Firms Objective & Decision Making Under Uncertainty
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Firm objectives
Why do some business firms pursue a triple-bottom-line outcome while others focus only on profit maximization?
The goal of most organizations today is sustainability. Organizations may either pursue the triple-bottom line or focus on profit maximization to achieve their goals. To measure sustainability, many firms pursue the triple-bottom line framework that measures the performance in three dimensions: social, financial, and environmental. Triple-bottom line is important for a sustainable economy because it touches on the three most important aspects of performance. The use of triple-bottom line and its core competences has become one of the most common frameworks in businesses today because of its long-term profitability. Cascade Engineering Ltd utilizes the triple-bottom line framework in measuring its sustainability. The company has been able to manage its finances, environment and social wellbeing effectively. In addition, Cascade Engineering was ranked the best company in the production industry (Savitz & Weber 2013).
On the other hand, some organizations focus on profit maximization. In reality, business firms aim at making profits irrespective of means used. Profit maximization in a form occurs where the care for the planet and care for the people coincide. Managers argue that doing good to customers only makes them love your products because they are always eager to buy from bad firms. Firms pursue the triple-bottom line only when they expect a return on investment (Peters 2012). Sony is one of the companies that use profit maximization as the key operation. The company achieves higher profits because people buy their products irrespective of the firm’s consumer behavior (Luh 2003).
Decision making under uncertainty (Edith and Mathew case)
Assuming that this month is a good representation of all months ahead, should Edith and Mathew continue to use the highway for traveling to work?
People constantly make decisions in order to evade some situations and risks that can be dangerous. Important decisions involve many stakeholders who have different perspectives. The most important decisions are complex in nature but they form the best alternative (Biswas 1997). Edith and Mathew should continue using the highway because it is the fastest and rarely do traffic jams occur. The highway was jammed three times in a month, which is a good indication that the rest of the time, almost 95% the road is free and they can make it to work on time. On the other hand, travelling via the Shea Boulevard took 35 minutes and the person ended up spending more fuel compared to using the highway. A delay of 3 days does not justify Edith and Mathew to use the alternative route.
How would you conclusion change for the winter months, if bad weather makes it likely for traffic jams on the highway to increase to 6 days per month?
There would be no change towards my conclusion because both routes will be affected during the winter. If it took 35 minutes to travel via Shea Boulevard, the presence of winter will slow down the journey meaning they would spend almost one hour to the workplace. On the other hand, the increase in traffic on the highway up to 6 days would be compensated by the time taken on the Shea Boulevard route.
How would your conclusion change if Mathew purchased a new smart-phone app that could show the status of the highway traffic prior to their drive each morning, thus reducing the probability of them getting into a jam down to only 1day per month (where on this day, the app showed no traffic jam, but a jam developed in the meantime as they were driving along the highway).
With the presence of a device that can show the status of the highway traffic, two options are available. If the application indicates that there will be a traffic jam, they should use Shea Boulevard route because it will make them reach their workplace faster. Secondly, if there is no traffic jam, they should use the highway because it is the fastest. Edith and Mathew should continue using the highway when the phone application indicates the absence of a traffic jam. However, if a traffic jam generates while on the way, they should take it as an uncertainty and continue using the highway since it happens once in a month.
References list
BISWAS, T. (1997). Decision Making Under Uncertainty. New York: St. Martin’s Press.
CASCADE ENGINEERING. (2009). The Triple Bottom Line Report. Retrieved from:
www.cascadeng.com/pdf/TBL_2009.pdf.
Luh, S. S. (2003). Business the Sony way: secrets of the world’s most innovative electronics giant.. Singapore: John Wiley and Sons Ltd
PETERS, T. (2012). Profit maximization (Ultimate Goal of Business). Delhi: Orange Apple.
SAVITZ, A. W., & WEBER, K. (2013). Talent, transformation, and the triple bottom line: how companies can leverage human resources to achieve sustainable growth. San Francisco: Jossey-Bass.
