GSBS6001 Managing Under Uncertainty

Managerial Decision-Making: The Transformation Process of AGD, Argentina

Word Count: 1,417 words

Introduction

Managerial decision-making is one of the greatest problems that beguile numerous businesses, companies and organizations today. In an age where information is rapidly and variably accessible via numerous avenues and in diverse forms, firms are tasked with making the hard decisions for progress, growth and development. Inherently implied is the need to borrow from previously successful companies that have stood the tests of time and become successful in their implementation of several methods to mitigate the effects of key decision-making issues. An example of such a firm is Aceitera General Deheza (AGD), which has been in existence in Argentina since 1948. In this paper, we shall analyze the four key managerial decision-making issues in the enclosed case study of the AGD transformation process.

A Summary of Identified Decision Issues

As reiterated above, managerial decision-making is essential to the success and growth of the firm. The following are some of the key issues of the managerial decision-making process that were prominent in the analysis of the provided case study.

• Strategic initiatives
• Internal organisational and structural changes
• Changes in management and
• Structure and strategy alignment.

Critical analysis and evaluation of key issues

Analysed Issue 1

Strategic initiatives

The term diversification of products has been often coined in business to push directors and managers into aligning their thoughts with the possibilities and opportunities in the market for new products. AGD was prompt to realize the essence of diversification by pivoting its focus from a more export-oriented perspective and venturing into a retail market. This allowed them to realize products that were essential and much-needed in the market hence becoming pioneers of the same. While their competition was busy leveraging their current business and market for optimal profit, AGD was in the process of innovating and implementing more cost-effective methods of production for the local market. As such, they were able to improve their market share capital as illustrated in figure 1 below. ‘‘Not putting all their eggs in one basket,’’ as another Director said was the strategy to help the margins of the business to remain stable (Hatum 2011).

With regards, to logistic chains and origination, AGD realised that with their move to diversify their business, arose the need to mitigate any losses or challenges of business in the origination process that involved the sourcing of raw materials. The problem of origination had initially been a major setback that led to the close of the company in 1968 (Hatum 2011). The directors were quick to react this time and went ahead to construct and operate 22-grain collecting plants and two purchasing offices spread around Argentina (Hatum 2011). Their actions in addition to cutting costs in their logistic chains led to a further improvement in the market share performance throughout their operations as shown in figure 2.

Analysed Issue 2

Internal organisational and structural changes

The vision of AGD’s founder for growth and the accumulating business through strength in the market saw the solicitation of consultancy for the conceptualisation of business units and support units. While this concept was relatively new and different from the initial operational structure of AGD the directors were focused on the future of the company where change was essential for success. Support units were needed to offer services and backing to business units and inherently not wait for directions from the board. Efficiency and economic use of resources was also, a major hurdle that business units faced during this restructuring period which would also mean the need for avoidance of activity overlapping. The customer-focus approach that AGD was implementing was set to flatten the present hierarchical approach which was bound to bring pushback from senior managers but would also create teamwork and synergy if successful.

Analysed Issue 3

Changes in management

AGD was proactive in the hiring process by bringing on board a new, young and fresh set of managers who would effectively acclimate to the changes in managerial structure. While previous hiring processes were more traditional and based on relationships with the stakeholders, these new managers were to help the company reach new heights of success through efficiency and strategical approaches to present and future business.

Table 1:  Degrees requested and experience required for joining various departments over the period 1989-1999

Source: (Hatum 2011) https://www.emerald.com/insight/content/doi/10.1108/20450621111123353/full/html?queryID=

Some older managers were not satisfied with these new changes and were adamant to change the processes and systems as stipulated to them. conveyance of information on the managerial structure change was also appreciated by other experienced managers who were quick to train the younger managers in the subtleties of business operations. For a company that was not accustomed to sporadic turnovers, AGD survived and thrived on these changes and gave more time to the board to contemplate strategies for future business and set up measures to survive during economic turmoil as would occur in 2001 (Hatum 2011)

Analysed Issue 4

Structure and strategy alignment.

The death of AGD’s founder in 1996 warranted the need for a concise and merit-based structure for the heirs to the family business. In essence, the directors were faced with the problem of asserting what departments and roles to assign to Adria´n Jr, Roberto and Adriana. Who took up the Presidency, Brand business unit and the Purchasing unit; Administration and Information Technology, and Finance; and Peanuts and HR respectively. With the involvement of family members in the business, the board needed to create a system that would absorb only the smartest and most organisational culture-invested, members of the company into the company to prevent the business from being affected by petty squabbles.

Solutions/Recommendations

In a bid to demystify and alleviate such challenges in the future of any firm or organisation, Légaré, et. al. (2008), it would be essential to abide by the below set of recommendations based on research and correlation to similar or other occurrences.

Recommendation for Issue 1

Shared decision-making process (SDM

The Shared decision-making process (SDM) proved to be an invaluable tool in the mitigation of problems arising in the diversification of AGD’s product selling and markets (Wilson 1999). While it was intrinsically an idea by Adria´n Jr to diversify and leverage against tumultuous global economies, the appreciation by the board and subsequent implementation through the hierarchical chain was seamless to the point of success and acquisition of a greater market share than before.

Recommendation for Issue 2

Bayesian Decision Theory

While the Bayesian Decision Theory is essentially used in the education sector, its Statistical, Measurement, or Econometric Model which uses the concepts of uncertainty among others, Pan, (2016) was imperative in the implementation of internal and structural changes of AGD; through the efforts of Roberto. Streamlining the logistical chain and giving way to a new generation of managers in tandem with the vision of their father was a genius move. While collating the uncertainty of economic recessions and downturns while ensuring that the company was ready for the same proved to be a genius move to undertake.

Recommendation for Issue 3

Action dimension process

The action dimension process, Clegg, et. al. (1999) as illustrated in the restructuring of AGD was invaluable to the growth and success of the company. The constant and consistent efforts in reshaping and restructuring the operational processes in the company allowed for assessment and reassessment of processes; that in turn led to the tailoring of the same to result in efficiency and seamlessness. Even though this process was exhausting and needful of keenness and sobriety of mind. It was made possible through positive attitudes by all the stakeholders inclusive f the directors, managers and new personnel being absorbed into AGD.

Recommendation for Issue 4

Decision-making as the enactment of power

Decision-making as the enactment of power, Clegg, et. al. (1999) was important in streamlining systems regarding leadership roles and family absorption into the business. While Adria´n Jr was granted the mantle of company President by the board of directors, it was based on a verbal and mutual understanding of ‘‘primus inter pares’’. He was first among equals. This was to say that this position was granted out of respect for himself and his efforts in ensuring the success and growth of AGD. Such decision-making was essential for the synergistic development of the company that gave rise to its future successes and survival of the downfall of the peso.

Conclusion

The essay has demonstrated that strategic managerial decision-making is imperative to the survival, growth and development of the firm. Through the theories and models provided, we realise the importance of a unity of purpose and adherence to the founder’s vision for success and goal achievement.

References

Hatum, A. (2011). The transformation process of AGD, Argentina. Emerald Emerging Markets Case Studies.

Pan, Y. (2016). Bayesian Decision Theory Guiding Educational Decision-Making: Theories, Models and Application. Society for Research on Educational Effectiveness.

Légaré, F., Stacey, D., Graham, I. D., Elwyn, G., Pluye, P., Gagnon, M. P., … & Desroches, S. (2008). Advancing theories, models and measurement for an interprofessional approach to shared decision making in primary care: a study protocol. BMC health services research, 8(1), 1-8.

Wilson, D. C. (1999). Decision-making in organizations. Managing organizations: Current issues, 43.

Clegg, S. R., Hardy, C., & Nord, W. R. (Eds.). (1999). Managing organizations: current issues. Sage.