The main function of a manager is to make good decisions that will help the company achieve its objectives in the most efficient way (Liff, 2007). Normally, decisions are made from the basis of assumptions. This means that a bad assumption can either lead to a bad or a good decision. A bad decision can negatively affect the growth of the company, while a good decision can result in higher returns for the company. This part of paper will briefly identify two business decisions that were made by two different companies and the possible assumptions that were made prior to the making of the decision. The two companies are Facebook and Starbucks.
In 2014, Facebook announced that it was acquiring WhatsApp at a cost of $19 billion. WhatsApp is a social networking application which boosts of more than 450 million users. Before making this move, there were a number of assumptions the company made. Some of the possible assumptions, the company made include; acquisition of the firm, would reduce competition in market. Secondly, the company would create and increase new markets for its services. Since WhatsApp is popular in most developing nations, acquiring it would imply increased markets in the developing nations. From a business perspective, this major decision was appropriate because it will make the company widen its market, and this will definitely lead to growth. Increase in growth implies increase in revenues and hence more profits.
In 2008, Starbucks, a coffee making company, announced that it was closing more than 600 stores in the United States. The possible assumptions behind this decision include; a closure of the stores will reduce costs of labor and other operating expenses for the company. Secondly, a reduced number of stores will make the firm increase efficiency for the remaining stores. This will make the company more manageable and provide quality services to the customers. From a business standpoint, I think the decision to close the stores was irrational because, it reduced the volume of sales for the company. Besides that, it was reducing its market share of the coffee business. The company’s managers ought to have improved the quality of services in the stores, and hence attract more customers.
There are various criterions of knowing whether a manager is making good decisions. The most important way is looking at the rationality and the assumptions used for arriving at the decisions. A good decision should be based on tangible facts rather than emotions. If a manager is seen to conduct tests or researches before making the decisions then that manager is making good decisions. Secondly, a good manager should have a purpose for any decision made. Any decision made by the manager should have an objective or an impact that contributes to the realization of the company’s goals. For instance, good managers make decisions that solve problems affecting the company. Thirdly, managers make good decisions from a range of other options. They have explored other options before arriving at the decisions. Having a wide range of options before arriving at a specific choice helps a good manager to make a good decision that will positively impact the organization.
Although managers are responsible for making decisions, they cannot enforce them alone. They require support to ensure they continue making good decisions. This support involves cooperation from all stakeholders in the business. For instance, employees and owners of the company should assist in implementing the policies developed by the manager. Secondly, financial and infrastructural supports are essential for the managers in enforcing their business decisions (Liff, 2007).
When I was working as a sales supervisor at a children’s toys company , I made assumptions which I thought would increase my productivity and hence the performance of the company. First, I assumed that children like appealing products hence suggested to my seniors to redesign the company’s toys to make them more attractive. Fortunately, this move increased sales and the company generated more revenue. Besides this, I assumed good communication skills could lure more customers to purchase the company’s products. Therefore, I always strived to horn my oratory skills to convince more customers to purchase the toys.
As stated earlier, assumptions should be backed with objectivity and tests should be conducted to ensure they lead appropriate business decisions. If presented with two assumptions; First, an automobile company assuming an increase of gas price will lead to more an increase in demand for SUVs (sports utility vehicle), and second, an airline assuming the need for another plane that offers no added amenities. It is important to subject the two assumptions to tests or evaluations to confirm if they worthy the ventures.
The second assumption is valid because of the following reasons. First, the airline recognizes that the income of their clients is not uniform. Therefore, adding another airline that targets the low income earners will make them create another market for their business,and this results in more revenue. Besides that, this move will make them look concerned on the welfare of their customers.
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