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    Problem Formation and Decison Making

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    Defining the issues that appear in the business scenario below.

    Discussing the forces that are involved in formulation of the problem.

    Using problem formulation tools and techniques, describe the organizational and environmental obstacles in a way that considers various key stakeholders that will be impacted by decisions.

    Applying critical thinking in the decision-making process.


    Description of the Company

    Genco is a manufacturing company that uses labor and industrial production, in which raw materials are transformed into finished goods on a large scale. Our finished goods may be used for other products such as produce, clothing, recycling, and refining of petroleum, etc.


    The location:

    A significant island country in the South Pacific.
    The people:
    Over 50% under 15 years of age
    Ethnic mix of indigenous South Pacific tribes, Asian (Chinese primarily), African, French, Spanish, and since World War II, a sizeable number of Americans.
    Religions - Indigenous 50%, remainder closely divided between Christian, Buddhist, and Islamic.
    Languages - Numerous indigenous, as well as English, Spanish, and French.

    The economy:

    Petroleum, coffee, cocoa, spices, bananas, sugar, tourism, fishing, and natural gas, as well as inexpensive, quality labor.
    Disasters threats:
    Tidal waves/tsunami
    Volcanic eruptions
    Petroleum spill
    High risk for avian flu
    Terrorism, from within and outside the country
    Helping organizations:
    Governmental service - local, state, and national levels?including the military
    Community based organizations
    Faith-based groups

    Define our mission and my assignment:

    Our company is considering establishing a greater presence here in Kava. That greater presence could take various forms, based on what's good for our company and what's good for the people of Kava. You and I get the chance to analyze, synthesize, and prescribe regarding that decision."
    Because so many disasters happen here?" I questioned. "I think I can write up this recommendation in two words, 'Forget It'".
    But our organization chose to play in this game and you chose to join our organization. If you really want to play, you will have to take your turn at bat. There are no designated hitters in this game."
    I rephrased my thoughts, "OK, we want a greater presence on Kava, because so many disasters happen here."
    Certainly, one reason is that whatever happens here affects us there. I'll make sure you understand that as we create this study. As you've seen recently, disasters happen at home, too. We can avoid, deny, or ignore them. We have to turn them into opportunities. Another huge reason is the founder of our company, Chris Morales, has a deep-seeded commitment to doing what is right. Not because of the economics, or politics, or recognition, but because it's the right thing to do. Our organization is far from perfect, but we keep trying to upgrade who we are, what we do, and how we do it. I believe we can't keep taking more from Kava, if we don't give more back. I want to live up to that Genco name. And, the third, maybe most consequential reason is the government of Kava, and I'm sure indirectly a bunch of other organizations, are asking us to bring our business "culture" to Kava.
    Why is their government asking our company, a for-profit business, to help them with their, social needs?" I asked.
    There are also three big, basic reasons, for that,and loads of other minor ones.
    First of all, through our growth, our company has demonstrated that we can develop and manage a very effective, as well as highly efficient, organizational structure and processes. That includes all aspects of the company; marketing, finance, purchasing, technology, human resources, physical resource, transportation, strategic planning, leadership, etc.
    Secondly, the goods and services that come from Kava, have a significant impact on our company, you and me, and most folks back home, as well as people all over the world.
    Last, and certainly not least, the CEO has preached and demonstrated, 'In the long run, economics drives everything.'
    All those fresh new critical-thinking skills I need to write a not-too-long Part I to what will be our company's plan about how we have a greater presence on Kava. I think Part I of the plan should discuss at least three areas; organizational processes, human resources, and ethics.

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    SOLUTION This solution is FREE courtesy of BrainMass!

    Please refer to the attached file for the response.


    What strategies may be implemented by Genco to establish its presence in the KAVA market?
    1. Geographical Location
    Kava is an island country in the South Pacific. As such there may be problems in transporting some inputs that are only available in the home country. As an island, the market may only be confined to the place and expanding into sub-markets may be difficult.
    2. Demographics
    The possible source of human resources may not be that feasible because over 50% of the country's population are under 15 years of age. At such a young age, they cannot be tapped as labour force for Kava yet.

    The remaining 50% are either old enough to perform effectively or may not be that old but lack the necessary knowledge and skills for the job. This would mean either training them or getting people from the home country.
    3. Economic condition of the place
    The country is abundant with raw materials that may be utilized by the company in its operations. As such, the company could have an advantage in terms of cost and availability of raw materials. However, the possible threat is that the people (mix of indigenous tribes) may be indifferent or may consider the manufacturing activity of Genco as an intrusion to their privacy.
    4. Natural environment
    There are factors that are beyond the control of the company that would adversely affect its operations. These include the natural calamities and disasters. However, what the company may do is to be proactive or to prepare for such events.
    5. Social /Peace and Order/ Health Situations
    The company's operations may be threatened by the activities of terrorist groups as well as the susceptibility of the people to some diseases.
    6. Foreign regulations
    Commercial laws, government ordinances, and other policies and regulations in the area must be taken into account to avoid future legal problems.
    7. Support of government and non-government organizations
    Government and non-government organizations have been very receptive of the business plan of Genco. However, it could be a cause for the company to be alarmed because of the possible expectations that these groups are hoping for in return.

    8. Ethical Issues
    Business standards and practices vary from one country to another. What may be ethical in one country may be less ethical or even unethical in another country (Kotler, 2001).
    Genco may decide to either lower its standards or put its standards to a higher level to cope with the ethical standards in the area.
    9. Global competition in the area
    Competitive situation must be taken into account. This will not only include direct competitors (companies) but also indirect competitors (substitute products).
    10. Genco Mission and Management Orientation
    One of the company's missions is, "To upgrade who we are, what we do, and how we do it". This implies a strong determination of the company to pursue its plan as a way to further build its name.

    Parallel to the company mission is the management orientation which is "Doing what is right for the people and for the company". This connotes ethical behaviour and social responsiveness.

    1. Exporting
    This is either indirect or direct exporting. In the indirect exporting scheme, Genco may work through independent intermediaries. Domestic- based export merchants buy the manufacturer's products then sell them abroad or to Kava. Cooperative organizations would engage into exporting, in behalf of its member producers.

    The advantages of indirect exporting include: less investment and Genco does not need to develop an export department and overseas sales force (Kotler, 2006).

    Direct exporting requires Genco to make a commitment to expand into a particular market. The company produces its goods in the home country and sells it to the foreign market. In this option, investment will be large and the risk involved will be high, relative to indirect exporting.

    2. Licensing
    In this structure, Genco would issue a license to a foreign company to use its manufacturing process, trademark, patent, or other items of value, for a fee or royalty (Kotler, 2006).
    In terms of entry, it would be easier but there is a risk because the licensee would learn the production expertise and gain an opportunity to use a known product or brand name.
    The disadvantages of this scheme include: the success of the business would not totally benefit Genco, a possibility that when the license contract is finished, the licensee may turn out to be a competitor.
    3. Franchising
    Under this structure, Genco would offer a complete brand concept and operating system. In return, the franchisee invests in and pays certain fees to Genco, the franchiser.
    4. Direct investment
    In this setup, Genco would have direct ownership of the manufacturing process in the foreign country and build its own facilities in the area.
    The following are the consequences of this set-up
    a) Genco could take advantage of economies of scale in terms of labour and raw materials.
    b) It could build its relationship with Kava, the host country because of: job creation and additional revenue in the form of taxes.
    c) Full control of investment and company operations
    d) Genco may easily build a strong relationship with consumers, the government, suppliers, and other stakeholders.
    The possible disadvantages of this setup include: high risk due to large investment requirement and other factors that may not be within the control of the company (e.g. natural calamities, indifference/rejection by the community members due to cultural and psychological factors).

    Based on the above considerations and the evaluations made on the alternatives, the following is recommended:
    1. Initially, Genco may tap the opportunity in the Kava market through direct exporting. This would mean that during the first two (2) years of its expansion activities, the company may go into direct exporting of its products to Java. This is to allow the company to put its initial presence into the market while continue preparing itself for more deeper and serious business commitments in the future. This would allow the company to get feedbacks on how well its products are accepted by the Kava market. Feedbacks would also serve as lessons to further improve its product offerings.

    While the company is going into direct exporting to Kava, its facilities and equipment may be utilized in acquiring possible raw materials in the area at low cost, to be used in the home country.
    2. During the 3rd year of having business with Kava, Genco may shift into direct investment, depending on its experiences during the first two years of marketing into the said foreign market.


    Kotler, Philip and Armstrong (2001). Principles of Marketing. Prentice- Hall, Inc.
    Kotler, Philip and Keller, Kevin Lane (2006). Marketing Management.
    Pearson Education, Inc.

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