Denise Richardson

Question: Discuss about Managerial Decision Making ? Answer: Introduction This paper will analyze the case study of Poor Frank Herdsman who is faced by a problem on the inflating customer rates and cost of operation in the Special Operations Division. Through the application of problem solving and solution generation tools, the paper will analyze the process in which Frank came up with a solution to the problem. Problem background In the case study, the main problem is the increase in rates on customers services, which include registering people for seminars, booking hotels and conference centers as training sites, hiring and training seminar leaders, fulfilling orders for materials, preparing invoices, and handling customer inquiries and complaints. The rates are expected to increase by 20% next year. The increase in the rates will enable Franks Company to cater for the cost of the new space they have just moved into. This service cost increase has disappointed the program managers as well as his customers. The cause of the problem is due to the relocation of Franks division from "drab-but-dirt-cheap" quarters where it has been operating for five years, to a new expensive facility. The other cause of the problem is the loss of customers who account for about 20% of the divisions hours for last year (Frishammar, 2013). The loss of customers has contributed to the reduction of workload hence reduction of revenu e. Problem definition Frank Henderson, the director of a division in a $300million company, is facing a problem of cost crunch, which has arisen because of relocation to the new facility costing twice as much as the old facility and reduced working hours in the special division, due to the loss of customers amounting 20% of the total working hours last year. The increased cost of the operations is becoming difficult to spread over the remaining divisions work hours. The other problem is the increased cost of space. The company has just relocated the division to a more expensive facility which charges double the amount the division has been used to be paying for the last five years. The reduced working hours, which are meant to cater for the cost of the space the division occupies, is the reason why Frank is facing the problem (Frishammar, 2013). Problem analysis To better analyze the increased cost problem Frank is facing, and identify the root cause, a set of tools will be employed. SWOT analysis is one of the tools used to identify strength, weakness, opportunities and threats associated with the organization in the context of Franks division problem (Dawes, 2011). SWOT Analysis Strength Ability to adopt the new vertical filing system to increase the amount of space Availability of an appealing working space that highlights the quality of services good new location of the business Availability of special problem-solving expertise The company has a strong brand and reputation Opportunities New client base creation Relocation to a new market Weakness High cost of renting the space in the new facility Increased workload once some employees are fired The cost of operation might lead to consolidation of operation. Reduced work hours due to decrease in workload Threats An expected reduction of clients in the coming year at a rate of 20% The competitors might acquire the clients leaving the organization. The increased cost of operation might render the organization non-competitive. The next tool to be applied is the pest analysis PEST Analysis Political There is political stability since no instability has been cited in the case study. Economic Assumption the economy is stable since no issue has been raised Social The division's existence and operations do not conflict with the social standard Technological The case study has not cited any factors relating to technology. The 5Ws and Cause analysis The 5Ws will address what the problem is, where is the problem, who is being affected by the problem, why is there a problem and when did the problem start. With the help of this tool, the following results are generated What is the problem? Defines the problem itself The problem is the increased rates due to the relocation to a more expensive facility. Where is the problem? Refers to the physical structure location of the problem The problem is at Franks Henderson Special Operation Division. Who is affected by the problem? Who are the stakeholders affected by the problem? The Special Operations Division staff and the entire organization are affected by the problem. Why is there a problem? This will address why the problem is taking place. The problem is arising due to the relocation to an expensive facility, as well as the decrease in the number of clients. When did the problem start? This question is designed to address the timing. The problem started soon after the division was relocated to the facility Results From the 5Ws analysis, we find the problem is increased customer rates, an operation cost within the Special Operations Division of about $225,000, and is affecting the staff of the division since the working hours have reduced due to reduced number of customers hence reduced revenues (Kesswaska, 2009). The problem is arising due to the inability to match the increased facility expense of the new facility. The divisions activities are supposed to cover the cost of the facility of which now they have not managed due to reduced working hours. Solution generation This is the stage where various options are put on the table on and how the problem can be solved for impact minimization. This stage has several strategies useful for identifying the solution. Such strategies include brainstorming, brain writing, six thinking hats, fishbone diagram and mind mapping. Brainstorming Brainstorming is the occasion where ideas on how to solve the problem are generated regardless if they are correct or not. The best and most effective idea is taken from the brainstorm session. The idea is evaluated based on implementation possibilities. From the problem cited in the case study, some of the brainstorm ideas would include: relocating back to the old drab-but-dirt-cheap quarters and saving the additional costs; reassigning work from another division to increase the working hours; reducing the number of staff in a vertical filling system to increase the floor space (Peterson, 2010). After brainstorming Frank realized, the idea of vertical filing system would help consolidate the space as well as provide the space needed to relocate the other team in the next room occupying 5000sqm2. This would go a long way in slashing the cost down to $ 20,000 (Akaha, 2013). Brain writing This is a strategy where Frank will do the brainstorming process but with the help of the staff in the division. The strategy involves a process of writing down ways in which one thinks the problem can be tackled. The written down ideas are then read aloud to the team to scrutinize their viability. Once an idea is settled upon the problem, then the evaluation process takes place to ensure the chosen idea will work and is the best garnered. In the case study, Franks idea of space consolidation needs to be taken to the top-level management for further evaluation (Chater, 2009). The Fishbone Diagram The Fishbone diagram shows the contributors aiding the ultimate benefit of the new strategy implementation. The diagram can also be used to determine the factors causing a problem. According to the diagram, the vertical filing will increase space, consolidate the working space, and reduce the rates charged on the space thereby reducing the overall operational cost of the division and the organization (McKnight, Knipper, 2013). The Six Thinking Hats The Six Thinking Hats strategy capitalizes on the fact that the human brain thinks in many distinctive ways. The thinking hats are assigned different colors, each color representing the motivation behind the thinking (Pilipczuk, 2011). Managing blue - represent what the subject is and the focus on the bigger picture. Information white - consideration of the information available as well as the facts Emotion Red - relies on intuition or statement of emotional feeling and gut reaction. Discernment black - the logic put in place to find out the reason to be conservative and cautious. Optimistic response yellow - the logic used to point out benefits, seek harmony and turn to the brighter side. Creative green - the statement made to provoke investigation and think creatively. Based on these hats and associated colors, one can make a decision by eliminating those hats not applicable to the situation requiring the decision. The red hat, which symbolizes emotion, is not applicable in the case study where Frank requires generating a solution (Shapira, 2009). The reason for not supporting this hat is due to inconclusive judgment, as it will be rooted on personal feelings, which may end up oppressing some of the employees thus leading to an appraisal. However, the other five hats are beneficial in the solution generation process. It is also good to note the hats are used as a metaphor and there are no actual hats worn while making the decisions. The hats are simply suggesting the state of mind to be adopted for proper generation of solutions (Fortun, Bernstein, 2009). Mind Mapping This strategy uses graphics to represent ideas depending on how they appear within ones mind. This helps in analyzing and synthesizing of the ideas and supports memorization. The strategy engages the mind fully as it is an analytical and artistic way of putting down ideas. In all the strategies adopted in generating solutions mind mapping is the best and the easiest to employ in decision making (Venkatraman and Huetel, 2012). Mind mapping encompasses brainstorming and other strategies. Some of the benefits of using this kind of solution generation strategy include, studying and memorizing, problem solving, brainstorming, note taking, planning, research and consolidation of information, gaining insight of complex subjects. In the case study involving generation of the solution by Frank regarding the increase rates, it is significant to note that if he had adopted the brain mapping strategy, the solution would have been found much sooner. Moreover, through the same strategy, may be another solution would further increase the space and cut down the cost on paper is the digitization of records. Advancing the technology in the special operation division will ensure the papers used to keep the records are eliminated as well as increase the accessibility and sustainability of those records. This move will further cut down the cost as well as improve the security of the records (Gootnick, Gootnick, 2011). Solution evaluation Frank Herdsman has arrived at several solutions he thinks could help solve the problem the organization is facing. The solutions generated by Frank include vertical filing systems, reassignment of more duties to increase the working hours so as to increase revenue, revert to the old quarters as well as fire a section of employees. However, these solutions might be difficult to implement due to some of the unforeseen consequences that come along with the solution. Therefore, the solution needs to be evaluated to ensure its practicality (Kahneman, Slovic, Tversky, 2012). The tools used for evaluating the solutions include: Categorization Tool: This the process of placing the solution into groups. The process involves identifying the solutions, which exhibit similar characteristics. The Elimination Tool: After categorizing the solution, the next step is to identify which solution best suits the problem or can solve the problem. The remaining solutions which do not meet the threshold are eliminated from the list. For the case study, Frank views the solution of firing some of the employees will increase the workload. Thus, the solution to fire is eliminated. (Kneeland, 2009). Ranking Tool: The ranking is done by giving priority to best suited solutions. The ranking process assigns numerical values to the solution and lists them from best to the worst. From the case, Frank considers the rearrangement of the filing system to be the best solution and thus it is given the highest priority (Wanberg, Milkman Timkan, 2015). Affinity Diagram: An affinity diagram is a tool enabling one to move beyond the habitual thinking and expound other factors to generate the solution. For the case study, the affinity diagram cannot be adopted, as the number of solutions the division is dealing with is less (McKnight, Knipper, 2013). Screening Matrix Tool: The Screening Matrix tool provides an objective method of comparing the solutions. The tool simplifies the process of selecting the preferred solution. This tool encompasses the categorizing tool and the ranking tool at the same time. A typical screening matrix tool appears as follows: Solution Category Priority Solution A Y 1 Solution B V 3 Solution C F 2 Solution D D 4 In the list of solutions that frank is considers to implement, the screening matrix ranks them from the most appropriate to the least appropriate (Mikulincer, Shaver, 2015). Pareto Analysis: Pareto analysis is a tool has not been used in the study, though it is worth mentioning as one of the management tool, which employs statistical methods to arrive at a decision. The tool is mostly used in a situation with a limited number of choices to produce a significant overall effect. The Pareto analysis is simply represented using a graph (Mikulincer, Shaver, 2015). Conclusion The evaluation of the case study has revealed that problem solving is a sequence of steps. These steps are crucial in arriving to a solution to a problem as they help to ensure the solution provided is airtight and all the loopholes have been considered. The steps to be taken to solve the cost crunch problem faced by Frank include communicating with the affected stakeholders about the new changes about to be effected. From there he should begin the implementation of the decision whereby the team working in the adjacent room to the bigger room, thereby consolidating the space and reducing the cost of space. From the findings highlighted in the research report this move will reduce the divisions cost by $225,000 and the cost of implementing this plan is $20,000 needed for implementing the vertical filing system. This therefore leads to the conclusion this move is suitable for the organization within there long and short strategic plans. The strategic plan will require rallying the mana gement to invest $ 20,000 require to support the vertical filling system. The next step is to inform the staff of the new changes that are expected to take place. Next is to inform the facility management of the new changes so that they can readjust the charges and finally start the consolidation of space References Akaha, T. (2013).Muddling through successfully(1st ed.). Chater, N. (2009).Judgement and decision making(1st ed.). London: SAGE. Dawes, R. M. (2011). The robust beauty of improper linear models in decision making.American Psychologist,34(7), 571-582. doi:10.1037//0003-066x.34.7.571 Fortun, M., Bernstein, H. (2009).Muddling through(1st ed.). Washington, D.C.: Counterpoint. Frishammar, J. (2013). Information use in strategic decision making.Management Decision,41(4), 318-326. https://dx.doi.org/10.1108/00251740310468090 Gootnick, M., Gootnick, D. (2011).Action tools for effective managers(1st ed.). New York: AMACOM. Kahneman, D., Slovic, P., Tversky, A. (2012).Judgment under uncertainty(1st ed.). Cambridge: Cambridge University Press. Kossowska, M. (2009). Motivation towards closure and cognitive processes: An individual differences approach.Personality and Individual Differences,43(8), 2149-2158. doi:10.1016/j.paid.2007.06.027 Kneeland, S. (2009).Solving problems(1st ed.). Oxford: Essentials. McKnight, A., Knipper, A. (2013).Problem identification course(1st ed.). Washington: Dept. of Transportation, National Highway Traffic Administration. Mikulincer, M., Shaver, P. (2015).Personality processes and individual differences(1st ed.). Washington, DC: American Psychological Association. Peterson, N. (2010). Choices, Options, and Constraints: Decision Making and Decision Spaces in Natural Resource Management.Human Organization,69(1), 54-64. https://dx.doi.org/10.17730/humo.69.1.82153826v2484743 Pilipczuk, O. (2011). Rational and Intuitive Decision Making Style.Encyclopedia of Business Analytics and Optimization,1986-2009. doi:10.4018/978-1-4666-5202-6.ch179 Shapira, Z. (2009).Organizational decision making(1st ed.). Cambridge: Cambridge University Press. Venkatraman, V., Huettel, S. (2012). Strategic control in decision-making under uncertainty.European Journal Of Neuroscience,35(7), 1075-1082. https://dx.doi.org/10.1111/j.1460-9568.2012.08009.x Wanberg, K., Milkman, H., Timken, D. (2015).Driving with care(1st ed.). Thousand Oaks, Calif.: Sage Publications.