Decision making skills_ MBA

1. Decision Making SkillsDecision Making Skills
Purpose of this course:Purpose of this course:
1.1. Build your analytical skillsBuild your analytical skills
2.2. Build your capabilities to take decisionsBuild your capabilities to take decisions
3.3. Understand various issues affecting anUnderstand various issues affecting an3.3. Understand various issues affecting anUnderstand various issues affecting an
organizationorganization--Environmental issues; FunctionalEnvironmental issues; Functional
issuesissues
4.4. This course would use what you have learnt inThis course would use what you have learnt in
the past 3 semesters plus this semesterthe past 3 semesters plus this semester--it willit will
utilize your theoretical knowledge in real lifeutilize your theoretical knowledge in real life
business situations (Cases)business situations (Cases)

2. The courseThe course
The course is designed to serve the needs of businessThe course is designed to serve the needs of business
organizations today.organizations today.
Business organizations today are facing rapidlyBusiness organizations today are facing rapidly
changing environmentschanging environments ––e.g.e.g.--RIM’s BlackBerry; RetailRIM’s BlackBerry; Retail
in India, etc.in India, etc.
Business policy making has become a more formalBusiness policy making has become a more formalBusiness policy making has become a more formalBusiness policy making has become a more formal
,rather than ad,rather than ad--hoc process.hoc process.
Emphasis has shifted to integration of functional areasEmphasis has shifted to integration of functional areas
in a rapidly changing environment : need for a powerfulin a rapidly changing environment : need for a powerful
way of thinking to resolve strategic issues (long termway of thinking to resolve strategic issues (long term
issues)issues)
Students doing this course would have completed a setStudents doing this course would have completed a set
of core functional area courses, so that they canof core functional area courses, so that they can
integrate their knowledge in solving broadintegrate their knowledge in solving broad--based cases.based cases.

3. Main method used in this course: CaseMain method used in this course: Case
StudiesStudies
Cases would be such that they containCases would be such that they containCases would be such that they containCases would be such that they contain
elements of various specializations, i.e.elements of various specializations, i.e.
Marketing, HR, finance, etc.Marketing, HR, finance, etc.
Your final paper will contain one or twoYour final paper will contain one or two
case studies.case studies.

4. The Case Study Method ofThe Case Study Method of
teaching at Post Graduate Levelteaching at Post Graduate Level

5. What is a case study ?What is a case study ?
A description of a real life or simulated businessA description of a real life or simulated business
situationsituation
It normally presents a ‘problem’ and a need toIt normally presents a ‘problem’ and a need to
take a decision to solve the problemtake a decision to solve the problemtake a decision to solve the problemtake a decision to solve the problem
Eg: The Kingfisher Airlines case: why did theEg: The Kingfisher Airlines case: why did the
company face the financial difficulties? ; howcompany face the financial difficulties? ; how
can the company come out of these problems?can the company come out of these problems?

6. Some RulesSome Rules
There are usually no ‘right’ or ‘wrong’ answers:There are usually no ‘right’ or ‘wrong’ answers:
there are however, ‘good’, bad’ and ‘stupid’there are however, ‘good’, bad’ and ‘stupid’
answers .answers .
One major example of Stupid answers is:One major example of Stupid answers is:One major example of Stupid answers is:One major example of Stupid answers is:
a mere repetition of the casea mere repetition of the case
Basic answers such as : ‘offer customerBasic answers such as : ‘offer customer
satisfaction’; ‘good quality’; ‘reduce prices’; ‘fightsatisfaction’; ‘good quality’; ‘reduce prices’; ‘fight
competition’ : would not earn high markscompetition’ : would not earn high marks unlessunless
quality is really one of the main reasons andquality is really one of the main reasons and
student demonstratesstudent demonstrates howhow quality should bequality should be
improved.improved.

7. Good answers versus Bad answersGood answers versus Bad answers
However, in the case of Kingfisher Airlines, giving aHowever, in the case of Kingfisher Airlines, giving a
recommendation to “demand for a government bailrecommendation to “demand for a government bail--out”out”
should be marked less than recommendations which areshould be marked less than recommendations which are
moremore proactiveproactive: e.g.: cost cutting; redefining routes: e.g.: cost cutting; redefining routes
which the airlines will operate on; organization structurewhich the airlines will operate on; organization structurewhich the airlines will operate on; organization structurewhich the airlines will operate on; organization structure
change; refocusing on what the ‘Kingfisher flyingchange; refocusing on what the ‘Kingfisher flying
experience’ is: Kingfisher Red competes withexperience’ is: Kingfisher Red competes with
KingfisherKingfisher——this way, you would be solving the issuesthis way, you would be solving the issues
which have caused Kingfisher its problems.which have caused Kingfisher its problems.
How well the student ‘justifies’ his/her recommendationHow well the student ‘justifies’ his/her recommendation
is importantis important

8. Problems versus SymptomsProblems versus Symptoms
Fix the problems not the symptomsFix the problems not the symptoms
Examples:Examples:
A company is facing high level of absenteeism.A company is facing high level of absenteeism.A company is facing high level of absenteeism.A company is facing high level of absenteeism.
A company is losing market shareA company is losing market share
A company is facing shortage of working capitalA company is facing shortage of working capital
By finding the problem behind the symptom, canBy finding the problem behind the symptom, can
accurate decisions be taken.accurate decisions be taken.

9. The case ‘problem’The case ‘problem’ Fixing theFixing the
symptom:symptom:
Fixing theFixing the
Problem:Problem:
IncreasingIncreasing
absenteeismabsenteeism
Make attendanceMake attendance
necessary; reducenecessary; reduce
allowable leaves (CLs)allowable leaves (CLs)
Improve motivationImprove motivation
levels (how ..levels (how ..--
restructuring jobs)restructuring jobs)
Losing Market shareLosing Market share Gain back marketGain back market Customer needs haveCustomer needs haveLosing Market shareLosing Market share Gain back marketGain back market
share through salesshare through sales
promotion; price cutspromotion; price cuts
Customer needs haveCustomer needs have
changed: new productchanged: new product
features are neededfeatures are needed
(innovation needed)(innovation needed)
Lack of adequateLack of adequate
working capitalworking capital
(WC = CA(WC = CA--CL)CL)
Borrow ; keep cashBorrow ; keep cash
reservesreserves
Creditors not payingCreditors not paying
on time; surpluson time; surplus
inventory (cash locked)inventory (cash locked)

10. A CaseA Case
A business hotel , ABC Hotels is a budget businessA business hotel , ABC Hotels is a budget business
hotel ,enjoys occupancy of 70% during most of thehotel ,enjoys occupancy of 70% during most of the
year, which as per industry standards is very high.year, which as per industry standards is very high.
In March, occupancy rates even touch 80%.In March, occupancy rates even touch 80%.
Coincidentally, in March , a cricket match is scheduledCoincidentally, in March , a cricket match is scheduled
in the same city as the hotel.in the same city as the hotel.
The cricket event managing team approaches the hotelThe cricket event managing team approaches the hotel
with a proposition: to allow members of cricket teamswith a proposition: to allow members of cricket teamswith a proposition: to allow members of cricket teamswith a proposition: to allow members of cricket teams
& managers of the cricket association to stay with& managers of the cricket association to stay with
group booking discount for of 10% for 10 days;group booking discount for of 10% for 10 days;
in return of which the event management team willin return of which the event management team will
give promotion worth Rs. 1,50,000 free to the hotel.give promotion worth Rs. 1,50,000 free to the hotel.

11. The hotel has 300 roomsThe hotel has 300 rooms
The hotel charges: Rs. 4000 per night/roomThe hotel charges: Rs. 4000 per night/room
Cricket event management is asking for group bookingCricket event management is asking for group booking
of 80 rooms @ room charge discount of 10% for 10of 80 rooms @ room charge discount of 10% for 10
days in March for which a promise of free promotion ofdays in March for which a promise of free promotion of
the hotel worth Rs. 1,50,000 is offered.the hotel worth Rs. 1,50,000 is offered.the hotel worth Rs. 1,50,000 is offered.the hotel worth Rs. 1,50,000 is offered.
Question: Should the hotel accept the proposal ? (seeQuestion: Should the hotel accept the proposal ? (see
next slide for more details)next slide for more details)
Groups are given 15 mins to come up with a solution.Groups are given 15 mins to come up with a solution.

12. SolutionSolution
In March, occupancy rates = 80%In March, occupancy rates = 80%
Total rooms = 300Total rooms = 300
Rooms forecasted to be filled in March= 240Rooms forecasted to be filled in March= 240Rooms forecasted to be filled in March= 240Rooms forecasted to be filled in March= 240
Remaining rooms (unoccupied)= 60Remaining rooms (unoccupied)= 60
Cricket event mgt wants = 80 roomsCricket event mgt wants = 80 rooms
While unoccupied rooms available are 60; hotelWhile unoccupied rooms available are 60; hotel
needs to keep aside 20 rooms more for theneeds to keep aside 20 rooms more for the
cricket event management booking.cricket event management booking.

13. The 20 RoomsThe 20 Rooms
Without discount, earnings = 20 x 4000 xWithout discount, earnings = 20 x 4000 x
10 (days)= Rs. 8,00,00010 (days)= Rs. 8,00,000
With discount= 20 x 3600 x10 = Rs.With discount= 20 x 3600 x10 = Rs.
6,20,0006,20,000
Loss= Rs. 1,80,000Loss= Rs. 1,80,000
This loss should be covered by the ‘free’This loss should be covered by the ‘free’
promotion which is only Rs. 1,50,000 .promotion which is only Rs. 1,50,000 .
FinanciallyFinancially, deal makes no sense, deal makes no sense

14. Marketing wise:Marketing wise:
Deal makes no sense as marketing is aboutDeal makes no sense as marketing is about
profitability too.profitability too.
Hotel would refuse 20 rooms to guests thatHotel would refuse 20 rooms to guests that
might be normally occupying rooms; this mightmight be normally occupying rooms; this might
not work well for the long term relationshipnot work well for the long term relationshipnot work well for the long term relationshipnot work well for the long term relationship
The core targetThe core target——businessmen andbusinessmen and
professionals may feel alienated; cricket teamsprofessionals may feel alienated; cricket teams
staying could interfere with their usualstaying could interfere with their usual
experience with the hotel.experience with the hotel.
Hence, the management should refuse the deal.Hence, the management should refuse the deal.

15. HR factorsHR factors
Risks: Personnel may give more attention toRisks: Personnel may give more attention to
cricket celebrities , ignoring target marketcricket celebrities , ignoring target market
customerscustomers
Security personnelSecurity personnel
Cricket association and team members wouldCricket association and team members wouldCricket association and team members wouldCricket association and team members would
have different needs as compared to regularhave different needs as compared to regular
business traveler: do hotel personnel have thebusiness traveler: do hotel personnel have the
skills to look after these needs?skills to look after these needs?
Gym: Do we have enough trainers/supervisors?Gym: Do we have enough trainers/supervisors?