Question

Case 3: Whether or not to keep a company open

You are in charge of a small engineering company that has been largely successful in recent years. Employees are motivated and content and share the goals and values of the organization. There is a trade union, but membership is quite low due to the stable nature of employment.

However, in the last few months your debtors have been delaying their payments. New business has been harder to obtain due to increased competition and recession. This has led to a serious cash flow problem. You feel that in these circumstances it would be difficult to carry on in the same way and are considering selling the business either in its present form or as individual assets. You have asked for advice on the future liquidity of the company from the chief accountant. The workforce naturally wants to see the company stay open or be taken over by another company. They also feel that they should be valued for their loyalty and commitment.

You value the commitment of the workforce and the economy is improving quite quickly, but with the company beginning to amass unpaid bills you need to decide if the company should continue to trade.

Analysis and Recommendation

Using the problem requirements, decision rules, and leadership styles of the Normative Decision Model, indicate which decision style(s) would be most appropriate.

1. What type of problem is it: group or individual?

2. Contingency factors:

Is there a quality requirement?

Does the leader have enough information to make a high-quality decision?

Is the problem clear and staicturcd?

Is employee acceptance of the decision needed for its implementation?

Will subordinates accept the decision if the leader makes it by himself or herself?

Do subordinates share the organization's goals for the problem?

Is there conflict among subordinates (are they cohesive) regarding the problem?

3. W hat are acceptable decision styles? W hy?

4. What are unacceptable decision styles? Why?

Answer 1

Answer:

1)

The issue portrayed in the model is an individual issue or problem.

2)

Contingency factors:

• a.Yes there is a quality necessity to sell the business, as the purchaser needs to guarantee the business is worth of the cash they are paying to purchase the business.
• b.The pioneer/leader needs more data to make a high quality decision. He/she hasn't examined potential solutions with the representatives or any data about market value isn't given in the section.
• c.The issue/problem is clear and organized. The reason for the issue, cash flow is characterized as per the current market trends.
• d.The representative/employee acknowledgment of the decision making cycle isn't really required for the execution of decision.
• e.Yes, the subordinates will acknowledge the decision if the leader makes without anyone else.
• f.Yes the subordinates share the objectives of company for the issue. They are open for the organization to have a difference in proprietorship.
• g.There is no indication of contention or conflict among the subordinates with respect to the issue/problem.

3)

The adequate decision making styles are decision without anyone else (of the leader), singular counsel with subordinates, group conference with subordinates, facilitation (decision made by subordinates by discussion with one another), designation (the leader doesn't participate in meeting, rather giving just the resources to subordinates.)

4)

Some unsuitable decision making styles would be subordinates settling on a decision without the knowledge on the leader and without talking with the leader. Likewise the pioneer/leader not advising the subordinates regarding his/her decision is additionally unsatisfactory. The pioneer/leader ending the business cycle is unsatisfactory, as the subordinates need the business to proceed, even with change in power. Likewise, they anticipate a remuneration for their faithfulness, which ought to be paid at the beginning of decision being made, which if not will be unsatisfactory and unacceptable.