AN APPROACH FOR USING STRUCTURED PROBLEM

SOLVING TECHNIQUES FOR MAKING EFFECTIVE BUSINESS

DECISION

PRESENTED BY
GUNJAN SHAH
ANISH PILLAI
SITUATION ANALYSIS
DASHMAN Company was a large concern which produced
equipments for the armed forces of the United States.
It had over 20 Plants, located in the central part of US.
Absence of coordinated purchase policy within the firm.
Each plant acted at a separate individual unit.
It became evident in late 1940 that the company felt they
might face difficulty in procurement of essential raw
materials.
To deal with this situation, Mr. Manson, President of the
firm, appointed Mr.. Post as Vice President (Purchase) and
assigned Mr. Larson who has worked with the firm for
many years as his assistant.
SITUATION ANALYSIS CONTINUE…
The appointment of Mr. Post was announced through formal
channels in the firm.
Mr. Post’s first decision was to centralize the company’s
purchase procedure.
For this, he made proposal for getting all the purchase contracts
in excess $ 10,000 approved by head office one week in advance
of the signing date.
This proposal was approved by the company’s board of directors.
On the time, when the peak purchase period three weeks away,
Mr.. Post drafted a letter giving the directions to all the plant
executives.
SITUATION ANALYSIS CONTINUE…
Mr. Larson suggested personal visits would be more
effective than written communication.
Mr. Post dismissed the idea and had the letters sent to the
plants with his signatures.
Most of the plant executives responded positively to the
letter.
There were no notices from any plant executives regarding
negotiation of contract in the next six weeks.
Executives visiting the plants reported for the plants being
busy with the usual routing for that time of the year.
ARRIVING AT PROBLEM

No co-ordination in purchasing

procedure in all plant units.
Lack of authorized control over the
purchase decisions of individual units to
have adequate supply of raw materials.
DECISION CRITERIA

Any purchase contract in excess with one limit should

get approval from head office six weeks in advance.
Preserving plant autonomy & company culture.
Timely purchase & availability.
Centralized purchase process among plants
overlooked by head office.
Best possible price for raw materials.
Keeping head office aware of all the purchase
contracts signed at individual plants.
ARRIVING AT ALTERNATIVES

Developing strategy or planning to make purchase on

centralized level.
One authorized control personnel can organize, for
centralized purchasing process.
Inviting views and suggestions from individual plant
executives for centralizing the purchase process.
Creating a separate purchase department for the
company with all the decision powers and control on
the purchase process of individual units.
EVALUATING ALTERNATIVES

Developing strategy or planning to make purchase on

centralized level. – Implementation and success of the
strategy will be a time consuming process

One authorized control personnel can organize, for

centralized purchasing process. - Individual unit
executives may not accept to give up their power of
decision making to a new personnel appointed as
their rights would be restricted.
EVALUATING ALTERNATIVES

Inviting views and suggestions from individual plant

executives for centralizing the purchase process. – All
plant executives will have their views which may be
contradictory to each other and there may be possibility
of ending up with no solution for the problem.
Creating a separate purchase department for the
company with all the decision powers and control on
the purchase process of individual units. – This has to be
thought out in a proper manner and communicated to
all the concerns and approved. Also there should not be
any ego clashes created due to the development in the
firm.
SOLUTION
Creating a separate purchase department for the
company with all the decision powers and control on
the purchase process of individual units.
ACTION
Mr. Manson should personally introduce the new
Purchase head to all the plant executives to make
them comfortable with appointment of Mr. Post.
Mr. Post should call a meeting of all the plant
executives and announce the proposal with the
benefits, for their suggestions, thus making them a
part of the decision making process.
The proposal of centralized system will be
unanimously accepted by all the plant executives as
they had been a part of the decision making process
and followed henceforth.