John C. McGuire, June 28th, 2012
Don Anglos, CEO of machine tool company Pinnacle , has completed the first three of the six steps in the decision making process. When Anglos heard a rumor that one of Pinnacle's major competitors had plans to acquire Hoilman Inc., a sensor technology and communications software company, he stumbled upon the first step of the process and recognized that a decision had to be made: acquire the company themselves, thus transforming the company from a manufacturing business into a high-tech service company, or let their competitor have it.
Anglos, taking the second step in the decision making process, analyzed the situation and its causes. He knew the company's growth was threatened by low-priced foreign manufacturers, and if he wanted to press forward in a slow growing industry, he had to be resourceful and innovative. The 48-year-old CEO, known for his prowess at spotting new market opportunities, was also well acquainted with Hoilman Inc., having recently rallied for a joint venture with the sensor technology company to develop similar technology to use in manufacturing. Unfortunately, the idea fizzled and was never implemented.
Clad in his knowledge of the situation, Anglos initiated the third step of the process, the development of ideas, by presenting to the senior management team his idea of a new strategy and the acuisition of Hoilman Inc. as it's first step. Jennifer Banks, head of the service division, was elated to hear that the company might make the switch from manufacturing to high-tech services. Sam Lodge, the Chief Financial Officer (CFO), of course, was concerned about the profitability of the venture, pointing out Pinnacle's recent slippage in earnings. Not only that, but Lodge pointed out the number of competitors who had already come to that conclusion and taken steps to join the service industry, such as Pinnacle's competitor who also had their sights set on Hoilman Inc.
The threat of the competition devouring Hoilman Inc. put Anglos on the spot and pressed for time. Besides the presentation to the senior management team, not much time was left to search for alternative opportunities. The fourth step was bearing down on Anglos: the selection of the desired alternative. He had two choices, one of which he would have to implement, taking the fifth step of the decision making process. Whichever he chose would be evaluated in the sixth and final step by himself, the senior management team, Pinnacle's employees, the customers, Wall Street, and anyone else who had a stake or interest in the company. For Anglos, the pressure was on and the heat was up.
The first line of the Case Study reads, "Don Anglos had to decide whether to trust his gut or his head..." This is a clear and cut metaphor for his personal decision making style. He could either trust his gut, which follows the directive style of decision making and would most likely lead him to acquire Hoilman Inc. as a simple, clearcut solution; or, he could trust his head, which follows the analytical style of decision making and would probably lead him to opt out of the acquisition in order to gather more information, consider further alternatives, and heed the advice of his senior management team. I don't think Anglos follows a conceptual or behavioural style because he has not presented a broad array of alternatives to the situation, nor has he sought a broad array of opinions.
Sam Lodge, CFO, seems to be the polar opposite when it comes to decision making. Lodge was perceptive enough to know that Pinnacle Company's revenue dip had caught the attention of the eyes on Wall Street. He also noticed how the competition was reacting to changes in the market. Still further, he went on to mention that the customers may not be able to afford, or even want, the high-tech services Anglos was proposing Pinnacle focus their attention on. Sam Lodge's socially-oriented concern for other's opinions and goals, as well as his reliance on information from a broad range of people and systems, points toward a conceptual and behavioural decision making style.
If I were to recommend a course of action for Pinnacle's future, I'd suggest to Don Anglos that he make the decision to acquire Hoilman Inc. and shift the company to the high-tech service industry. My main reasons for suggesting this outcome are Don Anglos's familiarity with Hoilman Inc.; the threat of competition, domestic and foreign, who are already making advances into the new field; and Anglos's reputation for spotting new market opportunities.
Anglos, when he proposed the joint venture with Hoilman Inc., recognized the potential of developing high-tech services to benefit customers in the manufacturing industry before competition caught on to the same idea. During that time he learned all he needed to know about the company and the opportunity that market presented. The rumor that competition was interested in the same deal is proof that other CEO's were noticing that the plan had potential. The threat of competition making the move before Pinnacle also increases the odds that the decision not to acquire will lead to the company slipping further behind in the industry, as competition will be moving forward as Pinnacle continues to brainstorm.
Don Anglos's decision making style is probably more directive than analytical, so choosing to acquire goes along with his usual hunches, which, as the textbook says, "paid off handsomely" in the past. Anglos seems to be intuitive, so following his gut couldn't do any more harm than his past decisions using the same method. Anglos knows that the company needs to be ultra-competitive, but also cautious of it's revenue stream, so keeping up with the competition and snatching Hoilman Inc. from right under their nose is a realistic option for the company's future.
As for Sam Lodge's concerns as the CFO: Don Anglos has done a good job so far keeping customers from switching to competitors, and he's done this through aggressive pricing. He used the competitive pricing strategy to take Pinnacle as far as it can go, and the recognition that a new strategy was in order came from the effect it had on profit margins, so it's safe to assume he has an eye on the company's finances and their well-being in mind. And, as Strategic-Acquisitions.com points out, "...the acquiring company can take advantage of synergies... two companies together will be stronger and more profitable than either company was previously."
Strategic-Acquisitions. David Annis, Eugene Merfeld, Gary Schine. June 29th, 2012 <http://www.strategic-acquisitions.com/index.html>
Of course, I didn't get a 100% (I got an 87% though, wooo), and there is an err in my words. Anglos is apparently only directive. Sam Lodge is meant to be an analytical decision maker, not conceptual or behavioural. I think this is bollocks, as Sam Lodge did indeed seem like a conceptual and behavioural decision maker, relying on a broad range of many sources and his empathy for the people's opinion to make decisions instead of the company's immediate need for change. But I'm just a student, so I'll accept your B+ Mr. Teacher. I see what you mean, but it's a debatable matter of viewpoints.
This turned into a free thought rant, but adieu to you, and you, and you!