According to Cyert and March, fundamental structure analyzes the process of decision making in terms of the variables that influence the decision-making process, the goals of an organization, the expectations of the organization, and the choice of the organization.
In the case of Siemens, several variables influenced the decision-making process of the organization. Siemens is a large company that has interests in various fields the world over. They include information and communication, automation and control, power, medical solutions, transport, and lighting. Technological advancements and the acceptance of novel technologies had an influence on businesses in the field of information and communication and medical solutions.
All the businesses that Siemens had a stake in were adversely affected in the wake of the global economic downturn that was witnessed towards the end of the year 2000. In addition to these developments, political uncertainty in the Middle East, as well as South America, complicated the situation for Siemens further since the organization had business interests in the mentioned regions. Investor sentiment nose-dived leading to a significant drop in the value of Siemens’ shares around the globe.
The information and communication sector was particularly affected by the economic downturn. The power generating group, on the other hand, grappled with drastic changes in the market conditions. The demand for power generating equipment hit record low levels. This phenomenon came about as a result of other firms that were customers of Siemens cutting back on their operating costs and expenditure as a result of the economic slump.
Siemens was forced to find out ways and means of responding to the situation it was facing. The organization enhanced its capacity while constantly improving the conditions of its gas turbines. The organization had to adopt extreme measures to counter the strict conditions that it was encountering at the time. The organization decided to cut back on its cost by way of consolidating its manufacturing facilities, streamlining its range of products, and sacking some of its staff.
Siemens’ products were up against strong competition from rival firms that were larger and had greater resources at their disposal. The markets in which Siemens operated in witnessed rapid changes due to technological advancements. Therefore, for Siemens to meet its customer’s needs, it had to develop new products continuously, update existing products as well as developing new technologies.
In light of Cyert’s and March’s viewpoint, choice takes place in response to a problem. In Siemens’s case, the problem came in the form of a global economic slump, rapid changes in the marketing environment due to technological advancements as well as a fiercely competitive marketing environment. These developments prompted the management of Siemens to take action in response to the problems that it was encountering at the time. These developments are considered as variables that had an influence on the next course of action to be taken by Siemens. Cyert and March were of the view that those variables that influence a choice are those that control the definition of a problem within an organization, those that influence the standard decision rule and those that affect the order of consideration of alternatives. The standard decision rules in return are shaped by experience and record of the organization. Alternatives are considered depending on the section of the organization in which the decision is being made and expertise in finding options.
Organizational expectations are deemed as the result of coming to a conclusion after analyzing the information available to the organization. Therefore, organizations have to consider variables that affect either the process of concluding, the process by which information is collected and made available to the organization. Concerning methods used to gather information, some variables influence the process of looking for information for an organization such as intensity, the success of search & direction of search.
The information available to Siemens at the time was gathered from various sources. This information revealed the looming crisis concerning the economy, extremely fierce rivalry in the market, and the unprecedented pace of technological advancement. This kind of information had to be responded to one way or the other hence it led to the decisions that Siemens took in response to the information that was available to it at the time. After analyzing the information that was made available to it, Siemens chose to consolidate its interests in specific fields of business while at the same time relinquishing its interests in other fields of business.
Brusson’s model defined decisions as a conscious choice between at least two alternatives. Concerning Siemens’ case, there were a couple of alternatives at its disposal. In light of the challenges that the organization was encountering, such as the global economic downturn and rapid technological changes, Siemens had the option of staying put and engage in business as usual or review its operations and practices subject to the changes that were taking place around it. Siemens, after evaluating the available alternatives, opted to alter its structures, operations, and practices in an effort of adjusting to the prevailing climate at that particular time. In this regard, Brusson’s model on decision making appears to be similar to Cyert’s and March’s model.
Cyert’s model was of the view that decision making in any organization is influenced by the goals of that organization, the expectations of that organization, and the choices of the organization. Brusson’s model, on the other hand, pointed out that for an organization to arrive at a decision, two or more alternatives have to be weighed, and one chosen over the other, the consequences of choosing either of the options have to be estimated before choosing the ideal replacement for the organization.
The actions that Siemens undertook in the light of the challenges that they were facing at that particular time were influenced by their goals. By its engagements and interests the world over, Siemens came off as an ambitious organization whose main goal was to expand its operations and capacity constantly. The future expectations of the organization were for it to keep growing and extend its operations to as many sectors as possible. The factors mentioned above had a bearing on the decision-making process of the organization. In the wake of the economic downturn, the decisions that were made considered the organization’s goals, its future expectations, and the choices of the organization. For instance, the decision to cut on its operating costs and competitively pricing its products was informed by the firm’s aims of maintaining its profit margins in the hard economic times.
According to Brusson’s model, the evaluation of viable alternatives is of extreme necessity before arriving at a decision. In reality, it is much easier to find decision processes that consider few alternatives than ones that consider many since considering multiple alternatives evokes uncertainty, which in turn reduces motivation & commitments. Concerning Siemens, the organization chose to develop new products, update existing products, and develop new technologies in response to rapid technological advancements in the market they were operating in. The organization opted for this alternative to that of doing nothing about it after the evaluation of both alternatives.
Rational decision-makers are required to consider all relevant consequences that alternatives might have. Siemens considered the consequences of maintaining the prices of its products internationally after the strengthening of the Euro relative to other currencies making the prices of its competitors cheaper than its prices. The organization chose to review its prices after concluding that it would adversely impact the organization’s profit margins in the event it fails to revise its prices in a manner that they are competitive when compared to those of its rivals.