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Business Management Fundamentals Assignment 1

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17 views2 pages

Business Management Fundamentals Assignment 1

Uploaded by

vahappymoresamunda
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Name: Happymore Samunda

Course: Business Management Fundamentals


Student Number: C23BT1800
Question: From the lesson to effective decision making
which barriers that attributed to Starbucks’ failure in
Austria and why?
Decision making is a process of thinking through a variety of options or decisions and select best
option or options. When it comes to decision making, there are many barriers to decision making.
These barriers include: bounded rationality, escalation of commitment, time constraints
uncertainty and personal bias. These are several causes to Starbucks’ failure in Australia. It is the
purpose of this essay to discuss these issues in depth.

Firstly, bounded rationality was one of the causes of Starbucks’ failure in business in Australia.
Bounded rationality happens when a head of a company thinks he or she can make rational
decisions on complex issues. This occurred when he or she haven’t faced that same situation
before. Basing on Starbucks Company in Austria it was possible that there was a bounded
rationality. Since Starbucks Company was successful in other continents, there would be an
assumption that it had to excel in Australia as well. This result to its failure. What Starbucks
Company had to do was to gather much information and use it appropriately.

Secondly, escalation of commitment resulted to Starbucks Company’s failure in business in


Australia. Lack of adequate or complete information will result to poor decisions in business.
Starbucks Company had limited information on running the business in Australia and it kept on
committed to its poor decisions. This made Starbucks Company to fail in business because of its
resistance to change.

Thirdly, time constraints caused the failure of Starbucks Company in business in Australia.
Managers find it challenging to make effective decisions. This can be resulted to a limited time.
As a result, managers tend to make decisions basing on heuristics. It was possible that, when
Starbucks Company was not succeeding in Australia, instead of gathering much information about
the business it relied on available information. As a result, it failure to excel in the business.
Lastly, uncertainty also caused failure of Starbucks Company in Australia. In 2008 there was
economic uncertainty in Australia. It was a difficult time due to financial crisis. This result in
closure of six hundred (600) stores. Managers or CEOs have high chances of making poor
decisions in these times of uncertainties. Thus, the company had to make effective decisions in
uncertain times.

To sum up, effective decision making is very important in businesses. When it comes to decision
making, there are many barriers to decision making. These barriers include: bounded rationality,
escalation of commitment, time constraints uncertainty, personal bias, group dynamics and
resistance just to mention but a few. These are several causes to Starbucks’ failure in Australia

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