Critical Thinking in Business-1200 words Essay Example
CRITICAL THINKING IN BUSINESS
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CRITICAL THINKING IN BUSINESS
Brief Description of the Business Scenario
A sporting apparel company, which has enjoyed many years of success with its sporting products focusing mainly in the United States market, particularly in the area of basketball, baseball and American football intends into expanding to new markets by producing apparel for different sports. As the company CEO, it is my duty to decide on the markets that the company will expand to using various business decision-making tools and concepts. The people expected to take part in this decision-making process will be the company team of senior executives constituting of the Vice President (VP) of sales, VP of Marketing, and VP of product development. The expansion project is expected to be completed within a period of twelve months. Additionally, the company expects to see return from this expansion within 2 years of launching. Therefore, this paper intends to provide the decision-making process that will be followed by the company’s team of senior executives in deciding on the markets in which the company should expand to in order to get the expected returns. It will also provide an explanation on the decision-making traps that may have a negative impact on the decision-making process.
Decision Process in this Scenario
The objective of the company’s senior executive team is to arrive at the decision regarding the markets in which the company should expand to within the next 12 months and remain profitable. In order to arrive at the final decision, there are a number of decision-making steps that will be followed in this scenario.
To start with, the first step will be for the team to identify the problem that needs a solution (Roberto, 2009, p37). In this scenario the problem at hand is identifying sporting markets that the company should expand to and be in a position to gain returns from its investment with a period of 2 years of launching. The senior executive team has to resolve this problem and come up with the best optimal solution.
After identifying the problem, the next thing that the business senior executive team will do is to generate and evaluate alternative solutions (Monahan, 2000, p 74). In this case, the team will be expected to initially identify the various markets that it can expand to. Some of the probable markets that the company can expand to in the next 12 months include athletics and football in Africa, Asia, America, and Europe. Hence, the decision-making team should determine the business’s viability of expanding its operations in the mentioned markets. Once the markets in which the company will expand to have been identified, the next thing will be to evaluate the alternatives using various decision-making tools and concepts.
In the process of evaluating the available alternatives, the team can make use of SWOT, PESTLE and Porter fives forces as decision-making tools (Dess, 2012, p 55). In the case of SWOT analysis, it will focus on determining the company strengths, weaknesses, opportunities and threats presented by its planned expansion process (Humphrey, 2005, p 12). The SWOT analysis will mainly be useful in scanning the internal environment of the company, with an aim of determining its preparedness to expand its products to new markets (Quincy, 2013, p 92). Thus, the team will be able to identify the capability of the company in terms of the markets in which it can expand into based on its strengths and weaknesses (Koch, 2000, p 63).
On the other hand, PESTLE analysis will be used by the decision-making team in evaluating the external business environment in relation to the available alternative sporting markets where the firm can expand to. This tool of the decision-making process will enable the senior executive team involved in the decision-making process of analyzing economic environment, social environment, legal-political environment and the technological environment, especially their impact on the identified alternative investment markets (Groznik and Krapež, 2011, p 104). Therefore, the tool will be used by the team to identify the markets that have favorable business environment as far as its sporting products are concerned (Warner, 2010, p25).
Furthermore, during the process of evaluating alternative markets, the team tasked with role of decision-making will be expected to conduct competitive analysis of the company in the identified alternative markets. In order to achieve this objective, the Porter’s five forces analysis will be a successful tool. Porters five forces analysis will enable the senior executive team to analyse the alternative expansion markets in areas of customer bargaining power, suppliers bargaining power, industry rivalry, new entrants’ threats, and substitutes threats (Porter, 2008, p 102). By making use of this model in the decision-making process, the team mandated with decision-making will be able to determine the firm’s competitive advantage position as far as the alternative expansion markets are concerned (David, 2005, p 42).
The next step in decision-making, given the business scenario, will be for the team to choose the best option and perform due diligence (Graham, 2004, p.14). Based on the findings that will be obtained after using SWOT, PESTLE and Porter’s five forces model analysis, the senior executive team will have to choose the best alternative in which the company is best positioned to get good returns, has competitive advantages, and its products will be highly profitable. The team will conduct due diligence analysis on the option chosen in relation to the ability of the firm to implement the option.
After choosing the best option, the next thing is for the team to implement the chosen option. This is whereby it will start the process of planning the products that will be produced to meet the needs of the targeted market and then initiate the product development process (Daniel and Amos, 2000, p 83). The final step in the decision-making process, in this scenario, will be an evaluation of the chosen option. In this stage, the senior team will be expected to analyse the effectiveness of the option implemented in achieving the business intended objectives (Patricia, 2005, p 97).
There are three main decision-making traps that may impact negatively on the decision-making process in the business scenario under review. Firstly, the firm’s senior executive team may have some members who do not have the right information needed to make the right decision. This trap will hinder the decision-making process since team members will be ineffective in their mandate. In addition, there is a high probability that they will end up making the wrong decision that might cost the company millions of dollars, in the future. For purposes of overcoming the this decision-making trap, the senior executive teams should first undergo some training in order to gain the right skills and information needed to enhance their capability to participate in the decision-making process effectively. Secondly, the team may be faced with the trap of lack of agreement on the decision-making criteria to be used to choose the best option (Van Knippenberg et al 2004, p.154). The disagreements may derail the process of choosing the option to be implemented. Hence, for purposes of avoiding this trap, it is important for the team to come up with a decision-making criteria that will be used in arriving at the best solution before they initiate the decision-making process (Nightingale, 2008, p 10).
Lastly, biases of some team members during decision-making may hinder the entire process. This trap arises where some the decision-making team members came into meetings having already formed their perception about the best solution (Nightingale, 2008, p 12). For purposes of overcoming this trap, it is important for the team members to be encouraged to be open minded during the decision-making process.
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