decision making
Allison and James Stewart recently attended a birthday party for their 10-year-old granddaughter, Shirley. During the party, the children were
all given a chance to make their own popcorn and add flavors and colors to the popped corn. The children could add caramel, butter, chili
pepper, cocoa powder, or dried cheese flavoring. The girls were delighted with the idea of mixing the flavors to their taste, which in some
cases were delightful and others not so much. The fun was in the mixing and the girls were delighted. Allison and James, recent retirees, were
looking for a new small business to start and they immediately latched onto this idea: Why not produce popcorn flavors? On second thought why
not produce snack flavors in general? Why not produce flavors for popcorn, pretzels, and potato chips that people could mix and match to their
taste – A gourmet flavor treat for all ages. Flavor “N” Snack (FNS) was born.
FNS makes 18 powdered flavor basics that when heated in a microwave for seconds would add flavor to most snack foods. The powders come in
flavors like masala, Thai green chili, honey and mustard, chili, malt vinegar and sweet flavors like orange chocolate, salty caramel, and honey
apple. The flavors are packaged in plastic jars with shaker lids for easy dispensing. Online instructions for hosting tasting parties are
included in the packaging.
Allison and James do all the product purchasing, mixing, bottling, labeling, packaging and shipping of the product in the basement of their
large home. Their teenage grandson has created a web page for them and helps with online orders. Currently after six months in business FNS is
selling about 875 bottles each month. The couple took the FNS products to a recent Sweets and Snack Expo in California and were surprised at the
response received. They received a contract from several small boutique chains looking for clever food gift ideas. This contract will increase
their output by about 300 bottles per month alone. They also learned from other conventioneers that the holiday season would give them a big
jump in sales as people look for hostess gifts, stocking stuffers, party ideas, and gift guides for new ideas. In fact, the conventioneers
suggested the Stewarts increase their existing production as much three times. Allison and James can increase sales more if they increase
production. Encouraged by positive reactions from the convention sales and a new listing posted in two national gift guides, the company’s July
revenue was $6,500. FNS’’s gross margin ranged from $3 to $5 on each bottle, depending on the ingredients. At this time, the website is doubling
its orders.
The holiday season is upon FNS and Allison and James are at a crossroads in their business. They cannot be sure the products will take off, but
they want to be ready just in case. The idea of not having enough inventory for the season and disappointing customers is unsettling to James
and Allison. The couple cannot be seen as unreliable to first-time customers. It is also true that keeping down expenses is critical because the
company is self-financed and the couple does not want to touch their 401K pension funds to fund FNS.
Allison and James have studied the market and although uncertain that they will reach their sales goals it seems likely that to fill all their
possible sales the couple would have to produce 6,000 bottles per month starting in September through December.
James estimates that he will need two additional full-time workers in October, mainly for production; an extra three and a half workers in
November, for production and shipping; and one and a half workers in December, mainly for shipping. The couple has examined a few options to
meet the huge increase in production:
• One option they considered is asking friends and family to help in exchange for food and laughs. The problem is that other commitments
may diminish the volunteers’ participation as the holidays, school schedules and work demands consume their time. They are likely not to be
reliable as time nears the holiday week. Further, James and Allison know that family and friends cannot be managed like salaried workers, and
hurt feelings may result. Although the most cost-effective measure would cost $1800, easily payable from their bank account, Allison and James
worry they may not meet the goal without losing some family or friends. Depending on family and friends is risky.
• They could hire bonded and vetted temp-workers through an agency. The cost is $25 an hour for a total of $20,000. This sum would tap
into their cash reserve and leave them strapped for other expenses. Although doable, this option leaves no cushion. It is a risk. The workforce
is also not trained and would have to be coached as well as supervised on dealing with food products.
• Another option is a bank loan. This could allow for a more professional workforce and free James and Allison to plan the company’s
future growth. However, the rates may be higher for people their age. Allison called AARP for some advice and was told that age should not be
an issue from a legitimate lender; however they would most likely have to post collateral that means mortgaging their home, which is mortgage
free. The house they feel is off limits. This is a strong no way option for them. They must have a place to live at their age. However, getting
a loan without using the house or their 401K accounts as collateral is possible but they have no idea of the rates.
• Another option is to invest in new equipment that would include turntables, workbenches, shrink wrap machines and fulfillment equipment
that James thinks will cost $11,500. He is uncertain that they will have enough time to install the machines in the basement in time for a
September production. He might have to pay extra for a rush fee of $3,000 more to guarantee a timely installation. The cost is something FNS
can handle without too much strain.
Looking for some advice, the couple turned to some of the small business people they met at the convention. Here are some of the comments they
received:
• Use every personal contact as you must get the orders filled and to the customers on time. The first impression is the best so do it
right the first time. Work 24/7. If you do not want to use family and friends look to other groups that may be willing to help for a small
donation. You may even have previous work buddies who may help for a small fee. Also include with every order a product list and order form.
Happy customers make good long-term customers.
• Do not invest in any equipment if you are not sure the holiday surge will continue in the months afterward. Family and friends will
want to see you succeed while temp workers will consider it just another job.
• Investing in machinery is a real growth move. Find customers that will sustain the expense by going to bigger retailers
The PrOACT model of decision making uses five steps to help make difficult decisions. PrOACT stands for problem, objective, alternatives,
consequences, and tradeoffs. Use the following worksheet to document how the group applied steps of the PrOACT model in making the decision for
the owners.
DIRECTIONS:
1. Before starting this process read and review the course readings:
• PrOACT Design
• Litemind Essential Guide to Creative Decision Making
• LifetoolsPrOACT Introduction
2. In order to apply the model correctly, complete the worksheet step by step.
Students should ask the following questions in examining the explanation sections of this worksheet:
• Was each of the steps of the model followed correctly?
• How did the group come up with their conclusions (e.g. framing the decision, list of objectives etc.)?
• Did we explain it in detail (e.g. was the way the process was applied by the group explained in each step)?
• Did we use course material and case study facts to explain the reasoning behind the conclusions the group drew? Additional research?
• Did we use in text citations to reference the material used to support the logic behind the conclusion?
• Did we look at the grading rubric?
3. Other information in addition to the directions associated with the project.
• Third person writing must be used. Do not use statements such as “the group, I, the team, or the case study” in writing explanations.
• Students are expected to treat the explanation sections of the worksheet similar to a college level research paper. The logic presented
in the worksheet may not be considered as common sense. All explanations must be supported with a source and facts from the case study.
• Use a cover page to include your name.
• Be sure to support the ideas, reasoning and conclusions put forth using the course readings, additional research and in text citations.
The case study facts do not require in text citations. List references at the end of the document.
• Turn in the Worksheet only into the Assignment Submission Folder.
Step One: Frame the Decision
Identify the Decision to be made by framing the decision. Framing the decision means discerning the reason or cause for a decision to be made
and what precisely needs to be decided. Identifying the correct decision to be made is a critical first step. It is important to review the
decision to make sure it is not being framed with bias or prejudice.
Review:
• LifetoolsPrOACT Lesson One
•
Framing the Decision
Fill in here: Identify the decision to be made by the decision maker.
Framing the Decision: explanation of how the group applied the model to the case study
Fill in here: Explain how the group arrived at this framing of the decision. Go through the process covered in the LifetoolsPrOACT Lesson One
in discussing the triggers, constraints, possible biases, and how the group came to choose this formulation. Identify the ideas that were
discussed by the group and the reasons given by its members to finally choose the formulation listed above.
Be sure to include source material from the readings to support the ideas, reasoning and conclusions. Explain in detail the steps you took to
come up with the framing of the decision.
Step Two: Determining the Decision Objectives
The next step is to identify the DecisionObjectives. Objectives are the “wish list” of end results. If the decision maker could have anything
they wanted from the decision choice what would it be? Focus on tangible, quantitative, long and short-term goals or needs the choice would
provide the decision maker. For instance, if safety were a big concern of the decision maker, then safety as it relates to the decision to be
made should appear on the objectives list.
Stakeholders: In formulating objectives, it is important to look at everyone who has an investment in the decision. Who are the stakeholders in
this decision? What end results do they wish to see? Thinking through the objectives that need to be reached and the end results will allow
you to set priorities as you move through the PrOACT process.
Read and Review:
• LifetoolsPrOACT Lesson Two
• Advantages and Disadvantages to including Stakeholders in Decision Making.
• Roles of Stakeholders in Planning Process
Decision Objectives
Fill in here: Identify and list the objectives. There should be at least four from the case study and two that the facts imply. Go through the
process covered in the LifetoolsPrOACT Lesson Two. Objectives: explanation of how the group applied the model to the case study
Fill in here: Explain in detail how the group arrived at the list of objectives. Go through the process covered in the LifetoolsPrOACT Lesson
Two in discussing why these objectives were chosen and others not. Include any possible bias or influences that might have entered into the
choice of objectives by the decision maker as expressed in the group discussion. Identify the ideas that were discussed by the group and the
reasons given to finally choose the objectives listed above.
Potential Stakeholders
Fill in here: Identify and list all potential stakeholders. Review the articles to help you understand and come up with a list of potential
stakeholders.
Explanation of how the group applied the model to the case study
Fill in here: Identify and explain the relationship the stakeholders have to the decision to be made and what influence or bias they may have
with respect to the objectives desired from the decision choice. Identify the ideas that were discussed by the group and the reasons given to
finally choose the objectives listed above.
Explanation of how the group applied the model to the case study
Fill in here: Identify and explain the relationship the stakeholders have to the decision to be made and what influence or bias they may have
with respect to the objectives desired from the decision choice. Identify the ideas that were discussed by the group and the reasons given to
finally choose the objectives listed above.