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Valero Energy, Elkay Manufacturing, J & J, and Overstock.com:
The Move Towards Fact-based Decision
Sir Michael G. Auditor, CPA
Instructor
.
Kaamiño, Maiah Ysabel
Gutierrez, Charmaine B.
Pagara, Phoebe
I. Problem Statement
Intuition, tradition, and simple financial analysis are often no longer sufficient for making business decisions. Generally, many organizations adopted data driven or fact based decision making in regards to business performance. Among these companies are the Valero Energy, Elkay Manufacturing, J & J and Overstock.com.
Business intelligence tools help to ease the work of business performance management of the companies mentioned above. Whether driven by Total Quality Management programs, Balanced Scorecards, or another methodology, data-driven companies tend to succeed by setting up clear goals and expectations that are aligned from the top of the organization down to departments and individual employees. However, each company uses different tools to manage business performance. Among all decision support tools, which one would be considered advantageous to use as a basis for business performance management activity?
II. SWOT ANALYSIS
This SWOT analysis is presented to gain a better understanding of the companies which can be useful in planning the development of the business.
Internal Environment |
Strength | Weakness |
- Employing decision support tools can reduce decision cycle time and time taken to solve any conflicts/problems.
- It enhances decision making effectiveness and the quality of the decision.
- It improves interpersonal communication since the entire department anywhere at any time has same information/data that are considering. In other words they have "one version of the truth" which helps them collaborate with each other.
| - There is a high cost on hiring a specialist to set up the system that fit your need. Also, the costs of the system/tools that are available in the market are material.
- The focus of the company will be centered on the information/data fed to them by the system/software. They may tend to disregard some factors like political, social, emotional and etc.
- They may be an obscuring responsibility because users/decision makers may divert personal responsibility to the system/software. They tend to think that they are not accountable for the decision they made and thus put the blame on the system/software
|
External Environment |
Opportunities | Threat |
- Since there is a time saving factor it will lead to have a positive image for the organization because they have faster time in solving their problems whether internal or external.
- Employees from a company/business entity with a satisfactory implemented system can help contribute to a positive environment.
- Overall, if the company performs well there will be a big opportunity for them to expand and be great, of course, with the help of the customers or its target market.
| - Fierce competition from local other casual dining chains and independent restaurants.
- A shift in customer’s taste and needs.
- Unanticipated changes in technology demand.
- Losing business to other suppliers
|
III. Alternative Courses of Action
The following are the suggested possible solutions and their corresponding advantages and disadvantages.
Alternatives | Advantages | Disdavantages |
Utilizing Dashboards |
- This tool allows to see the overall situation report of desired information in one glance.
- The dashboard is design to allow presentation of complex relationships and performance metrics in a format that is easily understandable by time pressured managers.
- This tool is most effective for managing hourly and daily performance when the user need to see data that is current (and often real-time).
- It provides a quick easy to understand snapshot of where a project stands. Also, It allows a faster and more efficient understanding of the results because it is color coded.
| - The data presented may completely useless if it is not actionable or there are no clear objectives.
- The design of dashboards is much more open to interpretation. Consequently, there is a tendency of misinterpreting data or getting incorrect or inaccurate data that will lead to bad decisions.
|
Utilizing Scorecards |
- This tool is typically a top-down approach that allows management to implement its strategy by aligning performance with goals.
- Scorecards readily monitor all the measures in a complex organization. As a results review are more regular and detailed. Generally, it encourages thorough monitoring and timely corrective actions when performance issue arises.
- Breaking down strategic measures to lower levels of the organization, so managers and employees both know what is required to achieve excellent overall performance
- Scorecard is designed to offer a comprehensive view of how the enterprise is doing and where it’s going. Also, it helps to see if any key factors are missing or the gaps towards success needed to address.
| - Scorecard does not include direct financial analysis of economic value or risk management. Goal selection under Balanced Scorecard does not automatically include opportunity cost calculations.
- Balanced Scorecard performance is subjective. Unlike quality levels, it cannot be quantified except by surveys or management opinion.
|
Combination of Dashboard and Scorecard
|
| |
IV. Recommendation
Decision making aspect is vital for every company and doesn't actually require explaining. Managers have to make decisions with which a company's performance and condition would likely depend. Rational choices shall be made from well-defined alternatives The better the decisions are, the better the company is doing, therefore executives do their best to provide decisive persons with the best tools possible to support and facilitate their job. Due to that, we would highly recommend what we think is the best tool to be used that would maintain the efficiency of the companies for better performance management- a combination of dashboard and scorecards.
