Exercise Overview Decision-making skills refer to the ability to recognize and d

Question

Exercise Overview Decision-making skills refer to the ability to recognize and define problems and opportunities correctly and then to select an appropriate course of action for solving problems or capitalizing on opportunities. In this exercise, you're asked to apply your decision-making skills to a situation calling for both good business sense and a sense of personal values Exercise Background You're the owner of a company that makes dress and casual shoes at two small factories, each with a workforce of 40 people. One is located in Smallville, Illinois, and the other in Modesto Texas, both small towns. You've been in business for 40 years, and both factories have long been profitable. Unfortunately, however, competitive conditions in the industry have changed in recent years. In particular, you're now facing stiff competition from Italian firms whose shoes not only sell for less money but boast higher quality You're confident that you can close the quality gap with new high-tech equipment, but your overhead is still 30 percent higher than that of your Italian competitors. At the moment, you feel that your best option is to close the Smallville factory and lay off the workers, but you're a little reluctant to do so. You're the major employer in Smallville, which is dependent on your factory and has just spent a good deal of money to improve utility service and highway access. In addition, most of your employees are older people who have lived most of their lives in Smallville Exercise Task The team may decide to close the plant or to keep it open, but the goal of the decision-making process is twofold: (1) to keep the company viable and (2) to reflect the team's individual and group values

Explanation / Answer

I have to be very transparent with the employees at the Smallville factory because they need to realize what is happening in the industry. They need to understand the situation and how it is affecting the business. It is clear that the overhead will still be 30% more than the competitors even after having high-tech equipment in the factory. So the only option to keep the company viable is by discussing the problem with the employees and asking them if they are willing to take a small cut in their salary to compensate for the overhead. Once the overhead is removed they can have the normal salary and I will also offer them an extra bonus when the company starts making a profit again. I am going to choose this option because I do not want lay-off the employees and make them unemployed after working together for a very long time. I respect the value these employees have added to the business and I would like to keep it going even during the tough times. I will promise them that the company will adopt the new technology and make the best quality products and then request them to give their time when the company is undergoing the change without losing interest. This way I will keep the company viable and also value the employees who have worked for the company.

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