Critical Thinking

Thinking Critically Simulation

The A-Team was provided a "Thinking Critically Simulation." Faced with the challenges, can the A-Team make a good decision? We were task to be a store manager at an Electronic Store, Dallas, Texas. We were informed that our sales are falling for eight weeks and legal action were filed by the city for violating local disability laws. Our decision making process help us focus on three steps (a) framing the problem, (b) making the decision, (c) and evaluating the decision.

In framing the problem, we had to pinpoint the problem areas. There were three critical problems. One was a newly opened store. The effect of newly opened store caused our sales to drop. The second was product mix. The effect of the product mix did not cater to the customers' demands for new internet-related and multimedia products. The third was low variable pay for junior employees. The effect of the variable pay plan attracted many of our employees. Our objective is to improve the store's sales.

In making our decisions, we have to alternate courses of action to solve our problems. We decided to increase promotional expenditure substantially to match the aggressive promotion of the new store. Increasing promotional expenditure might stimulate sales; however, this will substantially reduce the discretionary expenditures we make in other areas. Joint promotions with the large consumer electronics companies would save us money because the electronic companies would bear most of the expenditures. We will re-orient product mix. We can reduce the store's reliance on big ticket items like home theaters and digital audio hi-fi systems. Internet-related and multimedia products are increasingly in demand, even though they do not have the large premiums of the home theater and digital hi-fi audio systems. Sales volume should improve if our store radically alters our product mix. However, we would have to reconfigure the future orders placed with Credenhill's central buying organization and this may take some time. We will offer large discount on our inventory. A one time sale with large discounts might clear the bulk of the 80,000 unsold inventories that has accumulated with the store. Most of the unsold inventories consist of big ticket items like home theater systems and digital audio hi-fi systems. Despite people often replacing their older models with new ones, the local market for such items seems to be saturated. A discount would help. We recommended to headquarters a restructuring of the variable pay plan for junior employees who perceive a huge disparity in the variable pay of the junior and more senior levels. However, headquarters would have to restructure the variable pay plan for all the junior employees in the company. It is possible that the dissatisfaction on variable pay resulted only from the high variable pay offered by the newly opened store. Headquarters may dismiss this as a purely local phenomenon. We will offer discretionary bonus. We have discretionary funds that can be utilized by us for offering employees a cash bonus linked to improved productivity levels. We will formulate a performance bonus plan only for our employees of store. This will offer our employees a cash bonus linked to improved productivity levels. This action will reduce the discretionary expenditures we can