INTERNATIONAL UNIVERSITY-HCMUNIVERSITY

BUSINESS ADMINISTRATION DEPARTMENT

REPORT
Introduction To Business Administration
Topic: How a company apply six D models in making decision process?

GROUP MEMBERS: 1) Trần Bảo Tuấn - BABAIU20169

2) Nguyễn Minh Long – BABAIU20072

3) Nguyễn Tố Như – BABAIU20110

4) Võ Hồng Phương - BABAIU20592

5) Trần Lâm Thảo Nguyên – BABAIU20099

 One of the most important factors that directly determine the success of a
manager is the effectiveness and quality of making decisions, even if you are
presiding over a small team or are being at the head of a large corporation.
Decision making is a step-by-step process to make logical, intelligent,
profitable, and well-founded decisions. In some instantaneous situations, the
decision‐making process is needed to be extremely short with little information
available. However, sometimes, the process is quite complex and require a
longer term, maybe weeks, or even months. There are several models of
decision-making process applied in different companies. Today, this essay will
analyze the six Ds of decision making and apply it in the Nestle company to
compare the Nestle’s decision-making process with the 6Ds model.

The process commences with the definition of the situation. In this step, it
is necessary to define the problem to be solved and perceive it in many different
dimensions such as: economy, brand reputation, culture change, … For
instance, in a heavily disrupted commodity business, managers need to make
decisions to improve the situation. Where is the problem? The reasons for this
are the product quality which is no longer suitable for the customer, the price
might be not reasonable or the business method becomes outdated ... But the
important thing here is that the administrator must identify the main cause
leading to the relevant situation and find the most appropriate solution to
overcome the cause. If the problem is inaccurately defined, the decision will go
on the wrong way and the company might fail before it even starts. Since it is so
important, this step must be done carefully for the manager to know for certain
that the decision will meet the goal at the end of the process.

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 Having identified the decision, it is time to describe and collect needed
information. The good decision makers must base decisions on facts and data
from both internal and external sources. For example, the manager should
research whether your company has succeeded or failed in areas related to the
decision, associated costs and benefits, and other pertinent strategic issues.
From external sources, he/she should gather figures from studies, market
researchers, and sometimes, opinions from consultants.

Once the manager has gathered all the relevant information, the next
step is to develop alternatives. It is necessary to consider the problem from
every angle of the problem you are facing, such as viewpoint from marketing,
finance, human resources, etc. Administrators can rely on their own experience
and knowledge, and can also rely on the recommendations of experts and teams.
At this stage, it is important not to focus on coming up with the right decision,
but to identify as much feasible alternatives as possible.

After identifying and clarifying what decision needs to be made,

collecting all related information, considering, and developing the possible
paths to take, the manager should be well-armed to make a choice. It is time to
show management power. The decision maker should weigh the pros and cons
of each alternative, financial impact, possibility, power, morality. After that,
he/she will be well-prepared to come up with the option that has the highest
chance of success and understand any risks involved.

Following that, it is time to do what your choice indicated. This is where

you develop a plan to make your well-considered, fully informed decision come
true and attainable, turn it from an abstract idea into a concrete action plan.
During the implementing, the administrators should set the team and assign
tasks to each group in order to be more efficient, save more time and effort.

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 In the final step, the decision maker should determine whether the
decision was a good one and follow up. Having experienced all the previous
stages, at this step, you should have a look back at your decision. The decision
may have had a correct starting point, but the plan in middle steps was executed
poorly. Or perhaps there were some consequences you did not anticipate. If it
has not met the needs which are identified in the first step, re-evaluate each
previous stage to see where the problem is. Moreover, identify some additional
alternatives to figure out any opportunities for solving and improvement in
decision making. On the other hand, if the decision was successful, take note of
what worked or what could be done better.

Nestle is one of the most successful co-operations which has a rational

decision-making process. Founded in 1866 by Swiss pharmacist Henri Nestlé in
Switzerland, nowadays this giant of multinational food and beverage has a 148-
year history and a global network of operations around the world with
approximately 339000 employees and 500 factories in 189 countries due to the
successful product expansion and business as well as R&D strategies. Nestle is
widely famous for baby food and bottled water, breakfast cereals, coffee,
confectionery, dairy products, ice cream, frozen food, pet foods, and snacks,
especially coffee. Moreover, Nestle owns numerous consumer brands such as
Nespresso, Nescafe, Kit-Kat, Carnation, PowerBar, and so forth, which has a
dominant position in various markets and brings several billions of revenue
annually. The industry leadership of Nestlé largely depends on the company’s
Research and Development (R&D) networks and activities, which stimulate
Nestlé to provide high quality, safe and healthy food and beverage categories
for worldwide consumers in the long run.

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 To achieve the goals, Nestle underwent an influx of strategies and
effective decision-making processes before launching products. In the first stage
of process, the Nestle involved in three dimensions: economy, its brand
reputation, culture change. In the situation of economy, the market in Japan in
the 1970s was booming and growing exponentially, which lead to the higher
income and expenditure of consumers. Nestlé, the world’s largest food company
at the time, envisioned an opportunity to capture value in this growing market.
As people's income increased, the demand for branded products would also
increase. Thereby, Nestlé witnessed the emerging market as a rising opportunity
for making vast sums of money with the promise of significant market share in
the long term. Additionally, starting the 1960s, Japan became increasingly
interested in Western culture and coffee. It was easily seen that coffee was
started getting sold through vending machines and raising inhabitants' interest.
All the aforementioned situational factors facilitated them to have several ideas
about selling coffee in Japan.

The following step was to begin their research on the market with
Nescafé, Nestlé’s largest product in terms of revenue in other countries without
hesitation in choosing the main product. It was undeniable that the Japanese
loved tea, which was the staple beverage for centuries, so Nestlé cautiously
vetted before jumping in and conducted extensive secondary market research
by reaching out to potential customers across all ages and sex interviewing
them to gather their thoughts on Nestlé Coffee. Surprisingly, the result
witnessed that everyone loved it and came back incredibly positive. It turned
out that Japanese consumers were in love with the taste of the coffee.

When seeing such positive signs, Nestlé executives got interested and
shifted into high gear, preparing an extensive plan to roll out coffee on
every shelf in Japan. In this step, Nestle spent huge sums on advertising and
setting up distribution channels to make their coffee hit the market with all

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the pomp. Paradoxically, every study they had done demonstrated that Nestlé
Coffee was the best option for the Japanese, it just wasn’t having a good
revenue in Japan. The consumers were still not buying it even though they liked
the taste of the coffee. Therefore, in the final step after launching coffee in
Japan, they strike to turn back and investigating the errors in the first
decision-making process before planning another strategy.

In general, Nestle followed the accurate order of steps in six Ds

decision-making including defining the situation, describing and collecting
needed information, developing alternatives, deciding which alternative is the
best, doing what is indicated and determining whether the decision is good
enough to continue developing. In the first two steps, the company seemed to
have successfully brought coffee - one of Nestle's best-selling products in many
parts of the world at that time into a potential Japanese market, where coffee
was gradually becoming more popular.

As for the fifth step, a huge amount of money was poured into running
coffee ads, marketing campaigns and product distribution to the land of cherry
blossoms. The product seemed great with an affordable price and the right taste
which was well appreciated by people. However, sales continued to plunge,
making Nestle more and more desperate.

Obviously, there was a big gap in the step of collecting necessary

information, when Nestle investigated, interviewed each target group carefully
and consulted experts with Nestle coffee. They just focused on Japanese’s
feelings about the taste of coffee and forgot the importance of tea to the

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Japanese's culture, and the question should be surveyed at that time must be
between tea and coffee, what would the Japanese choose to drink? As
mentioned above, Japan was a tea-drinking nation, hence, changing the habit of
using this product was not possible at that time. Between a tea product and a
coffee product, tea will have priority in the top position. Incorrect decisions at
this step has led to products inappropriate for the intended market and to costly
mistakes in pricing, advertising, promotion. A company must look at a decision
from multiple perspectives. This can be accomplished through selecting a group
of people who will look at and define the problem from different perspectives.

In the 1970s, the question of the way to sell coffee in Japan had
triggered Nestle. Despite much advertising, marketing, publication, the Japanese
people still were not taking coffee. In 1975, Nestle hired a French man to
research the Japanese market and to answer the question why they keep
failing.

His name is Clotaire Rapaille who was a talented psychologist who

usually worked with autism children at the identical time. On the other hand,
Rapaille was also well-known for his research on “the emotional bonds humans
form with objects in their culture”. First, a group of Japanese people were
assembled to test their emotion linked with all the products in front of them.
Then, Rapaille played the kind of music that brought them all back to their
childhood. When it came to coffee, all of them said they had no memories about
it. Therefore, Clotaire Rapaille came to a conclusion that there was no
imprint of coffee in Japanese people. Clearly, it was impossible to sell coffee
in a very tea-loving country.

The critical insight Rapaille was seeking for was this. So, he advised
Nestle to stop wasting money on marketing or promoting coffee. Instead,
they should bring coffee flavor closer to the younger generation of Japan,

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because people would have a tendency to buy the products that remind them of
their childhood. The suggestion was dessert since children love sweet food.

Hence, the Sweeden-company flooded Japanese market with

caffeine-free candy flavored. The sweets were popular and went viral among
Japanese youth. After a decade, Nestle candy’s customer now had grown into
teenagers and adults. They had soon got used with the flavor. So, Nestle
returned to the Japanese market, but that time the target was not candy, it
was coffee. First was coffee with milk, then, it was black coffee.

By researching carefully the market and deeply understanding the

purchasers. The global company was able to develop an alternative that luckily
was the proper direction. Now Japan is one altogether the foremost important
coffee consuming country within the planet. 500,000 tons of coffee is imported
every year by Japan but who could imagine 60 years earlier barely a cup of
coffee was consumed. Keyword information....

In this decision-making process, Nestle has oriented a long-term,

sustainable plan and also followed a 6Ds model. For many companies, such a
long-term strategy would not be profitable, but it worked for Nestlé because the
company relies on local ingredients and markets products that consumers can
afford.

The situation that Nestle faced with was that the sale of coffee in the
Japanese market had failed since they did not do a thorough market survey.
However, Nestle chose to continue researching and developing coffee into
Japan without giving up. Learning from gaps of the previous failure plan, this
time, in the description and information gathering step, Nestle had a more
detailed plan to meet the needs of Japanese market. They invited a research
psychologist, then surveyed the Japanese dessert market and made a decision.
Similar to the 6Ds model, Nestle surveyed the situation both inside and outside.

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 To consider which alternatives are the most suitable to make a
successful decision, both processes have their criteria and method. For six Ds
decision-making, when there are too many alternatives that have the advantages
outweigh the disadvantages, decision-makers will use some criteria such as total
cost, time to implement, risk, and the organization’s ability to choose the one
most appropriate to them. As for Nestle, they relied on the results of market
survey to choose the most feasible product to carry out their strategy. The
reason why they chose candies over other desserts like ice cream, cake, milk, ...
was simply because they have had the advantage of candy production in Japan
before.

However, the six Ds decision-making process have the last step to look
back at their decision to check if its results cannot meet the requirements they
intended for timely repair, while Nestle’s process does not have. After a long
time implementing this strategy, Nescafe already has a prominent position in the
Japanese market.

Therefore, in the process of making decision of a business strategy, it is

necessary to ensure that strategy is appropriate to the needs of consumers and
build a significant position by changing customer perceptions of company
products.

Although the second set strategy by Nestlé to penetrate into Japan

was pretty perfect, there are some suggestions to make Nestlé’s strategy
better. First of all, in step two of the 6D model (collecting information),
Nestlé should have collected information from the investigation campaign
and investigate on a wide scale of customers involving all ages but in the

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urban places such as Tokyo, Kyoto, Osaka, e.t.c because those are
westernizing cities and easily adopt to the new things rather than the rural
ones. Besides, Nestlé could combine the raising computing machines and
digitalizing services to collect the information. Nestlé should have analyzed
deeply the culture effects on consumption behavior before penetrating this
Eastern market and failed in the first stage. For instance: demographic
trends, breakfast culture, the share of seniors, the coming uninterest of
having a child, etc. are the things that Nestlé should have investigated and set a
strategy to suit the futuristic scene. For example, the Japanese prioritize the
importance of breakfast whilst they have become busier and busier, so Nestlé
could develop some quick breakfast products which flavored coffee to meet the
needs of the seniors as well as integrate into this aging consumer.
Moreover, in step three of the 6D model (Develop Alternatives), Nestlé
should have considered the range of customers they can reach, the ability to
integrate into the long-lasting customs, the length of the plan, etc. Nestlé
should think at the margin the pros and cons and notice the prior pro they
should maintain is penetrate the mindset of Japanese and change the culture of
drinking. The alternative selection progress should be based on the
effectiveness in the way they can affect the drinking culture of the youngsters
and the total customers should be large and wide enough to radically change the
matter. There are more alternatives suggested then will play a crucial part in the
decision-making process of Nestlé. One of the following suggested alternatives
is giving a sample candy flavored coffee to the elderly at popular spots such
as supermarkets. Because the number of seniors has been increasing
constantly since 1930 when 65+ aging people were countered to share 4.7% of
population and until the investigated point of time 1970 when the mentioned
aging group shared 7.1% of the population and had a signal of continuing
growing up. This was the good signal of targeting the seniors and giving a
sample candy flavored coffee probably a viable alternative because it could

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have penetrated not only the young generation but also the old one. Compared
to the existing strategy, the mentioned below is better because it aimed for a
wider range of consumers. One more alternative suggested here is adding
more coffee desserts and serving them with tea in tea shops. The alternative
is offered because during the 1980s, Japan witnessed the boom in coffee shops
and peaked to 162000 outlets in 1982. Some young-generation children were
Westernized by the foreign habits. The alternative mentioned outweighed the
existing one because it targeted both the elders and youngsters and it would
have reached more consumers than the strategy which Nestlé had done.
In the step five of 6D model (Do it), the importance of this step is
how naturally Nestlé could westernize their targeted children and the more
the merrier. Nestlé could reach more children through some suggested
following solutions. One of them was modernizing the design of the box,
Nestlé could reach a wider range of students through the modern design thanks
to the growing development of the computer. Moreover, Nestlé only set a TV
program named ‘Breakfast with Nestlé’ but the incorporation did not have
some programs for the children. Obviously, Nestlé could have added some
TV programs such as animation related to coffee or games related to
coffee to target at the children in a better way and westernize them in a more
natural method.

In conclusion, the 6Ds model plays a fundamental role in companies'

decision-making process, especially Nestle. This F&B giant precisely applied
the 6Ds model in making the two decisions mentioned above although there had
some mistakes in collecting information step in the first decision, which lead to
the failure of launching coffee in Japan before succeeding in the second
decision and new strategy. Additionally, some new and viable solutions are

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mentioned, such as widening the scale of consumers and concentrating on the
metropolis in step two; diversifying the products with all ages and making more
strategies in penetrating the culture in developing alternatives step; adding
products in trending programs or games to advertise and attract the young
generation in operation step to boost the brand and reputation of Nestle around
the world.

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