Case Analysis - Business Management
Question 1
A strategy is the scope and direction realized in the long term after the available resources and competencies are configured to achieve stakeholder expectations (Johnson & Scholes 2008). On the other hand, strategic management is the process used to formulate and implement the primary goals and initiatives designed by management after assessing the external and internal environments of a business. Al Dunlap’s Strategic management was based on an operating philosophy that entailed making extreme cuts to reduce costs operations and to streamline a business in order to return it to profitability. For instance, Dunlap closed two-thirds of Sunbeam’s eighteen plants and eliminated half of the 12000 employees (Byrne, 1998). Al Dunlap applied four principles in his strategy: (i) getting the right management, (ii) cutting back to the lowest costs, (3) focusing on the core business, and (4) getting a real strategy. In reference to his strategy, Dunlap changed the management team and formed a new one and referred to it as the “Dream Team for Sunbeam”. Dunlap went ahead and adopted Sunbeam’s strategy which was to drive the growth of the company and create profits via core business expansions. The leader adopted Porter’s competitive strategies of diversification in terms of its products and markets (Johnson & Scholes 2008). Thus, the Dream Team for Sunbeam differentiated its products from competitors, introducing new products, and moving into new global markets to take advantage of the opportunities in emerging customer trends.
Ways to Improve the Organization Decision-Making Process.
An effective decision-making process ensures the success of an organization. In regard to Sunbeam Corp, the management must promote a culture of focusing on critical decisions. For instance, Sunbeam can concentrate on a process that puts into consideration the value-at-stake, the degree of management needed, and the stakeholders involved in the decision-making process (Blenko, Mankins & Rogers, 2013). For instance, rather than waiting for Dunlap to make decisions that affected the financial position of the management, the management team could have advocated for shared and value-based decision-making. Different employees could have brainstormed and come up with the most effective decision without harming other stakeholders. For example, the massive layoffs affected the reputation of the organization, and instead, the management could have influenced the decision-making process to ensure that the CEO did not look only at his satisfaction and personal gain, but impact of his actions in terms of how he was perceived by other stakeholders (DiPrimio, 2010).
In addition, the decision-making process can be made effective by holding people responsible for their actions. Thus, rather than exculpating him from the blame and the consequences of his strategic decisions, Sunbeam must develop a culture whereby leaders are responsible for their actions. In such cases, a leader would be rational in decision-making and consider the effects of his decisions on other stakeholders (Blenko et al., 2013). Other ways include hiring a consultant to train and develop leaders on how to be effective decision-makers and team players.
Question 2
From the case study, the CEO of Windmere-Durable Holdings stated that Dunlap was an extreme executive, who lacked any values, loyalty, ethics, and honour (Byrne, 1998). Based on these characters, the leader was narcissistic in nature as he showed a lack of empathy; irrational decision-making could have resulted in the callous elimination of people’s jobs in order to cut down operating costs. “Among the personal character flaws that will cause a CEO to lose his position of leadership is a callous and ruthless disregard for the employees who he causes to lose their jobs” (DiPrimio, 2010, p. 4). Thus, personality traits such as self-aggrandizement, arrogance, and indifference toward other employees influence Al Dunlop’s decision-making. Dunlap had limited value to the impact employees had on organizations and this affected the manner in which he made the decision while he was the CEO.
Dunlap could improve any adverse effects of these personality traits and values by adopting positive leadership traits and values. For example, he could learn to embrace and practice value-based leadership by developing values such as integrity, trust, and honesty (Dean, 2007). This is because shared values have the capacity to build trust, which ultimately results in the commitment of customers and employees. Dunlap lacked such values because the organization itself did not trust his leadership and decision-making skills. Also, effective leadership skills such as being rational, collaborative, and communicating with employees could have improved the adverse effects of these personality traits and values (Bruno & Lay, 2006).
Question 3
Dunlap was effective in ensuring that poorly performing companies brought shareholders sizable profits (Byrne, 1998). However, this affected other stakeholders of the company, especially the employees. However, his decision-making process was irrational. According to the economic theory of decision-making, rational decision-making is composed of different stages that are followed to make effective decisions (Oliveira, 2007). Dunlap only valued the effects of his decisions on shareholders. Thus, his decisions did not show any compatibility between choice and value. Basically, rational behaviour in leaders seeks to maximize the value of the outcomes because the focus is on the process of selecting instead of emphasizing the selected alternative. For instance, Dunlap was a demolition expert, and although his actions were applauded by Wall Street his decisions in Sunbeam Corp resulted in losses that affected the company. Even after massive layoffs, the company was still making losses and did not derive any numbers. This is supported by Hastie and Dawes (2000) who demonstrated that in instances when decision-makers followed rational methodologies, and then it was possible to generate numbers that represented personal values. Also, the application of Game theory can be applicable and effective in decision-making. For example, the theory is structured in a manner such that decision-makers have to which solutions are provided by other people before determining what strategies to implement for choosing an alternative. This follows options, outcomes, and probabilities, which are supposedly precise. In regard to the case of Dunlap disregarded possible alternatives from various decision-makers involved in the game.
References List
Blenko, M.W., Mankins, M. C., & Rogers, P. (2013). The five steps to better decisions. Bain & Company. [Online]
Bruno, L. F. C., & Lay, E. G. E. (2006). Personal Values and Leadership Effectiveness. [Online]
Byrne, J. (1998) How Al Dunlap self-destructed. Bloomberg [Online]
Dean, K. W. (2007) Values?Based Leadership: How Our Personal Values Impact The Workplace. Journal of JVBL, pp. 1-6.
DiPrimio, A. (2010). The Managerial Mistakes that a CEO Must Avoid. Journal of Case Research in Business and Economics, pp. 1-17.
Hastie, R., & Dawes, R. M. (2000). Rational choice in an uncertain world: The psychology of judgment and decision making. Thousand Oaks, CA: Sage Publications.
Johnson, G, & Scholes, K, (2008), Exploring Corporate Strategy, (8th edn), London: Prentice Hall.
Oliveira, A. (2007). Decision-Making Theories and Models: A Discussion of Rational and Psychological Decision-Making Theories and Models: The Search for a Cultural-Ethical Decision-Making Model. Electronic Journal of Business Ethics and Organization Studies, Vol. 12 (2), pp. 12-17.
