SEC390 Decision Making Analysis

Decision Making

Decision Making Analysis

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SEC390

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Professor

Decision Making Analysis

As a general manager of an Applebee’s there are many decisions that needed to be made every day. In one instance the restaurant was experiencing an increasing low sales volume. The problem was that many other new restaurants had opened up in the area redirecting the customers to the new restaurants and lowering sales. The weakened American economy only assisted in increasing this loss in business which not only affected the restaurant but the employees that relied on tips from customers in order to make their income. Employees were becoming concerned about the loss in sales and a few had begun to discuss going to work for one of the newer restaurants.

Decision-making is one of the defining characteristics of leadership and its core to the job description (Tanck, 2008). In order to make a critical decision concerning problems that arise in the work setting it is essential that the steps of the decision making process are followed to ensure that the right alternative is selected. In this case the decision was critical to ensuring the restaurant could continue to operate successfully and that employees would be able to make a decent income. Employees that work on small salaries and rely on tips are most impacted by this loss in sales but also employee that is paid an hourly wage when there is no labor budget and their hours must be cut.

The first step in the decision making process was to define the problem. In this case the problem was lowered sales due to the opening of two, new popular restaurant s in the area which was impacting the employee’s ability to earn money and the bottom line of the business. The sales for the business in the months prior to the new restaurants opening had already began to slowly decline due to the weakened economy but the additional loss in sales was creating a major financial concern. In order to reduce these challenge sales will need to be improved through the decision that is made.

The second step in the decision making process is to gather information in order to better understand the potential challenges that have caused sales to drop as well as to identify the potential challenges that could surface in correcting the problem. In this case the economy had slowly dropped the restaurants sales over time but the drop in sales was a companywide problem. When sales began to drop even further due to the opening of two new restaurants in the same area as the once popular Applebee’s the concern was whether the restaurant could financially service the drop in sales due to the economy and the new restaurant openings.

Other challenges that have surfaced due to the lowered sales at the Applebee’s restaurant were lowered employee morale and a high turnover. Employees have become concerned about their ability to make a decent income in order to pay their own bills which has resulted in a high turnover, especially the tipped employees, such as waitresses, hostesses, and bartenders. When employees are not satisfied they will not be motivated and their work will suffer. When employees are dissatisfied they will fail to provide the customer with the quality service which can result in the loss of more customers.

It is common for a new restaurant to divert the regular customers of the old restaurant to the new restaurant for a period of time and it is also common for some regular customers to choose one of the other restaurants to give their regular business. The goal is to draw back the old customers and drawn in new customers in order to improve sales and ensure the restraint and the employee can make a sufficient income. In order to make decision over what to do about the dropping sales research on past methods used to improve sales and current measures being employed by restaurants in the area must be conducted in order to determine what worked in the past and to determine what did not work.

The next step in the decision process is to develop alternatives in order to decide what efforts would lead to increased sales. Increases sales would also lead to higher employee morale and better service to customers. Each Applebee’s is provided with a limited marketing budget because the majority of marketing is conducted by Applebee’s International, the headquarters of Applebee’s. In order to increase sales the small marketing budget will need to be used to grab the attention of customers and draw them back into the restaurant. After much research and based on the available but limited budget two alternatives emerged that could result in increased sales.

Due to the importance of this decision it could not be made quickly but instead must be made very carefully. The first alternative was to run ads on a local radio station in order to alert members of the community about the new menu items and sales being offered at Applebee’s as well as to draw the customer back into the restaurant. The ads would run for thirty days, several times a day, and would bring in sales. The restaurant ran a similar campaign at the beginning of the economy crisis and it had been fairly successful in increasing sales by a little over ten percent.

The second alternative is to employ a local sales marketer to go out in the community and hold events in order to draw in old and new customers to the restaurant. The local sales marketer goal is to go out into the community and create public awareness about Applebee’s new menu items as well as support community events, sports teams, and educational efforts through the restaurant. With the local sales marketer there are many different ploys that can be employed to encourage customers to eat at Applebee’s.

The pro’s of the first alternative, which is to run radio ads, is that I will reach a large market and potential Applebee’s customers will be bombarded with these ads for an entire month. This alternative will not require any effort on the part of employees in order to increase sales and this method has been proven to work in the past. The con’s of this idea is t radio advertisements are expensive and are not guaranteed to work. Many members of society avoid listening to the radio in order to avoid the constant bombardment of commercials. Applebee’s International also already runs ad on radio and television.

The second alternative is to hire a local sales marketer that could go out into the community and drum up business by building relationships with members of the community. The local sales marketer can hold events at the restaurant designed to draw in members of the community and support local community programs and charities. For example the local sales marketer could sponsor the local baseball team and hold an event where customers get a ten percent discount if they come into the restaurant to eat and donate a can food for the local food bank. Te potential cons of the local sales marketer is there is a very limited budget and if the wrong person is hired for the position they may not be motivated to ensure sales are improved.

After analyzing the two alternatives it was determined that the second alternative, to hire a local sales marketer, would be most beneficial to the restaurants sales. The local sales marketer was selected from the current staff at the restaurant and would be required to devote a minimum of ten hours a week to drumming up new business and developing marketing strategies that will lead to increased sales. In the end the decision that was made was the successful and over the next few months sales began to increase and the LSM established strong community relationships and was able to lure customers back from the new restaurants.

Cognitive dissonance is inconsistency between two opposing beliefs or perceptions of an individual (Emin, 2010). When the belief or perceptions of the individual are in opposition they will experience feelings of discomfort. In the decision to use the local sales marketer there was some discomfort in the fact I would be going against a tried and true method in order to employ an alternative method that could easily fail. In this case the radio ads would provide a small percentage increase but in order for the restaurant to overcome problems with sales, lowered employee morale, and high employee turnover a more creative solution needed to be applied. Despite the initial discomfort the choice to go with the LSM was a successful one.

References

Emin, K. (2010). A Dynamic Model of Decision-Making under Cognitive Dissonance and

Modularity of Mind. Retrieved May 20, 2012 from

http://ideas.repec.org/p/dgr/umamet/2010014.html

Tanck, R. (2008). Decision making Process. Retrieved May 20, 2012 from

http://decision-quality.com/intro.php