Assignment Sample on Analytical Thinking and Decision Making

Introduction

Decision making is one the primary factors which involves a company’s ability to improve or degrade their value or position in the market. Effective decision-making capabilities always guide a company towards success and help them to achieve both short-term and long-term goals. In this present report analysis will be conducted for the decision-making issue faced by Sainsbury’s through their merger with ASDA that turned out to have a negative impact on the company. These shortfalls are further being discussed in the report with the help of Simple Multi Attribute Rating (SMART) which is a decision-making tool used for multiple-criteria decision analysis (MCDA). Hence, to start with the importance of decision making along with its application have been presented in the following section.

1. Importance of decision making and application of decision analysis

The importance of decision-making is in the concept of helping management to make decisions in regards to company’s growth, development or profitability. In order to make the decision-making process more effective and reliable it is always necessary for the management to gather all information that is available. In accordance with the study of Zhao et al. (2020), decision-making is not a method that can be taken randomly; rather, it requires avoiding curial challenges and verifying every aspect of the decision, which will have a long-term impact on an organization. As per the studies of Sweeney et al. (2020), future forecasting is a major part of the decision-making process where in depth research needs to be conducted with the use of relevant theories and models. Thus, it allows organisational management to forecast the impact the decision will have in the future as of long-term or short-term.

Guzmán et al. (2020) has stated that the process of decision making can bring fore skills to the management or an individual. Those skills are creativity and probing; thus, creativity can bring new ways and alternatives that were earlier missing from the management perspective or individual knowledge. Probing helps individuals to gather more information that is required for the decision-making process. A wise decision may pay off generously for a company and it can contribute to the establishment of a shared work atmosphere and mutual understanding between diverse parties (Norström et al. 2020). Thus, it is logical to make various members of the team appreciate one another’s viewpoints, strengths, and flaws by using group decision-making techniques. The majority of management and individual choices are based on experience. They may, nevertheless, analyse their decisions, analyse their consequences, and associate with themselves by introducing them into the awareness area. As a result of these actions, better judgments and results are made.

In context to the study of Mahammed et al. (2018), decision analysis is a logical, measurable, and visible way to address and analyse the critical decisions that organizations must make on a regular basis. The concept utilizes methods or tools that are necessary to examine all the necessary data that helps in the process of decision making and participate to collect the data of technical management, training concepts, and economic analysis. It is indeed frequently used to evaluate decisions that are made in the framework of several factors with a variety of potential consequences or goals. The method of decision analysis is mainly being adopted by individuals or management teams of an organization to resolve decision-making problems related to capital investment and risk management (Mahammed and Benslimane, 2021).

There are some important aspects to the decision analysis method that are quantitative and give a proper visual approach to making strategic business decisions. The purpose of this kind of system is to obviously lead with options when aiming to achieve organizational objectives, including highlighting possibilities and providing estimates about how adequately targets will be met if eventual results are obtained. Inconsistencies are usually described as possibilities and utility functions are used to describe internal tensions between competing goals. Threat, financing decisions, and corporate strategy choices are just a few examples of sectors in which decision analysis may be used. Decision analysis, on the other hand, combines a number of methods and combines psychological theory, leadership, and finance.

2. Identification and outline of the decision problem

In the context of the identification of the decision making issue, the mergers between Sainsbury’s and ASDA are being analysed and evaluated. The deal would have formed the largest grocery chain operating  in UK, that would have accounted £1 out of every £3 spent on food (BBC, 2019). Sainsbury’s as well as ASDA have earlier confirmed the planned merger would certainly save resources, allowing the companies to slash prices for customers throughout the country. In this context, the following figure will highlight the market share of both the organisations.

Figure 1: Supermarket market share

(Source: BBC, 2019)

However, the CMA had certainly claimed that the merger harm consumers on both national as well as subnational levels. Around 1,400 stores are operated by Sainsbury specifically in UK, out of which 800 are convenience stores, whilst ASDA holds 600 stores. “It would reduce competition in supermarkets and online grocery shopping, as well as at the businesses’ petrol stations,” asserted by Stuart McIntosh, chairperson of the CMA (BBC, 2019). The CMA’s research revealed that harming in-store visitors, the acquisition may increase pricing that in turn may lead to poor customer experience when purchasing online, including limited distribution alternatives. Even, motorists may need to pay 125 places when Sainsbury’s and ASDA petroleum outlets are near together (Gov UK, 2019).

In order to block the merger, different factors were considered that includes competitive pressure posed by discount retailers such as Lidl and Aldi, along with analysis on ways competitors may disrupt the retail landscape, specifically online (Gov UK, 2019). While the committee took these circumstances into account, they did not alleviate the board’s substantial competitiveness issues regarding business merger. They took a close look at the companies’ announcements that they would be cutting prices. However, a complete evaluation of the contract’s implications revealed that, in general, the merger will weaken the competitive environment and is therefore more likely to result in price increases than cost reductions (Gov UK, 2019).

Furthermore, the objective behind these decision problems of Sainsbury’s and ASDA are Price inflation, Market share, Brand reputation, Stakeholder experience and Revenue. Adding to this, the alternative of the problem decision can be considered In-depth market consumer analytics, market expansion, and assessment of merger control decisions in the digital market, competitive analysis and resource analysis. Along with embracing the attributes such as Commitment, Market analysis, Business growth, Competitive advantage and Market value.

3. Application of SMART

In accordance with the simple multi-attribute rating technique, the outline of the decision problem has been analysed below with clear definition and presentation.

Stage 1: Identification of the decision-maker

The Prime responsible person for the consideration of this decision is the management of Sainsbury’s who initiated to conceptualize the merger with another renowned retail supermarket ASDA.

Stage 2: Identification of the issue of issues

The most problematic issue, in this case, highlights the possibility of price inflation that might take place in respective organisational stores as a result of merger between Sainsbury’s and ASDA (Gov UK, 2019). In this context, the online stores along with many petrol stations across the UK might also be impacted in a similar way.

Stage 3: Identification of alternatives

Five alternative options are chosen on the basis of the decision problem included in this case. These alternative options reflect-

• In-depth market and consumer analytics
• Market expansion
• Assessment of merger control decisions in the digital market
• Competitive analysis
• Resource analysis

The mentioned alternative options eventually highlight significant attention of Sainsbury’s management to choose an accurate pathway for avoiding the decision problem undertaken by them. Moreover, the alternative strategies also disclose adequate opportunities for business growth on behalf of the organisation.

Stage 4: Identification of relevant evaluation criteria

In terms of highlighting the valuation criteria, data attention has been provided upon a couple of sequences including costs and benefits. Relational costs associated with the decision of merger between Sainsbury’s and ASDA highlighted the consideration of agreement for business liabilities under the partnership and relational expenses. However, the cost structure for the alternative options highlights the requirement of advanced analytical approaches under the shape of technological implications. Moreover, the conceptualisation of market expansion along with the assessment of merger control decisions eventually required adequate financial support.

Extended benefits might be obtained through the identified alternative options. In-depth market and consumer analytics can make Sainsbury’s familiar with the current market trends and industrial preferences along with consumer shopping habits. According to this understanding, Sainsbury’s could have initiated to deploy a strong market presence on the basis of product or service differentiation. The consequences of market expansion can be relatable with the organisation of business growth in the future. The assessment of merger control decisions in the digital market could have made Sainsbury’s familiar with the requirements of this strategic merger. Successive competitive analysis and resource analysis can be beneficial for getting adequate knowledge about the current market competition along with the existing resources. Based on this understanding, Sainsbury’s might be able to select the best probable strategic option on behalf of their organisation. Moreover, adequate resource analysis could have been supportive to avoid the consequences of price inflation that is expected as a result of this merger.

Stage 5: Assignment of values for each criterion

The consideration of valuations can be conceptualized in this case under the lights of numerical assessment of performance for each specific alternative as mentioned before. In this regard, tabular representation is provided below by highlighting the numerical performance and value for each alternative strategy.

The aforementioned evaluation has highlighted assigned values for each single criterion. According to this measure, the weight of each criterion is determined in the adjoining section.

Stage 6: Assignment of relative importance weights

As per the values assigned in this case for each criterion, the most weightage is undertaken by the decision of considering competitive analysis as an alternative option to go before the merger. This understanding could have influenced Sainsbury’s decision-making concerning intense market competition that might result in a merger failure. As per the values, resource analysis has taken the second place. Informative resource evaluation can be supportive to cross-check the resources required with the existing market resource base. It helps to understand the requirement of additional resources and funds for obtaining the desired outcome.

Critical market and customer analytics have been included in the third place according to the assumed values. The weight of decision alternatives looks to make an organisation familiar with the current market evidence and industrial trends according to which their offerings could be outlined. The market expansion comes in the fourth spot with the value of 60 out of 100. The weight of this alternative can be measured by evaluating the organisational ability of expanding their services in the cross-border markets. This action might have avoided the consequences of merger with ASDA.

The least weight has been gained by the option of assessing merger control decisions in digital markets. Profound evaluation of merger control decisions could be time-consuming but it could eventually be supportive to avoid the risk of failure by efficiently meeting consumer demands.

Stage 7: Calculation of weighted average of the values assigned to each alternative

This stage looks forward to normalise relative significance of the weights as measured before. According to this concern, each alternative can be arranged in a sequential manner. As per this measure, competitive and resource analysis can be assumed to obtain the most weighted average of the values followed by market and consumer analytics, market expansion and merger control decisions assessment.

Stage 8: Sensitivity analysis and final decision

This stage looks forward to make a provisional decision along with considering a sensitivity analysis for justifying those decisions. As per the assumption of weighted average of the values, competitive analysis, in-depth market, and customer analytics has been chosen. These features can be supportive to outline a profound Market picture in front of the organisation and management according to which their products and offerings could be differentiated. The sensitivity of the decision can be conceptualized by assuming the positive implications. These might include profound business growth and competitive advantage, strong commitment to the consumers, empowerment of brand value, and others.

4. Strength and limitations of the analysis in the context of decision problem

In respect to the above-mentioned decision problem and SMART analysis, several strengths and limitations have been generated in the context of the Sainsbury’s and ASDA merger. The strength of the above analysis can be referred to the future effectiveness of the business along with growth in the production business of the company. As demonstrated by Moreva et al. (2021), the organisation will be able to get the better insight of the marketplace along with easy and fast business tractions. Successfully managing will ease the promotion and marketing along with establishing reputation in the business, which can be interlinked with the attributes mentioned above. The more the business will be successful; the consumer will be able to connect with the organisation along with building trust as well (Doyle et al. 2021).

After the merger, Sainsbury’s has faced several issues such as lack of consumer support, low reputation and many more. In this respect, it can be justified that business is a huge responsibility and in this decision-making process needs to be effective and efficient which allows the company to be accurate with its strategies.  Furthermore, there will be potential sustainability in the operational management and the significant strength can be linked with above-mentioned alternatives. As mentioned by Akter et al. (2020), operational management will allow the business to improve the profitability of the management along with having competitive advantages. The more the operation will be appropriate the organisation will be able to manage their resources easily.

Furthermore, certain limitations have also been identified such as inadequate funding, increased production level, which leads to decline in quality measures. Adding to this, there will be the possibility of misinterpretation along with limitability of the products as well. As suggested by Dirani et al. (2020), it is very important for an organisation to preserve the best resources such as their knowledge, reputation and many more. Misinterpretation can be directly linked with competitive analysis; it is the most important to understand the potential strength and weakness of the competitor and a wrong interpretation can lead to many unavoidable risks and outcomes. Apart from this, funding is the game-changer, without proper funding, an organisation will not be able to stand on its own which will affect the liabilities of the company (Giarto and Fachrurrozie, 2020).

Conclusion

In context to the above findings and analysis it is found that merger between Sainsbury’s and ASDA led to a decision-making problem which has therefore, made negative impact on several aspects like price inflation, market share, revenue, stakeholders satisfactory and others. From the utilisation of Simple Multi-Attribute Rating (SMART), a profound focus has been maintained upon considering the consequences of in-depth market and consumer analytics along with competitive analysis as the most significant pathway to ensure decision success. The reason behind this attribute highlights avoiding decision failures as reflected in the case of Sainsbury’s and ASDA. However, the limitations like inadequate financial support and others can be noticed within the mentioned alternatives.

Reference list

Akter, S., Gunasekaran, A., Wamba, S.F., Babu, M.M. and Hani, U., 2020. Reshaping competitive advantages with analytics capabilities in service systems. Technological Forecasting and Social Change, 159, p.120180.

BBC, 2019. Sainsbury’s’s-ASDA merger blocked by regulator. [Online] Available at: <https://www.bbc.com/news/business-48048596> [Accessed on 4 December 2021]

Dirani, K.M., Abadi, M., Alizadeh, A., Barhate, B., Garza, R.C., Gunasekara, N., Ibrahim, G. and Majzun, Z., 2020. Leadership competencies and the essential role of human resource development in times of crisis: a response to Covid-19 pandemic. Human Resource Development International, 23(4), pp.380-394.

Doyle, G., Paterson, R. and Barr, K., 2021. Business Performance and Advantages of Takeover. In Television Production in Transition (pp. 75-102). Palgrave Macmillan, Cham.

Giarto, R.V.D. and Fachrurrozie, F., 2020. The Effect of Leverage, Sales Growth, Cash Flow on Financial Distress with Corporate Governance as a Moderating Variable. Accounting Analysis Journal, 9(1), pp.15-21.

Gov UK, 2019. CMA blocks merger between Sainsbury’s’s and ASDA. [Online] Available at: <https://www.gov.uk/government/news/cma-blocks-merger-between-Sainsbury’ss-and-ASDA> [Accessed on 4 December 2021]

Guzmán, V.E., Muschard, B., Gerolamo, M., Kohl, H. and Rozenfeld, H., 2020. Characteristics and Skills of Leadership in the Context of Industry 4.0. Procedia Manufacturing, 43, pp.543-550.

Mahammed, N. and Benslimane, S.M., 2021. Solving a Business Process Optimization Issue With a Genetic Algorithm Coupled With Multi-Criteria Decision Analysis Method. International Journal of Organizational and Collective Intelligence (IJOCI), 11(1), pp.71-94.

Mahammed, N., Benslimane, S.M., Ouldkradda, A. and Fahsi, M., 2018, July. Evolutionary business process optimization using a multiple-criteria decision analysis method. In 2018 International conference on computer, information and telecommunication systems (CITS) (pp. 1-5). IEEE.

Moreva, E.L., Obolenskaya, L.V. and Sharkova, A.V., 2021. Estimating Scientific and Technological Competitive Advantages: Study of Foreign Approaches, Type Classification of Business Entities and Influencing Factors. In Socio-economic Systems: Paradigms for the Future (pp. 511-519). Springer, Cham.

Norström, A.V., Cvitanovic, C., Löf, M.F., West, S., Wyborn, C., Balvanera, P., Bednarek, A.T., Bennett, E.M., Biggs, R., de Bremond, A. and Campbell, B.M., 2020. Principles for knowledge co-production in sustainability research. Nature Sustainability, 3(3), pp.182-190.

Sweeney, C., Bessa, R.J., Browell, J. and Pinson, P., 2020. The future of forecasting for renewable energy. Wiley Interdisciplinary Reviews: Energy and Environment, 9(2), p.e365.

Zhao, X., Lovreglio, R. and Nilsson, D., 2020. Modelling and interpreting pre-evacuation decision-making using machine learning. Automation in Construction, 113, p.103140.