Practise IB Business Management HL 2.3.1 by applying scientific and intuitive management concepts to exam-style questions.
Chips to Go (C2G)
Chips to Go (C2G) produce potato chips for the British market. C2G's Chief Executive Officer (CEO) is Charles Chip who is a dynamic entrepreneur famous for taking risks with chip flavours such as "banana and sour cream" and "chocolate fudge" and promoting them with humour especially appealing to British culture. C2G has created a number of successful snack products under the C2G family brand. Charles uses intuitive rather than scientific decision-making. He rarely consults with senior managers or considers financial data.
C2G's value as a company in terms of goodwill, brand value and other intangible assets is tied very closely to the personality and lifestyle of Charles. He is the company's most valuable intangible asset and is very popular among the younger generation. He is constantly in the news trying to travel around the world in a canoe, or taking risks by parachuting off high buildings to gain free publicity and word-of-mouth promotion. Current and potential investors have contacted the finance department as to what may happen to the value of these intangible assets if Charles were to have a serious accident.
C2G is looking for ways to increase market share in an increasingly competitive domestic snack market. One long-time aim for Charles has been the creation of a potato chip with all the taste of regular chips but without any fat. The marketing department of C 2 G is very excited with this idea but the Production Manager has indicated to Charles that it cannot be produced. Charles has been told and was furious.
A second strategic option could be to launch the potato chips into a new international market. One of Charles's closest advisers has argued that C2G would need to be careful with its product and promotion, as overseas customers may not share British tastes in potato chips, or British humour in promotion. He urges Charles to take time to carry out extensive market research of the new international market.
With reference to C2G, compare and contrast intuitive and scientific decision-making.
Features of intuitive decision-making include:
- the use of "gut feeling"/emotion based on life, or work experiences to make a decision for a business
- a reluctance to use market research or financial data, (which would be used by a more scientific style of management). For example, to decide whether to launch a new product or service into a new market.
There is evidence from the stimulus that Charles relies on his own "natural abilities" to make decisions and he rarely consults. This has led to a number of very successful and innovative snack products appealing to British culture.
Given his success, it is fair to argue that intuitive decision-making has been instrumental in C2G's financial performance and given that Charles is very much in control of the organization, scientific methods may be inappropriate as it will hinder its creativity / innovation and free spirit. His intuitive decision-making enables C2G to create a competitive advantage in the British market in an industry that is probably saturated. There are many potato chip producers. However, his lack of consultation with senior managers (such as the Finance, Marketing and Production Managers) may result in less than effective decisions in the future.
Scientific management however, requires a much more analytical and considered approach to decision-making based not only on financial and market research data, but also the application of tools and techniques such as decision
trees, networks or force-field analysis. The stimulus indicates that for C2G to successfully penetrate a new international market with a different cultural makeup considered market research (or sometimes referred to as cultural intelligence [CQ]) is required. The contrast with Charles's own thinking could not be more marked. However, for the successful entry into this new unknown market he will have to consider adopting more scientific methods as his closest adviser admits given the fact that his strengths are in and for the British market.
It appears that Charles's intuitive decision-making might frustrate the Marketing department / Manager as well as the Production Manager. Conflicts between internal stakeholders can reduce the efficiency of the organization as well as its reputation.
Both are relevant approaches to decision-making, but in this example it would be foolish of Charles to ignore scientific and rely just on his intuition given that he is thinking of taking C2G into a completely new untried market.
The similarities between the methods can be explained as both methods result in a decision and both methods can be effective or otherwise. One may also argue that for each decision making, especially the scientific one, some degree of intuition and especially experience is being used as the decision is made by humans. It might be unrealistic to assume that senior managers such as the Finance or the Marketing Manager do not rely on their interpretation, experience, background and so on when using a more scientific decision-making method.
Accept any other relevant analysis.
It is expected that the candidate provides, even briefly, the main characteristics / features of the different decision making methods with reference to some advantages and disadvantages of each with application.
Candidates may refer to the similarities, however do not penalize if they do not do this in their response.
For one relevant issue that is one-sided, award up to [3]. For more than one relevant issue that is one-sided, award up to a maximum of [4].
For one relevant argument for and one relevant argument against one decision
making method award up to [4].
For [5] it is expected that the analysis is relevant and detailed, but it may lack some balance. For example, one argument is missing.
For [6] it is expected that the analysis will contain at least one detailed argument for and at least one detailed argument against each decision-making method with application to C2G.
Accept mirror image arguments.
Marks should be allocated according to the markbands on page 3.