Business Question

Read the

Mudge Paper Company

Case Study.

You are Jimmy Cricket, CEO of Mudge Paper Company and Lauren’s boss. You have come into the office early on the day after the Memorial Day Holiday to find Lauren’s report on your desk explaining the events of the Friday before and her subsequent decision. You are not happy because this is the exact reason why you wanted group decisions and, as a result, you would like to bring Lauren up on the carpet ASAP. However, you decide to take a moment and collect your thoughts.

You decide to ask Lauren to explain her reasoning behind making the decision solo as opposed to having the group decide. You also decide to explain why you wanted the group to make decisions of this kind.

Write two paragraphs explaining each of the parties’ point of view – Lauren’s as well as the CEO’s. Explain your final decision on whether or not to go through with the sale as well as WHY this is your decision.

Discuss the advantages and disadvantages of using a group decision making process versus an individual decision making process by applying these concepts to the case study.

Discuss Lauren’s bias in her decision making process and how it may have affected her choice to make the decision alone.

Identify the CEO’s bias that may have entered the decision making process.

Discuss the business related facts within the scenario to develop an argument in favor of a group decision versus an individual decision.

Mudge Paper Company
Lauren Becall is the top salesperson for Mudge Paper Company. She also leads the sales team
that supports Mudge’s largest client, Bart’s Office Supplies. Bart’s is an international office
supply chain that is growing rapidly. During the month of May, Lauren and her team members,
Andy Griffith and Ronnie Howard, underwent intense negotiations with Bart’s purchasing agent,
Jack Black and Bart’s CEO, Cary Grant, to restructure the current sales contracts. The new
contract spelled out Bart’s yearly paper requirements (contracted sales amounts) as well as
payment and credit terms. The negotiations had been particularly hard for several reasons: 1.
Bart’s sales had increased internationally causing shipping and custom duties to increase the
cost to Mudge, resulting in an increase in sales price to Bart’s. 2. The volume of sales directed to
Bart’s required Mudge to offer a volume sales discount to remain competitive with other paper
companies. 3. Bart’s wanted a longer time to pay on the purchases. Bart’s wanted 60 days to
pay on orders invoiced rather than the current 30 days. 4. Bart’s also wanted Mudge to extend
its current credit line from $850,000 to $1,250,000. 5. Mudge’s CEO (Jimmy Cricket) was
reluctant to tie so much of the company’s cash flow to the success of Bart’s. The concern was
raised because in the last six months, Bart’s was paying down the credit line every 60 days
rather than in the 30 days that had been agreed to in the current contract. Bart’s did not appear
to have credit issues, but Mudge was not able to give interest free loans for 60 days. This week,
in time for the Memorial Day holiday vacation, the final agreement was reached between
Mudge and Bart’s. Bart’s would contract to purchase $1,750,000 of paper products from
Mudge. Invoice payment terms were 45 days, with a 3% interest on invoices paid later than 45
days. The credit limit was extended to $1,000,000. Lauren Becall was not completely happy with
the contract, as she felt Mudge was not protected from cash flow damage should Bart’s not pay
on time, not to mention the larger line of credit. Still, the parties agreed, including her boss who
was skeptical for the same reason as Lauren. The parties were due to sign the contract on
Tuesday after the Memorial Day holiday. On Friday evening, Lauren was packing her belongings
readying to leave the office for the Memorial Day holiday, when her cell phone pinged. The
caller was Jack Black, the Purchasing Agent for Bart’s. It appeared that a recent deal on Bart’s
end with UMGC tripled its need for copy paper from Mudge. This deal would raise the total
contract sales to $2.5 million. Jack Black made it clear that he wanted to change the credit limit
from $1 million to $1.5 million and to extend the payment terms from 45 days to 50 days. Bart’s
would not pay interest on late invoices until after 60 days. Black also made it clear to Lauren
that if the new terms were not agreed on by the end of that Friday evening, he would be
prepared to look at an offer supplied to him by Bart’s biggest competitor, King Paper. Black
further stated that, while Bart’s is pleased with Mudge’s work, money is always the most
important factor in purchasing. Bart’s president wanted an immediate answer so he could go on
vacation with a clear mind. Lauren was aware that most of Jack’s talk was a negotiating
technique but did not doubt that there is competition waiting in the background. Images of last
month’s teamwork ran through Lauren’s mind as she listened to Black talk. Lauren winced at the
memory of her teammate Griffith’s constant posturing in front of Black and the Bart’s CEO. She
had hoped to be able to pick her own team when she was promoted to leader but that was not
to be. Andy Griffith is a problem on this team. All month long, he had challenged her ideas in
front of Bart’s CEO. Lauren knows that she was promoted over Griffith because her sales record
was 20% higher than his was and she could close a deal better than he could. Griffith resents
her promotion and reminds Lauren, as often as possible, that he brought in the Bart’s account
and that he and Bart’s CEO have a great relationship. They play golf together and often go to
dinner together with their wives. Lauren thinks Griffith is a good salesperson but believes he
should not be on this team. The tension is at times very thick especially during the negotiations
this month. Griffith seemed to want to give away the store. Unfortunately, Ronnie Howard
seemed to be sitting on the fence when it came to the negotiations. Lauren had expected that
Ronnie would support her negotiation position with the client rather than Griffith’s because it
protected Mudge. Since Ronnie was the niece of Mudge’s owner and CEO, Lauren believed she
should be supportive of protecting the company’s money. Still, Ronnie was the one who came
up with the idea of paying interest on the late invoices. It just seemed to Lauren that one day
Ronnie was agreeing with Griffith and on another day with her. Lauren supposed that it was
Ronnie’s new position at the company that made her want to please everyone, including
Griffith. Lauren believed that pleasing people is a nice gesture but does not add to the efficiency
of the team’s decisionmaking. Lauren believed that Ronnie would be looking for the general
thoughts of the group, so she could appear to agree with the group. Overall, the month’s
negotiation process had been long and difficult. The thought of going over it all again to make
the changes seemed mind-numbing to Lauren. Yet, making the decision on her own would
mean obligating the company to an even greater cash flow commitment. Her boss would not be
happy with this obligation because he specifically warned her when they started that there was
nothing to prevent Bart’s from continuing to pay its bills every 60 days despite the new contract
agreement. Lauren rationalized and thought to herself, “Bart’s knows we are not likely to cut
them off easily. They are too big a customer to us. However, the extra sales volume should
offset the lost interest due for ten days on late invoices.” Lauren told Black that he could tell the
CEO that she would agree to the terms. When Lauren hung up the phone, she said aloud to
nobody in particular, “I supposed I should have consulted the group, but it was worth the risk of
not having to make another team decision.”
Week 3: Making Quality Decisions in a Group
Skills
Skill #3: Identify the types of bias that groups create and when the
decision to be made is better done alone or in with a group.
After week two, one has to wonder if we are all different and if we all
suffer from bias influence when making decisions. How can we possibly
make a quality decision in a group? Would we just be making triple the
bias baggage to overcome? This week we will examine group decisionmaking and how collective groups of decision-makers affect the process
of decision-making.
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“Jane, can you come help me for a moment? You’ve had some
experience with getting a mortgage lately.”
“Yes”, Jane replied, but Jack, don’t you have a mortgage now? I am
not an expert.”
Jack replied, “Yes I have a mortgage on my home, but I want buy a
new one and I need a good deal. Aren’t two heads better than one?”
The answer to the question Jack posed is “Maybe.” Decision-makers do
enter the group decision process with the same bias(es) they have when
making a decision individually. However, new forms of bias arise when
two or more people join to make a decision. The greater the number of
people that join the process of making a decision, the group dynamics
differ and bias takes on a different scope as it affects the information
being collected and the way it is interpreted by the decision-makers. Just
as with individual decision-making, it is incumbent upon the skilled
decision-maker to learn to identify the bias that applies to a group
decision process and how to mitigate its influence.
Keep in mind that there are different stakeholders within an
organization – both internal and external – that can be affected by
decisions. Review the image below to see the different types groups of
internal and external stakeholders.
Read:
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Are Two Heads Better Than One?
Are Two Heads Better Than One? It Depends
Decision Making in Groups
How Group Dynamics Affect Decision Making
Three Best Practices for High-Performance Decision-Making
Teams
What is More Effective Individual or Group Decision Making
Key Points
Groups are good for strategic, complex decisions and high risk –– but
bias is still a part of the process that must be minimized to make a quality
decision.