Country Dega and Company Nestle Waters - Essay Example

Decision Making Techniques: A conceptual Approach in a Business Scenario with Problem Formulation and Identification of Solutions. Problem Formulation: Introduction: With the advent of globalisation, the world has become small and the business organisations breaking all geographical barriers spread their wings to far off countries and locations, wherever they find economies of operations. This has given rise to various organisational problems caused by environmental, social, cultural, bahvioural and ethical issues. Such issues aggravate the complexities of business. In addition, economic issues like aggressive competition and governmental controls also make the business scenario a problematic one to tackle. But as the saying goes “A problem is a chance for someone to do his/her best.” Hence effective decision making, is often required and the first step in the decision making process is to define the problem so that the available information may be collected, analysed, summarised and studied to find out suitable solutions to the problem on hand. This paper attempts to formulate problems relating to the expansion of the business of the company Nestle Waters in the country Dega, which appears to be a potential market but surrounded by a multiplicity of problems that need to be addressed if the company wants to successfully launch and maintain its business. The First part of the paper deals with the problem formulation using appropriate tools and techniques. Country ‘Dega’ and Company ‘Nestle Waters’ – A background: Before we step in to the analysis of the problems in the business scenario of the company ‘Nestle Waters,’ a brief background of the company and the country, where the company is contemplating to expand, is produced below for a better understanding of the problem environment by the readers: Dega: Dega is a South Pacific Island comprising of multi religious ethnic people, some with European origin and sizeable American settlers having half of indigenous religion and remainder belonging to Christianity, Buddhism and Islam. Major languages include English, Spanish and French in addition to the local indigenous language. The natural resources include agricultural commodities like coffee, cocoa spices and banana, petroleum and natural gas. Main industrial orientation is towards fishing and tourism. The island is vulnerably exposed to all natural calamities like Tsunami; earthquake and so on and also is fighting HIV/AIDs and Terrorism. Nestle Waters: With 103 factories working in 36 countries Nestle Waters accounted for a turnover of 5.7 billion in 2005. The company employs 30,000 people and is currently enjoying a market share of eighteen percent. The company bottles seventy-five brands of mineral water and market them all over the world. As regards the market, accounting for one-third in volume of the refreshment beverage market and displaying the highest annual growth rates, bottled water is the most dynamic segment. Sustained growth patterns forecast a doubling of the bottled water market by 2012. (Nestle.com-Home Page) Problem Formulation Process: Being the first step in decision making, problem formulation is a crucial factor in determining the issues and data that need to be considered or eliminated in any managerial decision making process. In spite of the development of advanced techniques in decision analysis and decision support systems there are only few procedures based on formulae for problem formulation. Group process techniques have the distinct advantage of identifying multiple views of a problem and include techniques like Brain Storming, Nominal group technique, Consensus approach and Robert’s Rule of Order. Problem decomposition techniques synthesises a large problem into smaller problems that can be defined and solved individually. Multiple model techniques stress the importance of looking at issues from multiple perspectives such as historical, planning, cultural and environmental. “Divergent thinking, leading to appreciation of opposing viewpoints and their underlying assumptions, is used to reduce the impact of individual biases and to generate broader understanding of the problem domain.”(Fred Niederman and Gerardine DeSanctis 1995) Devil’s advocacy, dialectical inquiry and strategic assumptions surfacing and testing are some of the examples of multiple model techniques. Argumentation techniques use the study of rhetoric, basing the analysis on the causes, similarities or inductions. For our given problem of analysing the business scenario of Nestle Waters we will use multiple model techniques. Potential Problems of Nestle Waters in Expanding Business in the Country of Dega: The potential problems that the company may encounter in the country of Dega may be grouped under (1) Organisational obstacles and (2) Environmental obstacles. Organisational Obstacles: While the marketing outlook is good due to the presence of people of European origin and American settlers who are habitual users of bottled water, the obstacles may relate to the production processes involved, problems relating to human resources management, finance and investment and logistics problems relating to location, allocation, transportation and distribution. Since the country is under threat of natural calamities like volcanic eruptions and earthquakes there is a distinct possibility that the ground water available may not be of the required quality standards for a company like Nestle. Due to the fact that more than fifty percent of the people are under fifteen years of age there may be a shortage of skilled adult workers for working on a more sophisticated technical environment. Even employing the unskilled workers who are under fifteen years of age may give rise to the issue of child labour. Obviously for cost reasons the company cannot employ expatriates as workers. Constructing a high tech factory with sophisticated machines would involve higher capital investment. Because of the potential danger of Tsunamis and earthquakes there is always the danger of losing the investments by the destruction of natural forces. Being an island it is quite possible that the country may not have large seaports where bigger vessels may call. Moreover even within the island the conditions of highways and rural roads may pose a problem for transportation and distribution as essentially the company has to depend on efficient transportation. Environmental Obstacles: The following may become potential environmental obstacles for Nestle: Usage of plastic containers is the major threat for the company as there may be a strong objection to use the plastic bottles. Even if the government is in favour of the company opening up its operations in the country, use of plastic containers may come under the ire of environmentalists. The composition of ground water may sometimes fail the required chemical standards and under those circumstances it may so happen that the company is forced to make compromises on the quality requirements. Depletion of ground water may become another environmental obstacle. The organisational and environmental obstacles enlisted above have a direct bearing on the interest of the stakeholders of the company being the employees, shareholders and the community at large. Conclusion: Thus problem formulation forms the basis for evolving suitable solutions. Poor formulation can result in actions that do not address the source of the problem. It is observed that some two-thirds of managerial problem formulation activities used ineffective tactics resulting in ineffective actions from the organisation’s side leaving the problem unresolved. In contrast, full and timely understanding of a problem improves opportunity for early resolution. Application of Decision Making Technique: Introduction: Once the problem is identified with its proper perspective, it may be assumed that the problem is half solved. The next logical step is to collect all the available information and data, summarise them in such a way that it helps in the decision making process. In the instant case study of Nestle, the report analyses likely consequences of various decisions by working out the importance of the individual factors. This will help in choosing the best course of action for the organisation. From a wide range of available decision making techniques a proper decision making technique appropriate to the problem on hand is to be selected to arrive at a fitting solution to the problem. This part of the paper centres round the decision making process by selecting a suitable technique. Decision Making Techniques: Generally the following decision making tools are available to the analyst to arrive at a proper solution. Selecting the most important changes to make - Pareto Analysis Evaluating the relative importance of different options - Paired Comparison Analysis Selecting between good options - Grid Analysis Choosing between options by projecting likely outcomes - Decision Trees Weighing the pros and cons of a decision – Plus/Minus/Interesting Analyzing the pressures for and against change - Force Field Analysis Looking at a decision from all points of view - Six Thinking Hats Seeing whether a change is worth making - Cost/Benefit Analysis (Mind Tools 1995) For arriving at a solution to the different problems identified the ‘Force Field Analysis’ Force Field Analysis: Force Field Analysis is a useful technique for looking at all the forces for and against a decision. In effect, it is a specialized method of weighing pros and cons. The forces for and against the decision for the company to go ahead with the Dega project is outlined below: Forces for the decision: The market outlook for the bottled water is very promising that it may double in the year 2012 With the available natural and agricultural resources the economy of the country of Dega can be assumed to be good and growing. Since tourism is one of the main industries the potential for growth of bottled water is very high. The market for the bottled water in Dega also looks bright due to the presence of people of European origin and Americans. As a company Nestlé’s growth and presence in 36 countries gives it strength to open up in Dega also as the company would be able to successfully manage any problem that may be encountered. The company is well equipped to meet any challenges in the field of marketing, fiancé, purchasing, technology, physical resources, human resources, transportation, strategic planning and leadership as it has proven abilities in these functional areas evidenced by its phenomenal growth in the past. The project has the support of the government of Dega as indicated by a bunch of other organizations. The company values the goods and services that is emanating from the country Dega. Availability of cheap quality labour is a distinct positive factor. Forces against the Decision: The poor quality of contaminated ground water may pose a major threat for the success of the project. Risk involved in high capital investment is more due to the fear of the natural calamities destroying the facilities. The possibility of employing child unskilled labour cannot be ruled out. Transportation and distribution issues due to lack of proper roads may definitely deter the success of the project. The company has to face environmental issues like use of plastic containers and depletion of ground water sources. The chemicals present in the ground water may be an issue on the quality of the water for the health conscious Europeans and Americans. Last but not the least the cost factor needs an evaluation. Force Field Analysis: Pictorial Presentation: Forces for Nestle in Dega Forces Against Nestle in Dega Points Points 3 4 3 5 4 3 5 2 2 2 1 1 Total 18 Total 17 From the above analysis it may be observed that the value of forces that support the expansion of the business of Nestle Waters in Dega is more than the value of forces against the proposal. Solution based on the decision making technique to establish a greater presence in Dega: Since on the basis of the Force field technique we have arrived at the decision to go ahead with the expansion in Dega the following aspects need to be consideration in implementing the decision: Adequate testing equipments and methods coupled with strict quality control measures should be made to available to check the quality of the ground water and the quality of the bottled water. Usage of recyclable plastic containers with prominent indication of the recycling mark should be adapted to counter the environmental complaints. As a labour policy the company should never encourage child labour Against the investment risks, adequate insurance cover should be made even if the company has to pay a higher premium. Eminent Consulting firms should be engaged to advise the company in this respect. Similarly the building contractors should be provided with the best consultancy to construct buildings with a capacity to withstand natural calamities. Frequent quality testing of the bottled water should be made to ensure that the quality does not deteriorate at any point of time. Conclusion: Thus force filed analysis proves an effective management technique useful when looking at the variables involved in planning and implementing a change programme and will undoubtedly be of use in team building projects, when attempting to overcome resistance to change. These forces acting for and against any proposal can be termed as Driving forces and Restraining forces. It is important that while deciding on the solutions for problems not only the short-term effects but also the long-term goals should be considered. By using the force field analysis it is easier to diagnose the interrelationships. Decision Implementation: Introduction: Normally we find decision makers who force the world to suit their decisions and also those who correct their decisions to suit the realities of the world. Organisational success depends upon the ability of the management to put into implementation whatever decisions taken. Managing decision process is the same as managing other aspects of a business organization. Decision process is a multidimensional process and it requires consideration of consequences, culture, process and infrastructure. Unfortunately there exists some gap between the decisions made and their actual implementation. There are multifarious reasons for the existence of such gap which defers the benefit of the decisions made. This part of the report analyses the decision implementation process and the factors affecting such implementation. It also evaluates the resources and actions required for the decision implementation along with the ethical implications of such decisions from the perspective of the stakeholders. Factors affecting the decision implementation: There are a number of factors that contribute to the delay in the implementation of the decisions in an organization. Some of them are enumerated below: 1. The real problems are too tough to define and usually because of this reason a full fledged solution to the problems is not arrived at and the decision implementation is carried out in pieces. 2. As it is easier to make plans than to implement them, decision models that are to be implemented are not drawn correctly and not taken seriously from the beginning. 3. Data are often scattered, incomplete, and lacking in accuracy. Some companies are satisfied with "ballpark" results in order to save on the cost and get the results quicker. The "ballpark" results use less data and more assumptions. This approach takes less time to collect and thus saves money as well. 4. Close collaboration between the business analyst and the managers is necessary for the proper implementation of decisions. When the collaboration is not frequent, the organisation can not expect any direct and immediate benefit from the implementation of the decisions. 5. While taking decisions, the organisational culture, attitudes and behaviour also find their relevant places in the decisions that are taken. This often deters the timely implementation of the decisions. 6. The follow-up action on testing the effectiveness of the decisions implemented is always lacking. This leads to a situation that the decisions once implemented and became ineffective remain the same without any serious analysis of the effectiveness and reimplementation. 7. Some times it may so happen that the decisions are taken on the basis of ill defined problems. As already stated, problem definition is of paramount importance in the decision making process and well defined problems only can lead to successful decisions. 8. Mangers are often lacking the proper training and education necessary for the proper implementation of decisions and this result in delays of implementing the decisions already made. 9. Priorities of implementation often differ and not so important decisions are implemented prior to the important ones. Due to multiplicity of data collection and presentation, employees waste time. “The decision makers are often frustrated because they cannot get business-critical information exactly when they need it. Therefore too many decisions are based on guess work and not facts. Many opportunities are missed, if they are even noticed at all. “ (Prof. Hossein Arsham) Although the factors described above are general in nature the applicability of them in the decision to establish a greater exposure of the company in Dega. Some of the important factors that may affect the implementation are: Normally the quality control department’s reaction may lead to problems in implementation. Delay in sourcing the recyclable plastic or other containers may affect the implementation. Delay in presentation of the required information for the governmental registration processes may sometimes delay the implementation. Providing the historical information to the consultants for advising on the insurance coverage may delay some part of the implementation. Organisational culture of trying to get things done at a faster phase may sometimes prove to have a negative effect especially in a small developing country like Dega where there may be too many procedures to be followed for effectively implementing the project. Evaluation of Resources and actions required for implementation: After a careful evaluation of the factors that may delay the implementation of the decision to expand in the country of Dega, the company should take proper and timely action to eliminate the deficiencies in the system leading to such delays. Appropriate actions must be taken to ensure that the decision implementation is not postponed or delayed due to trivial issues. Among other things the following issues may be considered: Proper training of the quality control staff is the prerequisite. The quality department should be headed by an efficient senior manager Renowned insurance consultants should be contacted and also they should be provided with complete and up to date information on the nature of risks to be covered. A proper implementation schedule must be prepared taking into account the estimated time required for all the activities connected with the implementation The project in charge should be given adequate authority to access all the information he may need at any time so that the implementation is not hampered for want of any information. Ethical Implications from the stakeholders’ perspective: The ethical values of the stakeholders of the company will have the following implications with the proposed solution of establishing a greater presence of the company in the country of Dega. The shareholders while assessing the risk-reward on the proposed project may not express an elated feeling as the country is prone to too many risks for any investment to be made. However they will follow a wait and watch approach since they have the highest confidence on the managers of the company having achieved the tremendous growth in the other countries where the company is in existence. Since it is going to be additional business for the existing suppliers they will look for an enhanced business opportunity with the company. Similarly with the provision of employment opportunities for more number of people with the company’s usual salaries and allowances the employee morale will be high. The government of the country also will be too glad to have an extended presence of the company since the company brings along with it the demonstrated excellence of corporate management which is very vital for the growth of the economy of the country. The higher the business for Nestle, the higher the taxation income and employment opportunities for Dega. Conclusion: A good decision is never an accident. It is always the culmination of high intention, sincere effort, intelligent direction and skilful execution. It represents the wise choice of many alternatives. When decision making is too complex or the interests at stake are too important, it is absolutely necessary that all the available solutions are evaluated for their pros and cons and an appropriate solution is arrived at. For this purpose, the problem formulation is of primary importance. A well defined problem provides half the solution. The next logical step is to evaluate the available decision alternatives, by suitable decision making techniques and narrow in on the best solution to the business problem on hand. Proper and timely implementation of the decision so arrived at also tells on the successful outcome of the decisions. It is for the management to eradicate the obstacles that come in the way of implementing the decisions in time. References: Fred Niederman and Gerardine DeSanctis (1995) The Impact of a Structured-Argument Approach on Group Problem formulation: Decision Sciences [Online] Available from: http://www.findarticles.com/p/articles/mi_qa3713/is_199507/ai_n8722469/pg_1 Accessed on 16th February 2007 Mind Tools 1995 Decision Making Techniques [Online] Available from: http://www.mindtools.com/pages/article/newTED_00.htm Accessed on 16th February 2007 Nestle.com-Home Page [Online] Available from: http://www.nestle-waters.com/en/Menu/NWToday/OurStrategy/ Accessed on 16th February 2007 Prof. Hossein Arsham The Gaps between Modelling and Implementation Applied Management Science: Making Good Strategic Decisions [Online] Available from: http://home.ubalt.edu/ntsbarsh/opre640/opre640.htm#rgapmodImp Accessed on 16th February 2007 Read More