TUTORIAL SHEET UNIT 7 - MANAGERIAL DECISION-MAKING
CRITICAL THINKING QUESTIONS
Mini Case ONE – New Coke: The Fizz That Fell Flat (Adopted from New Coke: The Most Memorable Marketing Blunder Ever?) Instructions: Read the case and attempt the related questions that follow
In 1985, Coca-Cola embarked on a daring venture: changing the formula of its iconic beverage. Facing pressure from competitor Pepsi, the company aimed to revitalize its brand with "New Coke," a sweeter version backed by extensive taste tests. However, this calculated risk backfired spectacularly.
The launch triggered a consumer uprising, fueled by nostalgia and a deep emotional attachment to the original taste. Protests, boycotts, and a flood of complaints overwhelmed the company. Coca-Cola had underestimated the power of consumer loyalty and the brand's cultural significance.
Within 79 days, the company made a humbling retreat, reintroducing the original formula as "Coca- Cola Classic." This move was met with widespread relief and a surge in sales, underscoring the enduring appeal of the classic taste.
The "New Coke" debacle serves as a cautionary tale in marketing history. It demonstrates the dangers of underestimating the emotional connection consumers have with established brands. It also highlights the importance of thorough market research and understanding that taste is not the only factor driving consumer choices.
Despite the initial setback, the New Coke saga ultimately benefited Coca-Cola. It reinforced the brand's iconic status, generated unprecedented publicity, and even led to increased sales of both the classic and new versions. The company learned a valuable lesson about the power of consumer sentiment and the importance of respecting brand heritage.
Questions Related to the Case
1. Analyze the impact of Coca-Cola's decision to change its formula on the company's brand, reputation, and financial performance. What lessons can be learned about the potential consequences of major decisions? 2. Was the decision to launch New Coke a programmed or non-programmed decision? Explain your reasoning. 3. Which decision-making model(s) do you think Coca-Cola used when deciding to launch New Coke? Provide evidence from the case to support your answer. 4. Map out the key steps in Coca-Cola's decision-making process leading to the launch of New Coke. Where did the process go wrong? 5. Based on the information in the case, what personal decision-making styles might have been exhibited by Coca-Cola executives? 1 Revised Aug. 2024 - TC Mini Case TWO – New Construction, New Challenges: A Case at Brown's Construction (adopted from case by Oswy Gayle) Instructions: Read the case and attempt the related questions that follow
Fresh graduates Kendal and Omar, armed with top honors in Civil Engineering from the University of Technology, Jamaica, were eager to embark on their careers at Brown’s Construction Engineering Co. Limited. This well-established firm boasted a diverse clientele with a wide array of construction needs, offering a stimulating environment for the budding engineers.
From the outset, Kendal and Omar were entrusted with significant responsibilities, requiring them to make decisions that could considerably impact the company's success. Their supervisors, Ramon and Jesse, emphasized the importance of adhering to company policies and procedures when making decisions related to awarded contracts.
Recently, the company secured two major contracts: one for a hotel construction in Thailand and another for the prestigious new Jamaican Parliament Building at the National Heroes Park.
At a subsequent meeting to discuss these projects, Kendal and Omar were surprised to be assigned the Thailand project. Despite their eagerness, they were apprehensive due to their lack of experience in overseas projects, coupled with the scarcity of information in the company manual on handling such ventures. The second project, meanwhile, was assigned to Denvan, Oswald, and Floyd.
Sara, the project manager responsible for final approvals, raised concerns about the Thailand project. She deemed it too risky due to insufficient information and even recommended its rejection. A decision was needed by the end of the meeting, but discussions were proving inconclusive. The team was at a crossroads.
Adding to the complexity, the company's attorneys, Theo and Oliver, reported health issues they attributed to poor air quality in the office building. They urged Ramon and Jesse to address the matter, creating yet another challenge for the company to navigate.
The situation at Brown’s Construction is ripe with dilemmas, demanding decisive action and effective communication. How will the team resolve the project allocation issue? What steps will they take to ensure employee well-being? The path forward is uncertain, but the decisions made will undoubtedly shape the company's future.
Questions Related to the Case
a) Explain to Kendal and Omar the concept of decision-making and its significance in effective management, particularly within the context of their roles at Brown's Construction.
b) Differentiate between programmed and non-programmed decisions. Considering the
Thailand project, what type of decision would Kendal and Omar likely face if it's accepted?
c) Claudia, a client, stated, "Every decision can be organized on a scale according to the availability of information and the possibility of failure." Explain the meaning of this statement, including the different positions on this scale. Identify where Sara's stance on the Thailand project falls on this scale.
2 Revised Aug. 2024 - TC d) Recommend a decision-making model for Denvan, Oswald, and Floyd to manage the local project and justify your choice.
e) If the Thailand project is accepted, suggest a suitable decision-making model for Kendal and Omar and explain why it would be beneficial in their situation.
f) Considering Sara's concerns about the Thailand project, which personal decision-making style would you advise her to employ in reaching a final decision?
g) Analyze the potential consequences for Brown's Construction if the Thailand project is not accepted.
Review/Discussion Questions
1. Explain the difference between programmed and nonprogrammed decisions and the decision characteristics of risk, uncertainty, and ambiguity.
2. Describe the classical, administrative, and political models of decision-making and their applications
3. Identify the six steps used in managerial decision-making.
4. With the use of examples, distinguish the different types of personal decision-making styles.
5. What is the role of intuition in decision making?
True (T) or False (F)
For each question, answer “T” for True or “F” for False 1. Programmed decisions are decisions that are made for situations that have occurred often in the past and allow decision rules to be developed to guide future decisions.
2. Gerald's Groceries and Marty's Market decided to merge their operations. This would be considered a nonprogrammed decision.
3. Uncertainty is by far the most difficult decision situation.
4. The administrative model of decision making describes how managers actually make decisions in difficult situations.
5. Goals often are vague, conflicting, and lack consensus among managers, according to the administrative model of decision making.
6. The political model consists of vague problems and goals, limited information about alternatives and their outcomes, and a satisficing choice for resolving problems using intuition. 7. Nonprogrammed decisions require six steps, however, programmed decisions being structured and well understood require only one step.
8. Managers confront a decision requirement in the form of either a problem or an opportunity.
3 Revised Aug. 2024 - TC 9. Risk propensity refers to the willingness to undertake risk with the opportunity of gaining an increased payoff.
10. Making a decision is the only part of decision-making.
Multiple Choice Select the correct options by circling the corresponding letter a, b, c or d
1. The following statements relate to programmed decisions, EXCEPT:
a. Programmed Decisions involve situations that have occurred often enough to enable decision rules to be developed and applied in the future. b. Programmed decisions are made in response to recurring organizational problems. c. The decision to reorder paper and other office supplies when inventories drop to a certain level is a programmed decision. d. Programmed decisions involve strategic planning, because uncertainty is great and decisions are complex.
For questions 2 to 5, select from the list below. Insert the letter for the option with the correct answer in the space provided. Each option may be used once, more than once, or none at all. a. Uncertainty b. Risk c. Certainty d. Ambiguity
2. This means that all the information the decision maker needs is fully available. _____
3. Managers have information on operating conditions, resource costs or constraints, and each course of action and possible outcome. _____
4. Enough information is available to allow the probability of a successful outcome for each alternative to be estimated. _____
5. This measure captures the possibility that future events will render the alternative unsuccessful. _____
6. Which of the following statement BEST describes ambiguity?
a) Managers may have to make assumptions from which to forge the decision even though it will be wrong if the assumptions are incorrect. b) Statistical analysis might be used to calculate the probabilities of success or failure. c) It means that the goals to be achieved or the problem to be solved is unclear, alternatives are difficult to define, and information about outcomes is unavailable. d) Few decisions are ambiguous in the real world.
4 Revised Aug. 2024 - TC 7. The approach managers use to make decisions usually falls into one of three types. Which of the following is NOT one?
a) The classical model
b) The administrative model c) The political model d) The behavioral model
8. The choice of model depends on:
i. Strategic Goals ii. Manager’s personal preference iii. Whether the decision is programmed or nonprogrammed iv. The extent to which it the decision is characterized by certainty or risk
a) i, ii b) ii, iii c) i, iii d) ii, iv
9. _____ means that people have limits, or boundaries, on how rational they can be, while _________ means that decision makers choose the first solution alternative that satisfies minimal decision criteria.
a) Span of control; spontaneity
b) Satisficing; boundary spanning c) Boundary rationing; satisfying d) Bounded rationality; satisficing
10. Decisions are complex and involve many people, information is often ambiguous, and disagreement and conflict over problems and solutions are normal. This statement relates to what model?
a) Administrative b) Political c) Classical d) Behavioral
11. means that the goals to be achieved or the problem to be solved is unclear, alternatives are difficult to define, and information about outcomes is unavailable.
12. The model of decision making is based on economic assumptions.
13. A normative decision-making model defines how a manager _______ make decisions. 14. is the willingness to undertake risk with the opportunity of gaining an increased payoff.
15. The stage involves the use of managerial, administrative, and persuasive abilities to ensure that the chosen alternative is carried out.
