BUSINESS ORGANIZATION & MANAGEMENT
Case Study 6: The Icelander Who Wants Saks
Summary
After Johannes Jonsson lost his job in 1998, he spotted an opportunity to intrude Iceland’s retail industrial. He and his son worked together and established Bonus. In 1999, Bonus merged with hypermarket, Hagkaup to form “Bauger”. Among all Johanesson’s plans, there was two mistake he made which will the taking over Bill’s Pollar Stores which went bankrupt after two years and another was making false account on Arcadia and gettingcharged by Icelandic authorities. After the fall, he do things more diligence and cautrous like he managed his business using the traffic light colour coding system and analyze before taking over Saks.
Questions for Discussion
Question 1: Are most decision Jon Asgeir Johannesson makes as CEO of Baugur Group programmed decisions or nonprogrammed decisions
Answer:
Programmed decision is means that routine, virtually automatic decision making that follows established rules or guidelines. For example, managers have made the same decision many times before and repeated. There are rules or guidelines to follow based on experience with past decision.
Nonprogrammed decision defines as nonroutine decision making thata occurs in response to unusual, unpredictable opportunities and threat. The decision of the person is instinctive and there are no rules to follow since the decision is new. Therefore we can say that nonprogrammed decisions are made based on information, and manager’s intuition, and judgment.
In this study case, we concluded that Johannesson has made nonprogrammed decision. Mostly of the decisions that he made are base on analyzing the report that he get. Based on his analysis, Johanneson tends to merge with Hagkaup Company to form a new company (Baugur) to make his company as an international player. Most of the decision that he made can bring profit to his company. Anyway, there are some decisions that he made cause his company some lost too. These are some unexpected incident happened in year 2001. Baugur has taken over a company which facing bankruptcy, Bill’s dollar Stores. Johannesson predicted that took over this company can make a big profit to his company. Unfortunately, this company was belly up after two years. Johannesson has took this lesson and promised himself that he will do more analysis before he make a decision. Thus we can notice that the decision that Johannesson made is nonprogrammed decision.
As a CEO, Johannesson always reminded himselt to make the decision that can bring benefit to his company. In year 2001, Baugur’s plans for a full-scale take over of arcadia were derailed when Icelandic authorities, acting on a tip from a disgruntled former business partner, hit Johannesson and this company’s former CEO with the charges of accounting irregularities. However, Johannesson had made decision quickly sold his arcadia shares, netting a tenfold return on its initial investment. He always made the best decision to protect his company through analysis. Therefore we can conclude again that most decisions made by Johanneson were nonprogrammed decisions.
2) What are some of the ways in which he recognizes the need for a decision?
Answer:
Since Johannesson does not like to do management about his companies. He has a remarkably hand-off approach. Therefore, Johannesson has used a system to decrease his burdens and make him to have a plenty of free time to have other plans. The system had used was “traffic light” system. The function of this system is to evaluating the brands by using dozens of performance indicator. He has divided each brand with a different color code. For those brand which running smoothly and brings profit will own green color code. Red color code is for those brands which may not bring profit and has some serious problems that needed more attention. Brands that have some potential problems will own yellow color code.
Johannesson are able to make efficient decision by analyzing the color code data. He will not bother the green color coded brands but he will pay more attention on those brands which are yellow and red color coded. Therefore, he does not need to present all over country and get himself has a plenty of time.
Johannesson has delegate of authority to all the companies’s management team to handle and make best decision for the companies. These are the style that Johannesson play on his business.
3) To what extent are the decisions he makes characterized by risk or uncertainty?
Answer:
Johannesson has a special personality. He always thinks about business even though he only has plenty of time. Therefore he tried to manage his business as simple as him can. Thus, the decision that he make are characteristic by risk and uncertainty. From the case study, we can conclude most of the decision he make are instinctive because he met many kinds of situation on his way to success.
Johannesson are used to make decision based on summary report which regular manager or CEO of organization is not allowed or able to do. The report that Johannesson refered was too summarizes and short. This is the risk that he needs to take when he made decision for his companies. This is because he did not clearly analyze the companies’ situation based on the short report. Since Johannesson was not able to present all over his companies. Thus, this is the easiest and most efficient way for him to take care of his companies. Anyway, this is not the most effective and it is risky. Sometimes, he might just make wrong decision due to the short winded explanation report. Therefore, he only can make decision based on his six sense and brief facts.
Johannesson met some difficult time on his business during year 2001. He has made uncertainty decision to take over Bill’s Dollar Stores. But, there was an unexpected incident happened after him takeover Bill’s Dollar Stores. The Bill’s Dollar Stores went belly up and cause some lost to his companies. Johannesson take this as a lesson to prevent the same case happened again. Finally, we can conclude that the decision he made are characterized by risk or uncertainty.
4) How has he learned from feedback?
Answer:
Johannesson has learned a lot of from past two decades experience. There were two bad incidents happened during Baugur’s conquests in year 2001. The first one was Johannesson took over Bill’s Dollar Store which emerging from bankruptcy across the Atlantic. Altough it was cheap to obtain it but the project ended when the Mississippi budget chain went belly-up just two year later.
The second one was Johannesson failed to carry out his plan for a full-scale takeover of Arcadia Group. Johannesson did not expect there was a disgruntled former business partner would gave information to Icelandic authorities of Baugur’s accounting irregularities.
Both incidents happened at the same year. Two years just after he personalize Baugur since year 1998. He might not have enough experience during that time. All decision he made was through instinct. So, he has learned to make analysis but not instinct. He needs to have discussion with his employee. No one is perfect. Thus, Johannesson may need someone information in order to win his game. Information is the key to success in his corporate conquest.
Johannesson need to know how to create a win-win situation at all business deal. The second incident clearly showed that Johannesson has neglected his business partner so he got betrayed. Relationship is another important asset in business world. A good relationship between partners will ensure the corporate to function properly. So, it is important for Johannesson to learn the art of communication to make good term relationship.
Bibliography
Gareth R.Jones/ Jennifer M. George. 2009. Contemporary Management 6th edition. Americas, NewYork: McGraw-Hill/Irwin.
Linda. 2009. Decision Making: Programmed vs Non-programmed decision. Viewed on 8 March 2010. Available from: <http://www.strategicmarketsegmentation.com/decision-making programmed-vs-non-programmed/>
Robert Harris. 2009. Introduction to decision making. Viewed on 8 March 2010. Available from: <http://www.virtualsalt.com/crebook5.htm>
Wikipedia. 2010. Decision theory. Viewed on 8 March 2010. Available from: <http://en.wikipedia.org/wiki/Decision_theory>