be necessary before a decision is finally made.
tivities and concentrate on reinvestment in core businesses. In this
In some cases in Saudi Arabia, the decision making can be
way, decision making can be more focused and streamlined.
delegated down the organization, but the decision will still need
What does all this mean for the non-Saudi? It entails a
the overall support of the organization's senior executives.
slightly different approach to the decision-making process and
Decisions are often made with reference to the specific situa-
negotiations:
tion rather than an all-encompassing set of rules or laws.
1. Friendship and business are nearly always interlinked and
important in decisions than simple objective and empirical data.
based on mutual benefit.
2. Scheduled meetings are often moveable due to Saudis'
rather relaxed attitude about precise times.
sion if they trust those involved.
In many cases, personal feelings and experiences are more
To make a risky decision, decision makers need to feel comfort-
able with that decision and may be more willing to make the deci-
168
Part 2 • Planning
very best; and gets the best by hiring the brightest individuals community projects. It is also going through the process of
interested in a retail career.
replacing plastic carrier bags with paper bags.
Goal setting by employees is coupled with recognizing Following criticism in the early 2000s due to its use of
strong organizational skills by management.
Asian factories as the primary source of its products, Primark
Primark's Management Trainee Program is aimed at grad- decided to attain ethical trading status. In 2009, Primark set a
uates, with key training related to buying because the company program in motion to improve labor standards across its sup-
sources its products from around the world.
ply chain in China. Goals included increasing wages, deliver-
Interestingly, Primark is one of the few retailers that ing productivity benefits, and creating long-term and lasting
do not have an online presence. The company believes that improvements. In order to meet these goals, Primark hired.
it does not need an e-commerce site. Primark is owned by Progress has been encouraging, and realistic solutions to basic
Associated British Foods and at a major management meeting problems have begun to yield major successes.
in August 2011, it outlined the outlook for its various busi- Primark's planning approach has clearly been working.
ness divisions.
According to research 75 percent of a consumer's decisions
Notable in the planning
are made in three seconds at
was the fact that it retained its
the point of sale. Primark fo-
commitment to the high street
"Primark... Hitting the Mark"
cuses on this and pays par-
rather than the Internet. It also
ticular attention to instantly
planned to grow retail space by 10 percent within the next 12 hooking consumers with its shop fittings, layout, and visual
months.
merchandising
In terms of planning and decision making, the decision Primark's planning for the future is well underway.
not to set up an e-commerce site makes perfect sense. Given
the fact that many of its fast fashion clothing products begin at
Discussion Questions
as low as US$4, it would take an enormous number of sales to
5-31 Discuss Primark's decision to bypass e-commerce?
offset the setup costs.
Associated British Foods, the parent company, has an
5-32 Differentiate Primark's marketing effort from other retailers?
overall sales turnover of US$16.37 billion. It has 97,000 em-
5-33 Provide examples of fast fashion chains in your country? How
would cope
ployees working in 44 different countries. Primark itself em-
competition from an expanding retailer
like Primark?
ploys 34,000 across 226 stores, with 7.47 million square feet of
5-34 Why does Primark focus more on the look of its shops than
selling space. Primark is now the second-largest retailer in the
other marketing strategy?
United Kingdom
Primark also does not advertise. Instead it relies on public
5-35 What types of planning and goal setting are described in this
case? How would it help Primark's future operations, and
relations, word of mouth, and the strategic positioning of key
expansion?
stores. Clearly the business operates on tight margins.
Sources: Associated British Foods Plc, www.abf.co.uk; Primark, www
Primark's planning is focused on the ability to offer fast
primark.co.uk; "Primark Boldly Does Not Go Online," Marketing Week
fashion products at the lowest possible price. At the same
August 25, 2011, www.marketingweek.co.uk; and; M. Sheridan,
time, it attempts to ensure that it operates within an ethical
C. Moore, and K. Nobbs, "Fast Fashion Requires Fast Marketing: The
framework.
Role of Category Management in Fast Fashion Positioning," Journal of
Fashion Marketing and Management, 10 (2006).
Primark has membership in the Ethical Trading Initiative,
and it also supports local charitable organizations and
ED
130
Part 2 • Planning
Qua
QUA
are under stress. They also note an overreliance on the size of the
balance sheet, rather than the size or the growth of market share.
Some Saudi businesses are adapting and accepting a more
bottom-up leadership style, rather than a more paternalistic
one. Others are struggling with structural issues and seem re-
luctant to change.
Despite the readily apparent differences, according to the
World Bank, Saudi Arabia was rated thirteenth out of 183 coun-
tries in terms of general ease of doing business (World Bank,
2009). Certainly business models have shifted to include more
privatization, which has led to consultancy services being used.
Nonetheless Saudi Arabian business culture is complex and still
retains many customs and traditions.
In this mo
popular to
decision to
economic
assist in t
better-info
3. The working week starts on Saturday, prayer times and reli-
gious holidays need to be taken into account.
4. Meetings can take on the appearance of being disorganized;
personal and business matters are closely interlinked.
5. With the Saudi business being hierarchical, decision making
is reserved for senior management. It is often the case that
the manager who will ultimately make the decision will be
the one who contributes the least in a meeting.
6. Meetings can take a long time, so decisions may take time,
which reflects the bureaucratic nature of Saudi businesses.
Impatience can be seen as a weakness.
Several attempts have been made to typify the way in
which Saudi Arabian businesses, and decision making, operate.
It could be said that Saudi Arabian businesses are inherently
conservative and that formality and respect are extremely im-
portant. It is also vital to understand an individual's role and the
existing hierarchy of a business. Saudi Arabian businesses adopt
an inherently low risk strategy and adapt slowly to change.
Decision making tends to involve all major stakeholders. Once
a decision has been made, subordinates will implement it with-
out question.
Business is considered to be a personal task, and agreements
are often made face-to-face. Decisions may rely on several layers
of approval, which is not to say that Saudi Arabian business rep-
resentatives are not tough negotiators.
The mere fact that the businesses are hierarchical does not
mean to say that everything is not negotiable.
Some analysts-looking at Saudi business models and deci-
sion making-suggest a shift from top-down leadership and a
transfer of family businesses to younger family members, aided
by independent, professional managers. They feel that the family
business model and the associated decision-making processes
Paya
In Chapte
making
available
optimisti
sible pay
Discussion Questions
4-25 How might the Saudi business model and decision-making
differ from, for example, those in Europe or in China?
4-26 Is Saudi business decision making primarily based on certainty,
risk, or uncertainty? Explain.
4-27 Do you see evidence of groupthink in Saudi Arabian business
decision making?
4-28 What are the comparative advantages and disadvantages to
Saudi Arabian businesses in changing the way in which they
make their decisions?
4-29 How might Saudi Arabian decision-making processes be seen
as an advantage to Saudis and a disadvantage to overseas
customers, suppliers, or partners?
Sources: Mustafa M. Ashwi, "Decision Making Styles: A Saudi
Managerial Context," in Smith, Achoui, and Harb (eds.). "Unity and
Diversity in Arab Managerial Styles," International Journal of Cross-
Cultural Management, 7(2007), and H. T. Azzam, The Arab World Facing
the Challenge of the New Millennium, (London:1. B. Tauris, 2002).
possible
may cho
Con
determin
Visa car
major cc
for pron
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any of
Exhibit
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Endnotes
Scan for Endnotes or go to www.pearsonglobaleditions.com/Robbins
Exhil
166
Part 2 • Planning
Experiential Exercise
Winwood Performance Plus
To: Hannah Paul, Human Resources Manager
From: Eric Winwood, CEO
Subject: Environmental Issues
Hannah, as you know our entertainment consulting business has
had a remarkable couple of years. The success we've achieved
wouldn't be possible without the hard work our associates do
and I'm honored to be surrounded by such committed and tal-
ented individuals. I feel that our next push as a company should
be to become more environmentally responsible. All of us (me
included) generate a lot of paper as we do our work, so I think
our first step (and main focus right now) should be on controlling
paper waste. I would like you to create a company-wide pro-
gram for controlling paper waste. Before we get our associates
involved, I'd like you to set some goals and develop some plans
for this program. Get me your report (keep it to one page, please)
outlining these goals and plans as soon as you can.
This fictionalized company and message were created for educa-
tional purposes only, and not meant to reflect positively or negatively on
management practices by any company that may share this name,
CASE APPLICATION #1
Flip Flop
Y
Cou've probably seen them at weddings or graduations, The Flip camera broke new ground when it was introduced.
and maybe even at parties. No, they're not "crashers," Customers loved that it was pocketable, inexpensive, and easy
they're the handheld Flip video camcorder. Flip was to use. Flip's name came from the arm that flips out of the
the brainchild of some San Francisco entrepreneurs whose camera body and lets the user connect it directly to a computer.
idea was to create a pocket-size, inexpensive, and easy-to-use The camera also had video editing software that opened when
video camera. Considering that most video cameras were big. it was connected to the computer. Although the actual video
bulky, complicated, and expensive, that idea seemed right on camera seemed tiny, it recorded remarkably good footage for a
target. And it was! When Flip went on sale in 2007, it quickly camera of its size. In addition, unlike other video cameras, the
dominated the camcorder market as some 2 million were sold Flip could be held comfortably in front of you so you didn't
in the first two years. “Then, in 2009, the founders cashed feel "removed" from the event being recorded. The product
out and sold to Cisco Systems,
was exactly what the found-
the computer networking gi Cisco + Flip =
Flawed Strategy
ers envisioned-a practical
ant, for $590 million." Not a
pocket-sized, inexpensive, and
easy-to-use video camera.
bad payday, huh! For Cisco,
When Cisco Systems decided to acquire Flip, one of the
the acquisition was a key to its strategy of expanding in the
hottest consumer products to hit store shelves in a while, many
consumer market, especially as homes became more media-
industry analysts questioned that decision, believing it was an
enabled. However, two years later, in April 2011, Cisco an-
"odd fit" for the company that's best known for its business en-
nounced it was "killing" Flip and laying off 550 employees.
terprise networking services. The Flip camera was the first true
As one analyst said, “It's a testament to the pace of innovation
consumer product under the Cisco umbrella. In its announcement,
in consumer electronics and smartphone technology. More and
Cisco said that the acquisition was a key to its strategy to expand
more functionality is being integrated into smartphones."
momentum in the media-enabled home. There was no doubt that
Cisco was serious about the company's desire to expand its market
from technical components into true consumer electronics. And
there was another variable at work here, as well. The acquisition
of Pure Digital Technologies (the actual company behind the Flip
camera) was another sign that Cisco was making a statement by
-43
Four years. That's all it took for the Flip video camera, the
most popular video camera in the United States, to go from hot
start-up to obsolete. But even in the life cycle of tech products
where things happen fast, this flipflop seemed to be in the blink
of an eye-unusually fast, as one analyst said, especially for a
"hot" product. What happened?
CHAPTER 5 • Foundations of Planning
169
CASE APPLICATION #3
Shifting Direction
A
s the global leader in satellite navigation equip-
ment, Garmin Ltd. recently hit a milestone number.
Despite these new market shifts, customers have gotten
It has sold more than 100 million of its products
used to the GPS devices and they have become an essential part
to customers from motorists to runners to geocachers and
of their lives. That's why Garmin's executive team still believes
more-who depend on the company's equipment to help "show
there's a market for dedicated navigation systems. It's trying
them the way." Despite this
to breathe some life into the product with new features, better
milestone, the company's
designs, and more value for the
consumer's money. For instance,
Garmin's Change in Direction
core business is in decline
some of the new features include
due to changing circum-
faster searching for addresses or
stances.49 In response, managers at Garmin, the biggest maker points of interest, voice activated navigation, and highlighting
of personal navigation devices, are shifting direction. Many exit services such as gas stations and restaurants.
of you probably have a dashboard-mounted navigation device
in your car and chances are it might be a Garmin. However, a
number of cars now have "dashboard command centers which
Discussion Questions
combine smartphone docking stations with navigation systems." 5-36 What role do you think goals would play in planning the change
Sales of Garmin devices have declined as consumers increas- in direction for the company? List some goals you think might
ingly use their smartphones for directions and maps. However, be important. (Make sure these goals have the characteristics
have you ever tried to use your smartphone navigation system of well-written goals.)
while holding a phone to look at its display? It's dangerous to 5-37 What types of plans would be needed in an industry such
hold a phone and steer. Also, GPS apps can "crash" if multiple as this one? (For instance, long-term or short-term, or both?)
Explain why you think these plans would be important.
apps are running. That's why the Olathe, Kansas-based com-
pany is taking action to "aggressively partner" with automak- 5-38 What contingency factors might affect the planning Garmin
ers to embed its GPS systems in car dashboards. Right now, executives have to do? How might those contingency factors
affect the planning?
its biggest in-dash contract is with Chrysler and its Uconnect
dashboard system found in several models of Jeep, Dodge, 5-39 What planning challenges do you think Garmin executives face
with continuing to be the global market leader? How should
and Chrysler vehicles. Garmin also is working with Honda and
they cope with those challenges?
Toyota for dashboard systems in the Asian market.