Decision Making: Please Respond To The Following Determine A

Decision Makingplease Respond To The Followingdetermine A Key Facto

"Decision Making" Please respond to the following: Determine a key factor that led to management’s bad decisions. Indicate the resulting crucial impact to the organization’s stakeholder groups. Provide support for your rationale. Suggest an alternate decision that the company’s management could have made, and ascertain the likely impact to the stakeholder groups that the alternate decision might have. Provide support for your recommendation Discussion Questions need to be in APA format with references give. No grammar errors.

Paper For Above instruction

Introduction

Effective decision-making is fundamental to the success of any organization. When management makes poor decisions, it can have profound and widespread repercussions on various stakeholder groups, including employees, customers, shareholders, and the community. This paper explores a key factor that often contributes to management's bad decisions, examines the impact of such decisions on stakeholders, discusses an alternative management approach, and analyzes the potential benefits of this alternative.

Key Factor Leading to Bad Decisions

A primary factor contributing to poor management decisions is short-term focus driven by the pressure to achieve immediate financial results. Managers often prioritize short-term profitability or stock price increases over long-term sustainability, innovation, and ethical considerations. This obsession with quick gains can lead to riskier decisions, neglect of stakeholder interests, and oversight of potential long-term consequences (Hollensen, 2015).

For instance, during the 2008 financial crisis, many financial institutions prioritized short-term profits through risky mortgage lending and unregulated derivatives trading. The emphasis on quarterly earnings over long-term stability led to decisions that ultimately triggered widespread economic distress (Gorton, 2010).

Impact on Stakeholder Groups

The repercussions of such short-term decision-making are extensive among stakeholder groups:

- Employees: Layoffs, decreased morale, and job insecurity result from decisions aimed solely at immediate cost-cutting or profit maximization (Kirkpatrick & Ackroyd, 2015).

- Customers: Poor decisions, such as reducing quality or cutting corners to save costs, erode customer trust and satisfaction, leading to reputational damage and loss of business.

- Shareholders: While short-term gains may initially benefit shareholders, the long-term decline in organizational health can threaten their investments and dividend stability.

- Community and Society: Corporate decisions driven by short-term gains can harm communities through environmental degradation, neglect of social responsibilities, or unethical practices, leading to social conflicts and diminished corporate social responsibility (CSR).

A notable example is the Volkswagen emission scandal, where management's focus on short-term market competitiveness led to fraudulent practices that eventually resulted in legal penalties, loss of consumer trust, and damage to the company's reputation (Hotten, 2015).

Alternate Decision and Its Impact

Instead of prioritizing short-term financial results, management could adopt a long-term strategic approach emphasizing ethical practices, innovation, and stakeholder engagement. This shift could involve:

- Investing in sustainable practices and environmentally friendly technology.

- Fostering transparent communication with stakeholders.

- Balancing quarterly financial targets with strategic investments and corporate social responsibility initiatives.

Such an approach would likely lead to more sustainable growth, improved stakeholder trust, and resilience against market volatility. Customers and communities would benefit from environmentally responsible products and ethical business practices, enhancing brand loyalty and social license to operate (Porter & Kramer, 2011).

For shareholders, this strategy might mean sacrificing short-term gains but can result in higher long-term profitability and stability. Empirical evidence suggests that companies with strong CSR initiatives and sustainability strategies tend to outperform competitors financially over the long haul (Eccles, Ioannou, & Serafeim, 2014).

Conclusion

The pervasive short-term focus among management is a key factor that often causes detrimental decisions, with far-reaching impacts on all stakeholder groups. Transitioning to a long-term, stakeholder-oriented decision-making model can foster sustainable growth, stakeholder trust, and organizational resilience. While this approach may require short-term sacrifices, the long-term benefits for all stakeholder groups and the organization justify this strategic shift.

References

• Eccles, R. G., Ioannou, I., & Serafeim, G. (2014). The Impact of Corporate Sustainability on Organizational Processes and Performance. Management Science, 60(11), 2835-2857.
• Gorton, G. (2010). Slapped in the face by the invisible hand: Banking and the failure of market discipline. Economic Policy, 25(62), 205-239.
• Hotten, R. (2015). Volkswagen: The scandal explained. BBC News. Retrieved from https://www.bbc.com/news/business-34773109
• Hollensen, S. (2015). Marketing management: A relationship approach. Pearson Education.
• Kirkpatrick, I., & Ackroyd, S. (2015). Changing organizational culture: The importance of strategic leadership. Routledge.
• Porter, M. E., & Kramer, M. R. (2011). Creating shared value. Harvard Business Review, 89(1/2), 62-77.