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The process of decision making is extremely important, especially in the highly competitive business environment. In such a situation, the effectiveness of the decision making may be the determinant factor that defines the success of the performance of a company. At the same time, the effective decision making process is important not only as the means of the improvement of the competitive position of a company in the market but also as an effective tool to maintain the stability within the organization. It proves beyond a doubt that the stable relationships between people working within a company may exist only in the situation when the decision making process does not cause any harm to some members of the personnel and it does not provoke the resistance to the decision taken from the part of the personnel. In this respect, it is possible to refer to the experience of Kingstown Holdings, the company, which has faced considerable problems in terms of the decision making and effective management. In this regard, it is important to place emphasis on the fact the Kingstown Holdings faces the problem of the poor control over internal business processes from the part of the management and poor management of decision making process that naturally affects consistently the position of the company in the industry and its organizational performance.
The major problem the company is currently facing is the problem of the resistance of the personnel to changes. The company needs to introduce changes because its current marketing performance stumbles. In this respect, the company can focus on the use of transformational management style which can help the company to introduce changes and to minimize the resistance of the staff to the changes. In fact, transformational management style implies the involvement of managers in the process of changes through close cooperation with their subordinates. Managers help their subordinates to introduce changes serving as guides for their subordinates. At this point, the establishment of positive interpersonal relationships is crucial for the successful implementation of changes in the organization. The personnel will not resist to changes, if employees have positive interpersonal relationships with managers. In addition managers can communicate to the personnel goals of changes and their outcomes to make them accepted by the personnel.
In actuality, the effective decision making process depends on the theoretical framework used. In this regard, the System of Systems Methodologies can be particularly helpful because they can contribute to the elaboration of effective strategies of decision making. At this point, it is important to distinguish simple and complex systems, which may have either a few subsystems as is the case of simple systems, or multiple subsystems as is the case of complex systems. The complex systems imply more difficult decision making process because multiple subsystems should be taken into consideration while taking a decision. In this regard, the decision tree may be used to conduct the decision making process within the complex system.
At the same time, along with systems, it is necessary to take into consideration participants of systems and, therefore, decision making process. In this regard, it is possible to distinguish three major groups of participants. First, unitary participants are participants, who share the same set of values and have similar views and beliefs. Second, pluralists are participants, whose basic interests are compatible but they do not share common values and beliefs. Finally, coercive participants are participants, who have a few common interests, and they have conflicting values and beliefs that make compromise virtually impossible.
In such a context, it is possible to apply the System of Systems Methodologies to Kingstown Holdings. In this regard, it is possible to use the complex system, involving the decision tree methodology, which should involve pluralist participants because the main problem of the company is the resistance of the personnel to change. However, both managers, who are willing to introduce the change, and employees, who are opposing to the change, share the similar interests but have different values and beliefs. Both managers and employees are interested in the progress of Kingstown Holdings but managers attempt to maximize revenues of the organization and profits of shareholders, whereas employees focus on earning more money and rise of wages along with better conditions of work.
However, nowadays, it is hardly possible to speak about the ideal approach to the decision making, which could guarantee the effectiveness of the decision making process and its successful implementation. Nevertheless, among the variety of strategies and techniques that companies use in the contemporary business environment it is possible to single out decision trees, which provide ample opportunities to increase the effectiveness of the decision making process. In fact, decision trees help consistently to model a decision, to forecast its possible consequences, to choose the most effective strategy of its implementation and calculate decision probabilities to increase its reliability and effectiveness of its implementation.
At this point, it is worth mentioning the fact that the major problem Kingstown Holdings is currently facing is the problem of communication gaps which affect consistently the organizational performance and deteriorate consistently relationships within the company. In fact, the change among the top executives of the company affected consistently the relationships between professionals working within the company, whereas new top executives, namely Elizabeth Kingstown, have proved to be unable to establish positive interpersonal communication within the company. As a result, the company faced a considerable problem of the adequate development of its marketing strategy and maintenance of the effective communication to improve the organizational performance. In this regard, wide communication gaps have proved to be the major cause of current problems of the company and, what is more important, the decision making process of the company has proved to be ineffective to overcome existing problems and close communication gaps. At this point, it is possible to focus on the use of decision trees to improve the process of decision making and to elaborate and to take decisions that can help the company to close existing communication gaps.
On analyzing the role of decision trees in the decision making process, it should be pointed out that decision trees are widely applied in operations research. Basically decision trees are traditionally defined as a decision support tool that uses model of decisions and their possible consequences, including chance event outcomes, resource costs, and utility (Yuan and Shaw, 1995, p.129). Obviously, decision trees fulfill very important functions because modeling of the decision and forecasting its possible outcomes are the most important components of the process of decision making.
As a rule, it is impossible to take a really effective decision if its practical implementation is not modeled and its outcomes are not taken into consideration. A typical decision tree is a closely related model form which is used as a visual and analytical decision support tool. On the basis of the model developed in the process of decision making, policymakers actually define the possible ways of the development and forecast possible outcomes of the decision. In order to understand the practical implementation of decision trees it is possible to model a decision. For instance, it is possible to presuppose that a company has a choice between the development of a new product and consolidation. To take an effective decision, the company can use a decision tree, modeling decision and analyzing variants that the company has at the moment (Figures 1-2).
Another problem the company is currently facing is the problem of choosing the effective strategy, which can help not only to improve the decision making process but also to tackle other problems of the company including the problem of existing communication gaps. At this point, it is worth mentioning the fact that the choice of the strategy should involve the effective decision process because the company has to take a decision concerning its further development. At this point, decision trees may also be very helpful.
However, along with the practical aspect of the decision making process, decision trees may also play an important strategic role. To put it more precisely, the modeling of the decision making and analysis of possible options that an organization has while taking a decision, provides ample opportunities to forecast consequences of each option. In such a way, policymakers, responsible for decision making, can have ample opportunities to assess each of the options they have before choosing the most appropriate and effective decision. The choice is basically made on the basis of possible consequences and costs of the decision.
In such a situation, it is obvious that the process of decision making naturally provides a lot of information which clarifies the process of the practical implementation of the decision. What is meant here, using decision trees, it is possible to develop an effective strategy to implement the decision and maximize possible benefits a company can receive in case of the successful implementation of the decision. Returning to the example of the decision making concerning the choice between the introduction of the new product and consolidation, it is possible to estimate that the strategy of the implementation of the decision should be developed on the basis of the diagram and possible effects of decisions. For instance, if the analysis of the effects of the introduction of new products proves that this decision is more likely to bring positive results than the company should focus on the introduction of new products. Naturally, this means that the company should focus on the introduction of innovations, motivate employees to develop new products, etc. In such a way, the company should focus its strategic development on the implementation of innovations. At the same time, to maximize profits, the company should select whether to develop the new product thoroughly or rapidly. Probably, the latter may be more effective and guarantee the company leadership in the industry that makes the strategy of the introduction of innovations the dominant direction of the development of the company because it is the most effective one. In the similar way, the company may analyze each of the options modeled within a decision tree and, depending on the option selected, the company should choose the most effective strategy that meet either option. Obviously, the strategy will vary consistently depending on the decision taken.
At the same time, decision trees have not only strategic but also practical value. To put it more precisely, using decision trees it is possible to calculate decision probabilities. On analyzing the example of the company that have to choose between the development of the new product and consolidation and using the data from Figure 2, it is possible to calculate decision probabilities (Figure 3). In this respect, it should be pointed out that, in order to calculate decision probabilities, it is necessary to multiply the value of outcomes by their probability. The total for that node of the tree is the total of these values. Using such calculations it is possible to forecast that the value for new product will be as follows:
0,4 (probability of good outcome) * 1,000,000 (value) = 400,000
0,4 (probability of moderate outcome) * 25,000 (value) = 20,000
0,2 (probability of poor outcome) * 1,000 (value) = 400
The calculating of decision probabilities is very important because it makes the forecasts more reliable and facilitates the process of decision making.
Obviously, decision trees have a lot of benefits and advantages compared to other tools used in the process of decision making. In this respect, it is necessary to underline that decision trees are very simple to understand and interpret. In fact, it is quite simple to build the model and forecast possible outcomes, while the information about the resources the company possesses and the marketing research provide essential data that could be used for the calculation using decision trees. The simplicity of understanding and interpretation of the model is very important because it facilitates consistently the implementation of the decision selected.
It proves beyond a doubt that a decision can be applied effectively when it is understandable for the personnel and when it is positively accepted by the personnel. The use of decision trees may easily convince the personnel as well as policymakers in the necessity to take one of the possible decisions and the simplicity of decision trees makes them very convincing since advantages and drawbacks of either option are obvious.
Furthermore, it should be said that decision trees have value even with little hard data. In fact, in such a situation it is possible to involve experts and specialists, who can describe the situation in details, assess its probabilities, alternatives and costs, and give their professional preferences for outcomes of the option selected. In addition, it is possible to use decision trees for optimizing an investment portfolio. To put it more precisely, decision trees can demonstrate the effectiveness of investments and facilitate the process of taking decision concerning investments and, what is more, it can contribute to the more objective selection of the most effective decision concerning investments.
Finally, it should be said that decision trees use a white box model (Yuan and Shaw, 1995, p.131). What is meant here is the fact that if a given result is provided by a model, the explanation for the results is easily replicated by simple math.
Nevertheless, in spite of the numerous strengths and advantages of decision trees compared to other tools used in the process of decision making process, this tool has certain drawbacks and weaknesses. In this respect, it is necessary to underline that one of the major drawbacks is the high probability of the subjectivity of the decisions and options developed in the process of the construction of a model. In fact, often it is difficult to take into consideration all possible outcomes and existing options in the process of decision making. As a result, some options may be simply omitted, while potentially they may be stronger compared to those included in the model. However, this drawback may be minimized through the involvement of experts in the development of a decision tree.
At this point, the company should focus on meeting needs of employees. In this regard, the use of effective methods can help to meet this goal. In this respect, the development of Maslow's Needs theory can be viewed as an alternative to traditional methods of the Scientific Management. First of all, it should be said that Abraham Maslow is recognized by many specialists as an outstanding psychologists whose findings help better understand human nature, behavior of people and their motives. In actuality, Abraham Maslow was mainly focused on human psychology and all his theoretical efforts were directed at the revealing the essence of human nature and understanding of their behavior. On analyzing human behavior, Abraham Maslow has developed a theory which is based on human needs as the major factors that define human behavior. In other words, Abraham Maslow stands on the ground that human actions, behavior, interests are determined by human needs.
In this respect, he did not made a great discovery since other scientists also indicated to a significant role of needs in the life of humans. However, the major accomplishment of Abraham Maslow is the development of the hierarchy of human needs. In fact, unlike his predecessors, Maslow systematized and structured human needs. Basically, his hierarchy of human needs include six major elements: 1) physical, 2) safety, 3) belongingness and love, 4) esteem, and 5) self-actualization. All these elements of the hierarchy are extremely important to each individual and they define the life and behavior of people. In fact, this hierarchy is strictly structure since the significance of needs increases steadily from physical up to self-actualization. Maslow developed the idea that physical needs and needs of safety are basic needs that lie at the bottom of the pyramid of the needs' hierarchy. At the same time, the physical needs are vitally important since they create the foundation for the physical existence of human beings for they need to eat, drink, sleep, etc. to survive. The safety needs are also important because they are closely interrelated with the survival of an individual in a hostile environment.
In actuality, physical and safety needs are primitive, basic needs. The following three categories of needs occupy consistently more important place in the hierarchy and are more meaningful for human on the social level. For instance, the belongingness and love needs imply the need of an individual in the participation or belongingness to some social group, such as family, group of friends, colleagues, etc. On the basis of the relationship with other people individuals shape their esteem, which comprises individuals' self-esteem, confidence, achievements, respect of others, etc. In such a way, the esteem shapes the significance of an individual for the society and his self-perception. As a result, self-actualization of an individual accomplishes the hierarchy of needs created by Maslow. The need in self-actualization implies mainly moral needs of an individual, the need to realize individual's potential, creativity, etc.
From the managerial point of view, these findings of Abraham Maslow can help develop effective management style on the basis of the formation of positive relationship between individuals. Obviously, on the basis of the needs of an individual it is possible to find more effective approach to managing this individual. What is meant here is the fact that it is possible to meet the needs of an individual and, in such a way, stimulate his/her work, increase the effectiveness and productivity of work since it proves beyond a doubt that the satisfaction of individual's needs is a strong motivating factor improving his/her professional performance.
In actuality, Kingstown Holdings should focus on the improvement of its decision making process and taking control over its organizational performance and internal business processes. In this regard, the company should pay a particular attention to the development of effective supply chain management, customer relationship management and total quality management, which can help the company to improve its organizational performance consistently and facilitate the communication not only within the organization but also between the company and customers. Today, the development of the modern management is characterized by the emergence of new trends and new approaches to management. In this respect, the emergence of the Supply Chain Management and the Customer Relationship Management is particularly significant in the contemporary business environment. In actuality, the Supply Chain Management and the Customer Relationship Management play an important part in the development of modern organizations and companies because they influence consistently the organizational performance and affect the business development. At the same time, the Supply Chain Management and the Customer Relationship Management are quite different from traditional approaches to management which focus on four key functions of the management and use traditional methods of management. However, in the contemporary business environment, the use of traditional approaches to management is not always effective. In such a context, it is worth mentioning the fact that the Supply Chain Management and the Customer Relationship Management can contribute to the improvement of the organizational performance on the condition of their effective implementation and proper planning of the organizational development.
On analyzing the role of the Supply Chain Management and the Customer Relationship Management and their relationship with traditional approaches to management, it is worth mentioning the fact that the Supply Chain Management and the Customer Relationship Management are relatively new. Nevertheless, they have gained the tremendous popularity among modern organizations because they can improve consistently their relationships with clients and improve the organizational performance at large. In such a context, it is important to dwell upon both the Supply Chain Management and the Customer Relationship Management in details.
In actuality, the Supply Chain Management is defined by specialists (Mohrman, 1998) as the process used by companies to ensure that their supply chain is efficient and cost-effective. In such a context, the efficiency and cost-effectiveness are crucial concepts to evaluate the Supply Chain Management. At the same time, it is worth mentioning the fact that the Supply Chain Management can have different stages in its development and implementation. Basically, specialists (Parrino,Kidwell, Jiambalvo 2006) distinguish several stages of the supply chain management.
The first stage of the Supply Chain Management is the elaboration of the plan. Basically, planning is an integral element of all approaches to management. In this regard, the Supply Chain Management is similar to other approaches to management. At the same time, it is worth mentioning the fact that the planning in terms of the Supply Chain Management focuses on planning the development of the product and its supply. In this regard, the development and supply are closely intertwined with each other. In this regard, it is worth mentioning the fact that the Supply Chain Management implies the efficient supply as one of the major goals of the effective management.
The next stage in the Supply Chain Management is the development of the product and creation of the network to supply the product to customers. As the matter of fact, the development of the product and creation of the network need substantial financial resources from the part of organizations. In the contemporary business environment, organizations need to foresee needs and wants of customers to create needs to develop the product that meets customers' needs.
After the development of the product, the next stage arrives that is the stage of making the product. In fact, this stage is not the stage of mere manufacturing as is case of other approaches to management. The Supply Chain Management implies that the stage of making the product includes manufacturing, testing, packaging, and scheduling for delivery. In fact, at this stage the product should come prepared to sales en masse
The next stage is delivering. This stage is crucial for the Supply Chain Management and the previous three stages prepare the product to the effective delivery to the customers. At this stage, the organization should have a well-developed network, infrastructure and transportation along with the production facilities to deliver the manufactured, tested and packaged product to retailers and to sell the product to customers.
Finally, the last stage of the Supply Chain Management is the stage of return. This stage implies that customers can return the delivered product. In fact, this stage is never included in traditional approaches to management. In this regard, it is important to place emphasis on the fact that traditional approaches to management view the sale of a product or service to customers as the ultimate goal and the final stage in the product development and product lifecycle. However, the Supply Chain Management implies that the customers should have the possibility to return the product that is apparently a very important opportunity companies should not deny because any product may have defects and may be returned by customers. Companies should take it into consideration because the return rate will define the effectiveness of their performance. Obviously, the more products are returned the lower is the effectiveness of the performance. Moreover, the high rate of returns of the product indicates to the existence of serious problems either in the manufacturing or delivery of the product. Therefore, companies taking into consideration the return of products will be able to cope with their problems and outpace their competitors but to do this they need to apply the Supply Chain Management instead of traditional approaches to management.
In this regard, the Customer Relationship Management is also of the utmost important because it is quite different from traditional approaches to management. In fact, the Customer Relationship Management is a customer-centered approach, which views the customer as the primary concern of a company. What is meant here is the fact that the Customer Relationship Management is focused on the customer, his or her needs and wants. At this point, it is important to place emphasis on the fact that the Customer Relationship Management's primary goals are to define needs and wants of customers and to meet needs and wants of customers.
Basically, both major goals of the Customer Relationship Management are closely intertwined with each other but, at the same time, they both are directed to customers, their needs and wants. In this respect, the Customer Relationship Management is quite different from traditional approaches to management because traditional approaches to management imply that the company views customers as subject to its business activities (Khor, 2001). The main goal of the company in traditional managerial terms is to maximize its revenues, to improve its marketing performance, to take a better position in the market (Peters, 2002). In such a way, traditional approaches to management do not view customers as their primary concerns. Instead, they attempt to use customers to meet their marketing goals. In stark contrast, the Customer Relationship Management focuses on the customers, their needs and wants above all.
At this point, it is important to dwell upon the two major goals of the Customer Relationship Management. First, the Customer Relationship Management attempts to define clearly needs and wants of customers (Robbins and Finley, 1995). In the contemporary business environment, customers' needs and wants are very important because they define the customer behavior. Therefore, companies need to understand their target customers' needs and wants. In such a way, they will know what sort of products they should offer their customers and what specific characteristics their products should meet to satisfy customer needs and wants. When companies have identified needs and wants of their customers, they can start developing the product that meets needs and wants of customers. At this stage they can use the Supply Chain Management to develop the product and to launch the production of the product along with its delivery to customers. The difference between the Customer Relationship Management and the Supply Chain Management will lie in the fact that the Customer Relationship Management is grounded on the knowledge of customers' needs and wants, whereas the Supply Chain Management can be used to complement the Customer Relationship Management because the Supply Chain Management will help the Customer Relationship Management to meet the needs and wants of customers technically.
Finally, it is worth mentioning the fact that meeting needs and wants of customers in terms of the Customer Relationship Management contributes to the growth of the customer satisfaction, whereas the customer satisfaction leads to the high customer loyalty. Customers become loyal to a company, when they feel being satisfied with the quality of products and services delivered by the company. The customer satisfaction evokes positive emotions in customers and they want to have this feeling over and over again that makes them loyal customers.
Thus, taking into account all above mentioned, it is important to place emphasis on the fact that the Supply Chain Management and the Customer Relationship Management are very popular in the contemporary business environment. At the same time, their popularity is determined, to a significant extent, by their high effectiveness. At this point, it is worth mentioning the fact that the effectiveness of the Supply Chain Management and the Customer Relationship Management is achieved through focus on the effective company-customer relationships, which can be traced in both approaches to management the Supply Chain Management and the Customer Relationship Management. In fact, both these approaches imply the orientation of companies on customers, their needs and wants. The organization of the production and supply process along with the customer satisfaction are primary concerns of the Supply Chain Management and the Customer Relationship Management that make them very efficient in the contemporary business environment and facilitate the business development for modern organizations and companies.
Obviously, Kingstown Holdings faces considerable problems in terms of the development of effective communication within the organization and the improvement of the decision making process. At this point, it is worth mentioning the fact that the development of the total quality management may be one of the major strategies that contribute to a consistent improvement of the organizational performance through the improvement of the quality of relationships between professionals working within the company. As the matter of fact, the company has faced considerable problems caused by communication gaps but these problems can be tackled if the company introduces the total quality management at all levels. What is meant here is the fact that the development of effective communication within the organization should be grounded on the total quality management. The total quality management implies the development of relationships of the high quality between employees, as well as between employees and managers. The improvement of the quality of relationships needs the training of employees and managers to enhance their communication skills and to improve their interpersonal relationships. In such a way, the company can stimulate the development of positive relationships within the company and improve the communication within the organization. In such a situation, the role of top executives of the company can hardly be underestimated. Top put it more precisely, the company's top executives have to develop effective approaches to the communication with their employees. At this point, the use of the transformational leadership can be very effective because the transformational leadership contributes to the close cooperation between leaders and their subordinates. In such a situation, leaders should help their subordinates and to guide them throughout the change being introduced in the company. In this regard, the development of the effective communication is extremely important because the communication defines the extent to which leaders can communicate effectively with their subordinates. If they can communicate effectively, they can help their subordinates to develop positive models of behavior desirable for the leaders. In such a situation, the top executives of Kingstown Holdings should serve as models of behavior for their subordinates.
At this point, it is important to place emphasis on the fact that organizations where people continually expand their capacity to create the results they truly desire, where new and expansive patterns of thinking are nurtured, where collective aspiration is set free, and where people are continually learning to see the whole together (Khor, 2001). In this regard, the company should focus on the learning of its employees because the process of learning contributes to the consistent improvement of the organizational performance.
Peter Senge argues:
"when you ask people about what it is like being part of a great team, what is most striking is the meaningfulness of the experience. People talk about being part of something larger than themselves, of being connected, of being generative. It become quite clear that, for many, their experiences as part of truly great teams stand out as singular periods of life lived to the fullest. Some spend the rest of their lives looking for ways to recapture that spirit" (Senge, 1999, p. 132).
Senge's theory of Systems Thinking helps to develop effective approaches to the introduction of changes in modern organizations. In this respect, it is important to place emphasis on the fact that the theory of Systems Thinking contributes to the introduction of changes on the ground of the systematic approach to changes. The company should focus on the analysis of its internal business operations, external business environment and human resources to assess its current resources and capabilities. On the ground of this analysis, the company should elaborate the systematic approach to the development and introduction of changes. Each stage of the change should be carefully planned and prepared. In a long-run perspective, the company can use the elaborated system to introduce other changes. As a result, the company can use the existing system and eliminate problems, such as the personnel resistance to changes.
Thus, taking into account all above mentioned, it is possible to conclude that the use of decision trees in the process of decision making can be very effective. At any rate, the advantageous of decision trees are obvious and they may be easily implemented in different environment that makes this tool widely spread in the process of decision making. In actuality, Kingstown Holdings faces considerable problems in terms of the wide communication gaps that prevent the company from the effective organizational performance and internal problems in interpersonal relationships within the company. Another minor problem is the elaboration of the effective strategy, which can help the company to tackle existing difficulties. In such a situation, the company has to change its decision making process and improve it consistently using the decision making trees.