Analysis of Business Decisions Essay Example

positions that they do not deserve, not every individual in the organisation deserve a leadership position within the organisation. These appointments lead to strategic poor decision making even though tools for proper decision-making process is available at their disposal.

Good policy decisions provide a competitive advantage to the company; hence, successful companies are associated with good strategic decisions. When making policy decisions on behalf of a company, the managers take the highest risks for their businesses. Some poor decisions are easily avoidable while others require research and analysis of available data to make a well-informed decision. Bad decisions can result from an individual or group of people. If the decision comes from an individual, it will not have a high impact on organisations’ decisions. However, if the decision arises from a large group of people making the same bad decision, it will significantly affect the decision by the organisation.

Most poor business decisions result from inadequate examination of assumptions made and negligence of relevant information. In making a business decision, all the data present must be thoroughly analysed to assess all constraints involved in making those decisions. Assumptions are critical to determining the validity of a particular decision. It is important for every assumption to be critically considered and looked over before arriving at an appropriate business decision.

An example is a scenario where car companies ignore relationships arising from gas prices and sale of automobiles. Assuming such, vital information may lead to poor decision making by automakers and sellers. Some assumptions made by analysts may not be correct or may have little impact on the performance of the company. Hence, it is vital for managers to assess

the validity of information provided to them before making a full decision.

Several companies built in Silicon Valley pride themselves in analytical, data-driven approach when making decisions. Netflix is not unique to this system; it prides itself on data-driven analytical approach when making strategic decisions. However, in 2011, the company made a huge business misstep that affected its financial income. While making its business decisions based on long-term strategy and data reliance, it assumed the role played by its subscribers in its long-term strategic goals. The firm underestimated the emotions of its customers who preferred the little red envelope even if they did not watch the DVD inside. The majority of his clients were not ready to shift to the internet platform.

Its subscribers did not accept the decision by Netflix to divide its movie rental services into two. According to the company, it was to share its services with two one that offered old DVDs by mail, and the second that streamed movies over the internet. Most of the subscribers revolted, and several dropped the service. The decision also tarnished the name of the web service that the company offered. However, it was in addition to an already damaged reputation by high prices charged by the web service. Because of the split, the company ended its third quarter of the year with 800,000 fewer subscribers. The company’s stock plummeted by more than a 24 percent at the end of trading.

However, irrespective of the decline in the number of subscribers the company still performed relatively well in that particular quarter. It posted a net income of $ 62.5million as compared to $ 38 million in the same

quarter the previous year. The company’s revenue rose by 49 percent, hence topping the analyst’s expectations. The CEO of Netflix, Mr Hastings said he was not satisfied that the plan to split the firm had been presented to customer focus groups before it was publicly announced. He stated that the corporation was trying to slow its decision-making process to ensure that the customers were fully engaged before such decisions are made. The company may not have recorded any financial losses. However, it did many loose subscribers who would increase its profitability.

The majority of its customers did not welcome the decision by Netflix to split its DVD services to legacy DVD services and streaming video services. The strategic decision did not include customer consultation on what would be convenient for them. Customer consultation through planned customer groups is an important part of strategic decision-making process. A decision made by the company was right for the institution. However, it did not reflect on the requirement by the customer. It is important for the organisation to consider the inputs by customers on specific services offered by a company.

The services should be provided for the convenience of the client. The CEO of the company did note that the company was implementing its decisions too fast. Hence, it was prudent to take time in the implementation process. The company made an ineffective business decision without proper consultation of the end users of their products and services. The customers sharply opposed the move by Netflix to separate its DVD services without adequate awareness of their demands.

Comprehensive market research to ascertain whether the consumers would accept their decision. The decision by the

company to hike the prices of their services leads to further complaints about their services. The majority of the customers felt that the prices were increased for no reason because the services had not changed. They also complained about the poor services that the company delivered the company yet increased the prices of their services.

The company promised the customers that it would have one site in which it would stream and also offer DVD services, yet when the company made changes, they renamed the place for DVDs to Qwikster. Feeding customers with irrelevant information played a vital role in the migration of the subscribers.

Strategic decisions are meant to provide a company with a competitive advantage over other businesses. The policy decisions made by Netflix only provided other companies with an additional benefit over other firms. It it's important to note that the number of Netflix subscribers reduced by 800000 implying that they migrated to other platforms that provided better service. The leadership of the company made gross mistakes that contributed to complaints by the consumers. Good management requires the input of all factors that contribute to the success of business. By neglecting customers, input the management proved that the company was not competent enough in making its strategic decisions.

However, the idea of Netflix was not entirely a bad decision to the Netflix corporation. The CEO had forecasted a tremendous change on how people would access videos. The DVD system was worn out and was not going to be a future-oriented endeavour. The only problem is the mode by which the company implemented the transition. The business decision was poorly executed and cost the company, several

subscribers.

The entire idea was brilliant only to be spoiled by poor implementation by the organisation. It is important to note that the current success of Netflix is based on continued improvement on missteps the company had made. Ineffective decision affected both positively and negatively to the performance of the enterprise. The CEO also failed to make positive remarks that supported the program they had launched. After the retaliation by consumers, the CEO made a public apology then went ahead to implement the decision that the users had complained about (Spratt & Devine, 2012).
Decision Implementation

The Netflix leaders only considered the profit motives of the company while applying the decision to split the business services into two distinct services. In the implementation of a business decision, the management should first test if it works, if it has positive results, it can then proceed to implement the whole decision. However, the Netflix management went straight ahead and applied the decision before first performing a survey on how their consumers would feel about that decision.

The idea behind Netflix decision was to keep up with technological advancement in the movie industry. The world was shifting from watching movies on DVDs to streaming the videos live on the internet. Netflix CEO had a bright idea that could have easily been accepted by the consumers if the right methods were employed (Revella, 2015).

Implementation of strategic decisions is one of the most sensitive parts of the top management of a company. Once a decision has been fully researched, it is necessary for the administration of an organisation to assess the probable outcome of the decision before implementation is done. A decision can only

be determined to be a wrong decision if its results, impacts negatively on the financial performance of the company. A good decision is one that provides an institution with a competitive advantage over other organisations.

Such decisions can only be realised through stepwise implementation, where the decision is slowly implemented to assess its effects on the performance of the organisation. It is also vital to benchmark such decisions; benchmarking involves conducting a market research to find out the performance of other agencies based on the decisions they implemented (Hammond, Keeney, Raffia, Hayashi, & Harvard Business School Publishing Corporation, 2002). A good manager would ensure that all data and resources are thoroughly analysed before applying a particular decision.

The CEO of Netflix successfully failed to indulge professionals on handling pertinent organisational issues such as the introduction of new services and products to the market. The decline of Netflix had been established long before the company decided to split its services. The CEO of the company had departed ways with the founding administrative managers who ensured the company was performing at its best.

The CEO lost hi valuable and trusted personnel yet when they were replaced; he replaced them with individuals who had little understanding of management issues. The company silently scrambled under the influence of uninformed decision making by the CEO. The CEO made decisions that were not profitable to the enterprise yet nobody dared to correct him. The company finally fell from being one of the top companies to being one of the businesses that were best known for exploiting its customers.

The poor decision made by Netflix CEO resulted from uninformed conclusions and poor management practices that were

employed by the CEO. In making the decisions, there was no proper market research to assess what was relevant to the clients. The CEO completely underrated wise counsel from much more experienced people in dealing with consumer preferences and choices.

These are the recipe for poor decision-making, a good manager must listen to wise counsel on matters that exceeds his/her expertise. It is important to the point that the ideas and strategy used by Netflix were unsuccessful in the short run but successful over the long term. Netflix remains to be a leading company in the whole world regarding online movie streaming. However, consumers initially rejected the online platform because they were not prepared for the changes in their DVD mail services.

In the evaluation of the best decision to be made by the company. The CEO of Netflix ought to have incorporated the ideas from other experienced staff members. The problems of Netflix begun when the majority of its top management started to leave without any possible reasons. The CEO of the company ought to have maintained his loyal and experienced staff members who were critical in the group decision-making process.

By keeping this experience in the business, the company would not be susceptible to bad decision-making processes. Before a decision fully arrived at the company ought to have thoroughly analysed the level of competition in the industry. It was important to assess the possible impacts of a decision before the decision was fully implemented. It would provide the company with ample time to make adjustments before fully implementing a particular business decision.

Before introducing a new service or product into the market, it is prudent first to

organise a market research before introducing the result to the market. Market research help institutions make comprehensive decisions before actually launching a new commodity to the market. It helps organisations in understanding the impacts of the new product to its financial performance.

An extensive market research will establish a relationship between a company’s competitive advantage point and its profitability. If the CEO of Netflix had intended to launch a new line of services with distinct characteristics, the company should have educated its consumers about the changes in the company’s services before launching the new product.

By educating the customers about the new changes to their services, the customers would be fully acquainted with information regarding the new product. Those who wanted to oppose would be vocal their decent upon which the organisation would have been forced to make adjustments. It is important for all managers to engage end users of a commodity while making changes to such products or services. Consultations with the customers are the key to a goods or service success in the market.

A company that cleverly implements its strategic goals through customer engagement has an upper hand in ensuring that clients accept the products or services they offer. However, businesses that do not constructively engage customers before launching or providing a particular service are bound to fail, because the majority of the consumers would be having less information regarding such commodities or services.