Question

How do the characteristics of management decisions-uncertainty, risk, conflict, and lack of structure- affect the decision facing Stan Eagle?

Answer 1

Answer:

Explanation:

The case study about the decision making ability of Stan Eagle from the beginning of the set up of the company till the time he faced problem after its inception. Stan Eagle who runs a skate company was losing money when he and his partner Pete Williams combined the business of clothing with the business of selling skateboards. Stan’s partner decided to sell other types of sports equipment which he thought will generate more revenues for the company. But Stan was disturbed as he thought it was better to focus on sports that they had most expertise and believed there was a way to bring out profit from those sports. This disturbance led Stan to become confused on whether to listen to his friend or move on with his own decision and eliminate Williams his partner from the business by buying his shares.

Question:

How do the characteristics of management decisions – uncertainty, risk, conflict, and lack of structure –   affect the decision facing Stan Eagle?

A.     Uncertainty

Uncertainty is a state whereby a decision maker have insufficient information on the consequences of his actions. For Stan Eagle, this uncertainty was a cause for worry whether or not the company will succeed or not as he has no expertise about the new product line. Even if he enters the market with the new products, there is a doubt on how well he can manage the new business as he knows nothing about these sports. Thus, there is a big question whether or not he will make profit from it. The company will surely be operating under conditions of uncertainty with the lack of adequate information and cannot estimate accurately about the results of his actions.

B.     Risk

Risk is when the probability of an action being successful is less than 100 percent. If the decision is wrong, one may lose money, time, reputation or other important assets. Thus, accepting William’s proposal is a huge risk to take. It is a fact that risk takers are admired, the reality is that good decision makers prefer to manage risk and minimize it. Stan should accept that decisions have risky consequences, but he should do everything he can to anticipate minimize and control the risk.

C.     Conflict

Stan experienced psychological conflict when William offers a new idea for their product line. The conflict happens when he has to deliberate on whether the option is attractive or not. Also, conflict arises between people in the company, Stan and William are partners and they both have different opinions thus bringing forth conflicts between them.

D.     Lack of structure  

In the case of Stan Eagle, he encountered a non – programmed decision.  Stan Eagle's Company faced a dilemma whether it should or should not invest in the new product lines. The idea proposed by Pete Williams is a new area for the company and Eagle has no expertise or experience in this line of business.