Decision-making processes and frameworks

Decision Making

The clothing store is suffering from a decline in sales as competitors have entered the market with wider selections and better prices. As CEO, I need to determine the best course of action. There are six steps in the decision-making process that can be used to help with strategy formulation -- recognizing the need for a decision, generating alternatives, assess alternatives, choose alternative, implementation and learn from feedback (Jones & George, 2008).

The need for a decision is obvious at this point, because sales are on a long-run decline. The competition seems to have different competitive advantages over us, and that is creating a situation where we need to change something about our business. There are several alternatives. The first is that we can take steps to lower our prices. The second is that we can add new clothing lines to match those of our competitors. The third is that we can focus on developing a high end business, since we are already charging more money for a differentiated selection. The fourth option is to expand more into areas where the competition is not as strong.

The next step is to assess these different alternatives. The first option, lowering our prices, is something that is not easy to sustain without significant strategic change, because we would need to lower costs. We also have a good brand at this point and probably can attract customers on the brand strength, something that will be eroded if we become a discounter. Filling out our selection with men's and children's clothes might give us more revenue, and win back customers, but it also takes away from our sharp customer focus. The third option of getting more high end clothing is probably better for the company, because it leverages our existing strengths on marketing to women and having a premium brand. We might need to do some re-branding upwards and make some merchandising decisions, but this move will take us away from direct competition with the companies who are presently beating us in the marketplace. The fourth option will also allow us to find new ground, geographically. The key to this is that such a move is only temporary -- if those new markets are any good there will be competition moving in soon enough.

This analysis points to the need to make some merchandise changes, and get our branding allowed with a high level. This takes us away from the major competitors who are beating us, something of a blue ocean strategy (Investopedia, 2014) that allows us to carve out a niche for our business that plays to our strengths. We are good at selling clothes to women at premium prices, and that is our brand image as well. This strategy essentially doubles down on that, whereas the other options all force us to do new things and learn new skills. This option allows us to do what we have always done, but more intensely and with more focus than before.