Understanding Decision Making - Case Study Example

Individual Reflection on Decision Making Name Institution Course Date Executive Summary Decision making process occupies a core position in organisational success. The purpose of the paper was to conduct a reflection on personal decision that I was involved in or aware of. In this regard the paper tackled personal decision I was aware of. The decision the paper tackles is the one done by Cirque du Soleil who despite of the decline in circus industry they managed to expand their revenue by a factor of 22% in the past ten years as result of adopting new strategic decision outside the traditional competition driven format to creation of new market space. The paper found out that the decision exhibits high level of economic theories of bounded rationality since the process has numerous circumstance of being goal oriented. Additionally, the paper established that it equally bordered on incremental decision making. Within these two theories, equally it is evident that the thinking was mostly driven by utilitarianism and egoism perspectives. Secondly, the reflection established that the strength of the decision lies on its positive deviance where they were able to think outside the box and employ objective oriented thinking anchored on utilitarianism to create a new uncontested market space and thus, capturing new demand. Nevertheless, the paper established that irrespective of the success, the decision show little regard to other ethical expectations especially Kantian deontological expectations that calls for decision makers not to peg outcomes on expected pleasure alone, but also the intention. Anchored this realisation, the paper recommends that while making future decisions so that they come out better than the present one, they should not only focus on consequentialism alone, but also on non-consequentialism so as to address wider stakeholders expectations. Table of Contents Executive Summary i Table of Contents ii 1.0 Introduction 1 2.0 The Decision and Issues surrounding it 1 3.0 Critical Concepts evident in the Decision 2 4.0 Reflection of Weakness and Strengths of the Decision 4 4.1 Strengths 4 4.2 Weaknesses 6 5.0 Recommendations 6 6.0 Conclusion 7 1.0 Introduction Decision making is a significant process in management and daily operations of a business organisation. There are routine decisions to be made and major decisions that are done occasionally, equally, individuals can be called upon to make decisions during crisis (Oliveira, 2007, p.12). A decision maker or group decision is contextualised with different factors. This calls for application of various theoretical propositions on decision making such as normative and descriptive theories (Beresford & Sloper, 2008, p.3). The same applies to personal decisions that one is directly or indirectly involved. Using the case example of Cirque du Soleil, this paper is a personal reflection on personal decision. In this regard, the paper analyses the personal decision in context of various theories, models and frameworks. Secondly, the paper critically discusses in a reflection manner the weaknesses and strengths of the decision. Finally, anchored on the reflection on the weaknesses and strengths identified, the paper proposes a recommendation how the decision can be improved in future. 2.0 The Decision and Issues surrounding it The personal decision outlined below is one that was done by Cirque du Soleil. Before indulging on the decision, let examine the context surrounding the decision. The circus business has seen significant decline in market share and profitability owing to the changing dynamics such as the growth of personal entertainment services including PlayStations and DVDs. Moreover, utilisation of animals that has been the cornerstone of circus industry has been heavily opposed on the grounds of animals’ rights therefore limiting their application. Finally, most businesses within the industry while engaging star performers such as lion tamers, the contractual engagement was done in favour of the star performers hence, leading to reduced bottom-line as result of increased cost (Kim & Mauborgne, 2004, p.1 & 6). Despite of these challenges, Cirque du Soleil founded in 1984 was able push their revenue by a factor of 22% in the past ten years (Kim & Mauborgne, 2004, p.1). To counter these negative trends, the first decision to counter rising cost and reduced revenue was to shift focus away from star performers to creating shows full of fun & thrill through intellectual sophistication and artistic richness. This allowed them to reduce costs as they have dropped traditional approach centred on animals that reduced bottom-line in terms of training, housing, transportation and insurance. By dropping some aspects of traditional acts that delivered a show of ‘one for all’ they incorporated aspects of theatre by having multiple productions as opposed to three unrelated production approach in traditional circus business approach. In a nutshell, they were able to create a sophisticated experience in circus entertainment by delivering high value entertainment anchored on circus and theatre at a low cost (Kim & Mauborgne, 2004, p.6-7). 3.0 Critical Concepts evident in the Decision One critical concept evident in the decision is the rationality that it depicts since the organisation was able to analyse the existing situation and predict the future direction they want to be in a deliberate and planned manner by selecting amongst the crowded alternatives. Such long terms strategic thinking that seeks to address strategic gap is best explained through bounded rationality. For instance, Hodgkinson and Starbuck (2008, p.457) indicates that any rational human being is goal oriented and thus should be able to shape the future by selecting available alternatives. This is what Tarter and Hoy (1998, p.212) refers to optimising strategy. For instance, Kim & Mauborgne (2004, p.7-8) notes that the firm re-created circus experiences by deliberately curtailing cost, creating new entertainment experience of the traditional approach by not competing for the existing market, but by creating a new market space. It is evident that by being goal oriented in their purpose, the firm has realised that to capture and lock in customers, they have to create products/ services of high value at low cost (Lindič, Bavdaž & Kovačič, 2012, p.930-931). Indeed, Kim & Mauborgne (2004) notes that the Cirque du Soleil is one of the companies that have successfully employed what is known as ‘blue ocean’ strategy that is not geared on competition through low cost leadership strategy or through differentiation. But through value innovation where they are able to combine the two strategies advanced by Porter’s into one strategy. Chandra, Krovi & Rajagopalan (2009, p. 48) notes that decisions under economic theory of choices such as bounded rationality, the alternative solution sought or adopted should lead to maximum satisfaction. Such argument connects with the teleology/ consequentialism theories such as utilitarianism. Utilitarianism advocates for the fact that for a decision to be considered effective or right, it has to contribute to pleasure of the greatest number irrespective of the process used to attain it. In a nutshell, the whole process is justified by the outcome (Adams & Maine, 1998, p.15). Indeed, the decision made exhibits higher levels of utilitarianism. For instance, the approach has yielded a 22% growth in the profitability for Cirque du Soleil while the rest of the industry was facing total decline. Apart from utilitarianism, the decision depicts application of egoism. Egoism concepts are embedded on the fact that a process is valid so long as it addresses personal interest of the decision maker. For example, the above was done at the expense of traditional aspect such as start performers and animal charmers who were deemed redundant in the new strategic decision approach. In this regard, the organisation did not pay attention to the process of axing out these traditional aspects, but on the expected outcome. However, it equally contributed to maximum benefit in terms of pleasure and enhanced bottom-line. For instance, the company profit grew tremendously as result of the decision. On the other hand, circus lovers experienced a redefined experience, pleasure and entertainment that were missing in earlier traditional approaches have they had grown boring and predictable. However, the decision made does not only display rational approach but also an incremental approach. According to Tarter and Hoy (1998, p.212), most decisions made do not necessarily fall under bounded rationality but, based on incremental basis. Incremental decision entails relying on past experiences and cumulative knowledge to inform present challenge and arrive at a decision. For instance, based on past experiences of the failures in circus industry, the firm had to create a new strategy that combines the two extremes of cost based strategy and differentiation to arrive at value innovation approach. 4.0 Reflection of Weakness and Strengths of the Decision 4.1 Strengths I personally believe that this decision exhibits higher levels of strength owing to the unique goal oriented approach it has given birth to and how it has drove the firm back to profitability amidst overall decline in the industry. The rationale, for such argument is affirmed by the fact in traditional strategic approach by most firms, the decision is either to adopt differentiation strategy or cost leadership strategy. Cost leadership strategy is premised on the need to reduce production and operational costs in the organisation with the belief that it will contribute to overall low cost which can be subsequently transferred to consumers. On the other hand, differentiation is about creating higher value products and sells them at higher cost (Baroto, Abdullah & Wan, 2012, p.121). However, the firm in their strategic decision depicts an innovative approach that does not only embrace the above identified strategy singly, but combines the two approaches to create what is known as value innovation. Under value innovation, a firm is able to produce higher value services or products and at the same offers these services or products at a lower cost. It is indeed this combination that worked in favour of Cirque du Soleil. For instance, they abolished tradition uncorrelated three set production to an innovative theatre like production with advanced sound and lighting system. Equally, they limited reliance on animals and animal charmers as this was getting obsolete yet constituting significant operational costs in terms of housing, insurance and medical treatment (Kim & Mauborgne, 2004, p.6-7). This is what is known creation of new market space under blue ocean strategy as opposed to cut throat competition that is geared towards undercutting other players under Red Ocean Strategy (Lindič, Bavdaž & Kovačič, 2012, p.930). The strategic goal oriented decision and the incremental aspect of it, depict four critical successes that allowed them created uncontested new market space and capture new demands. The first is the elimination, raising, reduction and creation strategy. First they eliminated unwanted unrelated three set production to a thrilling theatre like production. Secondly, they reduced role of star performer and animals in whole process. Thirdly, they raised the production process by incorporating technology and having numerous shows for numerous segment of the market as opposed to ‘one size fit all’ strategy. Finally, they were able to create a new uncontested market space that in unrivalled (Kim & Mauborgne, 2004). 4.2 Weaknesses The shortcoming of this strategic decision is limited and not well expressed. However, the shortcoming can be associated with the way they had to do reduce the presence of animal charmers yet their livelihood was anchored in circus industry. This affirms the fact that the whole process while it was anchored on bounded rationality, the informing ethical theories were more of utilitarianism and egoism. Such argument can be contextualised within the discourse of Kantian deontology is justifying a right or wrong decision. Kantian deontology accepts the fact that a decision is right or wrong rooted on the intention and not outcome and such the theory proposes that every rational individual has a moral duty to do what is right by not looking at the outcome, but the process used to attain it (Adams & Maine, 1998, p.18). In the context of Cirque du Soleil, the prime focus or outcome is profitability. However, the firm did not give considerations to the fact that their decision will have other social impact for instance loss of job opportunity for those in several years have depended on the circus industry only at the expense of entertaining public and gaining profits. Indeed, such observation defeat deontological expectations under corporate social responsibility that calls upon business not only to anchor their business on profitability alone, but also on the impact they have on other stakeholders (Iamandi, 2006, p.7). For instance, as a moral agent, Cirque du Soleil is expected to aid in issues such as job creation so as to be seen to be ethical (Donaldson & Dunfee, 1994, p.254). 5.0 Recommendations In terms of how decision should be made, the process exhibits a competent outcome. The theoretical underpinning that seemed to have guided to have guided the whole process of goal oriented approach as expounded in bounded rationality and as implemented by Cirque du Soleil is the teleology theories especially the utilitarianism and egoism. nevertheless, any rational decisions should not only be rooted on outcomes/ consequences, but also on non consequences and thus, the firm while making decision next should also take into consideration deontological expectations without focusing only on profitability, but also on other stakeholders expectations such as animal charmers who have been part of traditional circus event. 6.0 Conclusion The aim of the paper was to conduct a personal reflection on a decision event conducted personally or in a given organisation. Using case example of Cirque du Soleil, the paper conducted a personal reflection on the decision made by the firm. In the first instance, the paper examined the decision and issues surrounding it. The paper found the decision was a strategic response by the firm as result of declining market share by creating new market and demand as opposed to cut throat competition. Secondly, the paper found out that this decision depict application of various theoretical constructs such as bounded rationality through goal oriented/ satisficing approach; incremental approach and utilitarianism. Thirdly, the paper reflected on the strengths and weaknesses and found out that the strength lies on its innovative approach of combining differentiation and cost based leadership strategy to create value innovation concept for unrivalled market space. Finally, the paper recommends that, in future decisions, utilitarianism should not only be the basis of decision making, but also deontological aspirations such as Kantian ethics. References Adams, D.M. & Maine, E.W. (1998). Business ethics for the 21st Century (pp. 10-18). Mayfield Publishing. Baroto, M. B., Abdullah, M. M. B., & Wan, H. L. (2012). 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