Case study: Making Decision

ToysRUs, a retailer of toys, childrens books, and childrens apparelhas prospered and ranked #1 over the years until recently, when Wal-Mart surpassed them to become the number one toy retailer in the United States. Gerald Storch, CEO of ToysRUs has made a number of decisions that will hopefully help ToysRUs to better compete against Wal-Mart.

Storch has made some courageous nonprogrammed decisions to improve the performance of ToysRUs. By hiring new executives, changing the corporate culture, and training employees, Storch hopes that ToysRUs will soon overtake Wal-Mart as the number one toy seller in the United States.

When making these decisions, Storch did not make them alone. Management probably listed relevant alternatives in some order of desirability before choosing an alternative to implement. Both the internal and external environments of ToysRUs would have to be analyzed. Problems would have to be identified first by management. Once the problem is identified, management would have to list all possible problem solutions. After eliminating infeasible solutions, ToysRUs management would have to evaluate all remaining solutions, select one, and implement it. Problem-related feedback would be extremely important and Storch would need to find out whether the decisions made and implemented did in fact improve performance. If not, he would need to decide what additional action should be taken to do so.

The decision-making process contains a great deal of uncertainty . tools that they can use to make better decisions is the probability theory to obtain an expected value for various decision alternatives and then implement the alternative with the highest expected value.

DISCUSSION QUESTIONS

1. List three alternatives that Toys R Us management might consider in handling competition from Wal-Mart before making a decision to remodel Toys R Us existing stores.

2. What information would management need to evaluate these three alternatives?

3. Do you think that you would enjoy making this decision of whether or not to remodel Toys R Us stores? Explain.