Severe Enterprise Risks essay

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This essay investigates the literature on decision making in businesses during the times of the severe enterprise risks. It examines the importance of decision making in organizations, and the process and implications of flawed decision making. According to the literature, decision making is very significant in determining the success or failure of the entire operations of the business. In addition, the essay evaluates the theories of organizational decision making and explains the different approaches to each strategy.

The company Siemens was established in the year 1847. Since then, the company has successfully waded through the murky waters of the global economic situations. More often than not, Siemens has emerged as the largest electronic and electrical engineering company in the world. These have been credited to its ability to undergo the complete phase restructuring. To this moment, the business operations of this company have been sharpened in six major areas of production. Among these are; automation and control, information and communication, power, medical, lighting and transportation. However, the emergence of tough economic times in this era of the global recession and rapid technological advancement has forced the management of the company to make tough decisions most of which may have far reaching impacts on the overall sustainability of the company in the long term. The following principles could offer a significant insight in making decisions that could push the company successfully through the several business risks that have taken over the reins of the economic world (Hamel, G. & Prahalad, C.K 1994).

Behavioral Approach of Cyert and March

This approach acknowledges that people only have a limited ability to influence the business environment that they operate in at any given time. As such, the main focus should be on attaining goals that can realistically come out of the situation rather than expecting the ideal maximum rewards. According to this approach, individual operators within a business environment have their own aspirations and interests that could be conflicting with our own. In light of this, the behavior of the individual firms existing in this environment must put into consideration the impact of these conflicts and attempt to maintain them at a level that is not altogether detrimental to their operations (Clark, Manes, Antoun, Sahakian & Robbins, 2003).

The challenges related to the rapid technological advancements would be faced with little patience. Indeed, it is an accepted fact that the speed at which technology is changing often renders many products in the market obsolete, even before the producing company can get back the funds it invested in their production. As such, Siemens should anticipate these changes and plan for them appropriately. For instance, they should avoid mass production of products that could easily be out-phased by the changing technological developments. Although there is always the market power that pushes businesses to look competitive enough by making the presence of their products felt in the market all the time, they should remain true to the principle of patience. As a matter of fact, the main focus should not be on outdoing its competitors, but rather on surviving the economic times or wading through the rapid technological changes at least till the technology tends towards stabilization (Drake, 1985).

However, that should not mean that they sit pretty and wait for the situation to pass. The times may pass so fast that the entire firm, Siemens, may eventually realize that they just don’t fit into the market any longer. That is why their retreat should be a tactical one in that they should also engage in a lot of research so as to keep abreast with the technological changes. Although research is always an expensive undertaking for most companies especially when the returns are not forthcoming, Siemens should remain engaged at least to the levels that do not cause them financial constrains. The fact that their competitors are facing the same challenges should be their source of inspiration considering that they are not alone in their times of adversities (Drake, 1985).

At times they may not really have to apply the new technology that is originating from their research. This is because it may compromise the quality of their products that they release into the market, a fact that may destroy all the gains they have made over the years in consolidating their market base. It would perfectly befit them to acknowledge that the low quality products going into the market do more harm to the reputation of the manufacturer than no products at all. As such, they would do themselves a lot of good by introducing only those products whose quality is not in doubt so that they at least retain the credibility of their products in the market waiting to bounce back once the storm gets over. Ideally, this would assure them great relevance that is essential for the long term existence of a business in the market (Clark, Manes, Antoun, Sahakian & Robbins, 2003).

Mergers and strategic alliances should be one of the considerations by the company. However, these should not be rushed into; considering that they involve people of diverse backgrounds, conflicting operations and competitive technological research programs. As such, it requires a lot of reasoning with the targeted party in the market, so as to have them appreciate that significant benefit could actually come out of the alliance. For instance, the cost of doing research on the rapidly changing field of technology could be felt less if the expenditure is distributed between different companies. Besides, they can get to share the little progress that they have individually attained and use it as a launching pad for much greater advancements. As a matter of fact, this would give each of them a competitive advantage over the other companies that are single handedly approaching the economic crisis. For instance, the Total Motor Corporation has been able to survive in the market simply because they know when to compete and when to retreat. In most cases, they end up reaping great benefits from alliances or mergers that they quite very strategically get into (Drake, 1985).

This is actually in line with Brusson’s view that the best decisions should be based on strategic initiatives that would stand the test of time. It can be claimed with certainty that taking a low profile in terms of economic trouble implies that the business has chosen not to exhaust all their energy in competition. Their continued competition could actually be very detrimental considering that competitors would be keenly watching their moves. As such, the competitors may decide to hit the market with new products at a time that you may not be able to compete favorably. In view of this, the essential thing would be the ability to remain focused and not to expose too much considering that the people you are dealing with are competitors (Drake, 1985).

In some instances, Siemens could adopt the policy of joint production into the market, besides the joint research. This would imply that the new products that would get into the market would bear the names of all the companies that are involved in the research and the subsequent production. As such, the name of Siemens would still resonate well in the market even though they are not engaged in the active production and may certainly not be getting huge profits from their ventures. However, this would suffice as a market retaining strategy so that they would not have to entirely re-establish themselves in the market once the storm is over. Ideally, it corresponds with both the views of Cyert and March as well as Brusson’s in that it is as strategic as it is realistic within the prevailing market conditions (Metzner-Szigeth, 2009).

Yet still, Siemens would still have to contend with risks that they entirely have no control over. These would include risks like political, human resource, as well as legal in nature. For instance, legal risks could only be minimized by ensuring that every action the company takes is in line with the prevailing market conditions. As such, the company would need to be very cautious in entering into any form of partnerships as this could get it into unending legal feuds with their partners. On the part of the human resource, getting new skilled employees may be too difficult during such economic times. As such, the company would be wise to focus on retaining all the skilled labor that that they already had before the recession struck. They can achieve this by simply providing the same benefits as those provided by their competitors, so that no one is lured into walking out. Besides, they can make all the employees understand the situation that they are going through and make them feel hopeful about the future (Knight, 1921).

The risky part would involve having to limit the political implications of their operations. Currently, the political class is so concerned about the job creation because that is what majorly concerns the general public. In light of this, the Siemens Company may decide to change the leadership at the helm, so that they have managers who can perfectly blend with the political class. This would save them the wrath of the politicians as they would feel part of the company, and therefore find no need to rise against them. Besides, they may decide not to lay off any of their employees, but instead engage them in the decision making to the extent that they are able to accept small cuts in their salaries to accommodate them all till things normalize. This would not only work well with the politicians who are against job losses for the general public, but will also ensure the company does not lose its employees. Ideally, these are strategies that are not geared towards making any profits, but rather on retaining a respectable position in the market (Clark, Manes, Antoun, Sahakian & Robbins, 2003).

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