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The Corporate World decision making

Introduction

In the corporate world, decision making is a routine process. This process is critical for the business world as successful and effective decisions by the management lead to earn good profits, whereas unsuccessful decision may make the company suffer huge losses. Therefore, the process of decision making is crucial in the business world. In the decision making process, the company may follow the predetermined steps and also use various techniques and tools such as statistical tools. Based on the results, the management prepares the action plan and implement the decision taken. The process of decision making may be collective, engaging the employees of the organization or may only be conducted by the top management. The decisions taken may also face some conflicts or dissatisfaction by the employees of the organization. However, the management of the organization needs to address and resolve this conflict and resistance to change in order to successfully implement the decision taken.

This report discusses the case of Sun Power company which involves the decision making process and its implementation. The report throws light on the implementation of the decision and its impact on the company’s business concern and stakeholders.

Decision Process

In the case give, the company Sun Power located in Oakland California, who is into manufacturing of solar panels, is financially performing well. However, the growth of the company has declined and the management is expecting the decline in growth for next 2 years. This being the concern, the management analysed the factors affecting the growth of the company. It was found that this decline was due to increased cost of the tax expenses, government regulation, cost of leasing and property and other utility expenses. Furthermore, the management found these expenses could be reduced to a great extent if the company moved its business to New Mexico. After reviewing the options and assessing the objectives, the management decided to the business to New Mexico. However, with this decision the business concerns and stakeholders will be impacted. The rest of the report will discuss the consequences of the implementation of decision on the stakeholders and the implementation plan to address this change.

Impact of Decision on Stakeholders and other business concern

Stakeholders are the ones who will be affected by any decision of the business. The Stakeholders include not only the shareholders of the company. It also includes its clients and employees. Business concerns which are related to the company are also affected by the decision taken by the company. These business concerns are suppliers, business partners, suppliers, financiers, etc. the impact of business decision on the customers depends mainly on the use and availability of product. If the business decision is related are affecting the use or availability of product, it impacts heavily on customers. In which so ever case, the business decision will impact on the main stakeholder, those are employees. Every stakeholder or business concern has their own parameters to judge the decision taken by the company. For example, suppliers may look for effect of business decision on the production location and process and similarly, customers will look for use and availability. Whereas employees will look for incentives and other facilities and shareholders will look for profitability, efficiency and risk factors. Hence, the influence or impact of business decision on various stakeholders depends on the circumstances and various factors (Lewis, 2016).

In the given case, the management analysed that there are various factors that are affecting the growth of the company. These factors are government regulation, tax expenses, and other utility expenses. After research and negotiation with the government of New Mexico, the company decided to move the business to New Mexico. This move will be beneficial to the company as New Mexico has agreed to offer the company tax reduction of 20% and a cut in personal income tax of employees for 3% as credit for relocation. This will reduce the overall cost for the company and will be beneficial to company as well as employees. However, this decision will have to viewed keeping in mind all the stakeholders.

Identification of participation of stakeholders in the process of change will assist the company in take into consideration the various interest of the stakeholders.  This assessment of impact will help the company to understand the reaction of stakeholders to change. This will assist the company in identifying the stakeholders that can be engaged in change process, their resistance level to change and ways to address them. The below table describes the participation level required by business concerns and stakeholders and the impact of a company’s decision on them (GovernmentofWesternAustralia, 2016):

Participation Level

Stakeholders/Business Concerns

Description of impact

Driving

Employees

Employees will be the driving participants as they will be directly impacted by decision and will also require lead role in implementation of decision. Since, the company will make sure that employees will get the benefit in personal income tax and the growth in company will be indirectly beneficial to them, they will be willing to accept and support the decision.

Advocate

Suppliers

Suppliers will be directly impacted by the decision of the company to move to new location as their business may be affected. However, the company will need their support and facilitation in the process of change.

Active participation

Financiers

Financiers of the company have direct impact as the company will need financial support from them to move the business to other location. Financiers are expected to support in the role they play.

Willingness

Shareholders

Though shareholders of the company will not have direct impact as this decision was to improve the company growth. However, shareholders may arrange for some help required by the company in the change process.

Understanding

Customers

Customers will not have direct impact of decision as the product will be made easily available to them. 

There will be some resistance to change by few of the stakeholders in the process of implementation of decision. However, the management of the company will find the root cause of the resistance and address the issues on priority basis. The company will communicate the consequences and benefits of the decision taken by the company to move the manufacturing unit to New Mexico. The company will also encourage the employees and stakeholders to participate in the discussion on this decision. 

Implementation Plan

The main aim of change management is to align the stakeholders with the company’s strategic decision. This helps to avoid the change resistance by the stakeholders and grow their level of involvement for successful implementation. In the given case, the change in Sun Power is on-going and transitional. The company has decided to move the manufacturing unit to New Mexico and they want all the current employees to shift to new location. Implementation of such change needs holistic and systematic approach. It involves guiding employees for the process of change and also making them understand their importance in implementation process. There are various models that can be used as a base to implement the decision. For the given case, Kotter Model of Change Management has been adopted for developing implementation plan to address the change. This model outlines the step by step guide which is based on fundamental principles that were identified by John Kotter. These principles are related to the approach of people to change, their response to change and how to embrace the change. The following is the implementation plan for Sun power company to address change (Kotter, 2012):

Step 1: To Create Urgency

According to Kotter, for the successful change, all the stakeholders including managers, employees, suppliers and financiers should support the change. This will need proper planning for setting the foundation to move on to next step.

  • Finalizing the participation of stakeholders by communicating with them
  • Preparing plan implementation and setting long term objectives
  • Exploring opportunities in New Mexico, roadblocks for setting manufacturing unit in Mexico and analysing the benefits to the Sun power
  • Prepare implementation team and seek support from stakeholders

Duration for this phase is 1-2 months.

Step 2: Forming Coalition

To manage change, the company will need to form coalition based on various sources, expertise and efforts required. This will require convincing people for change and seek support from top to bottom level of company. The time frame needed for this phase will be 1-3 months.

Step3: Communicating Vision

The company can counteract effectively to the resistant stakeholders for shifting of Sun Power through constant communication and engagement. Hence, the management should keep communicating the vision of the company to the stakeholders. The duration for this phase will be 1-2 months.

Step 4: Removing hurdles and Take Actions

In this step, Sun power will need to analyse the factors that are creating hindrances for process of change. These issues will be addressed and action will be taken. The duration for this phase will be 1-2 months.

Step 5: Generating Win

The company will recognize the success of short period and celebrate it in order to motivate, and endure momentum. 

Step 6: Holding the gain

During the step 5, Sun power will be fully operational in New Mexico. However, the company will need to set goals for long term and keep forming new coalitions as per the requirement of the company in order to sustain growth.

Step 7: Anchoring Change

In this step, Sun Power will evaluate the working, check if any improvement needed. This will include creating new vision, training and educating employees and leaders and keep track of future.

Summary

There are various elements in the process of decision making which are related with good operational and financial outcomes i.e. either growth in revenue or savings in cost. From the above report it is very clear that in the process of decision making, the company should weigh negative as well as positive consequences, but favouring the positive consequences. This helps in avoiding the losses that are possible which will keep the company working with sustainable growth. However, avoiding the process of decision making may seem easier and the same process seems extremely difficult if there is great confrontation. To avoid such confrontation and in order to sustain growth for long term, it is essential for the company to communicate the strategy to business concerns and stakeholders. This will assist the company to empower the workforce in implementation of decision taken (Saaty, 1990). 

In the given case, the management analysed the consequences of the decision of the company to move to New Mexico on the business concern and stakeholders. The implementation plan of the decision has been prepared addressing the change that the company is looking for based on the Model of Change Management by John Kotter. Hence, before implementation of decision taken, the company should evaluate the whole situation, analyse the consequences that may have on the stakeholders and address the issues or their resistance to change for the successful implementation of their decision.

References

  • (2012, February). Change Management: 7 Essential Elements of Stakeholder Engagement. Retrieved April 2016, from Acuity Consultants: http://acuityconsultants.com/wp/2012/02/change-management-7-essential-elements-of-stakeholder-engagement/
  • (2016). Change Management Plan. Retrieved April 2016, from Government of Western Australia: http://www.nrm.wa.gov.au/media/10528/change_management_plan_workbook_and_template.pdf
  • Kotter, J. P. (2012). Change Management model implementation guide. Retrieved April 2016, from GSA: http://www.gsa.gov/portal/mediaId/203435/fileName/Guiding_Principles_for_Leading_Change_Guide_vjune2012.action
  • Lewis, J. (2016). How Are Employees Affected as Stakeholders? Small Business Chron.
  • Mori, N. (2010, July). Roles Of Stakeholders In Strategic Decision-Making Of Microfinance Organizations. International Business & Economics Research Journal.
  • Saaty, T. L. (1990). Decision Making for Leaders: The Analytic Hierarchy Process for Decisions in a Complex World. RWS Publications.
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