Page 139 - Fundamentals of Management Myths Debunked (2017)_Flat

138 Part 2 • Planning
Discussion Questions 4-21 Suppose some trainers meet at a conference and view a pre-
sentation about an organic new feed that naturally improves
4-18 What are some examples of rational and intuitive decision mak- muscle development in race horses. A trainer who did not at-
ing that you may see in horse racing? tend the presentation hears each trainer who left the presenta-
4-19 A jockey from Melbourne, Australia is swayed by a friend to tion signed up for a month’s supply. Then the trainer decides to
race at the last minute in Happy Valley, Hong Kong without a follow suit without gathering any evidence. What type of deci-
track preview. How would bounded rationality affect the jockey sion bias would you consider this to be?
who normally races in Australia?
4-20 What decision-making approaches could an owner use to
help decide what type of horse to buy?
Case aPPliCation 3
#

Tasting Success

he Coca-Cola Company (Coke) is in a league by it- three months long. To help in this, Coke relies on a consultant
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self. As the world’s largest and number one nonalco- experienced with revenue analytics, who has described OJ as
Tholic beverage company, Coke makes or licenses more “one of the most complex applications of business analytics.”
than 3,500 drinks in more than 200 countries. Coke has built 15 How complex? To consistently deliver an optimal blend given
billion-dollar brands and also claims four of the top five soft- the challenges of nature requires some 1 quintillion (that’s 1
drink brands (Coke, Diet Coke, Fanta, and Sprite). Each year followed by 18 zeroes) decisions!
since 2001, global brand consulting firm Interbrand, in con- There’s no secret formula to Black Book, it’s simply an
junction with Bloomberg BusinessWeek, has identified Coke as algorithm. It includes detailed data about the more than 600
the number one best global brand. Coke’s executives and man- different flavors that make up an orange and about customer
agers are focusing on ambitious, long-term growth for the com- preferences. This data is correlated to a profile of each batch of
pany—doubling Coke’s business by 2020. A big part of achiev- raw juice. The algorithm then determines how to blend batches to
ing this goal is building up its Simply Orange juice business match a certain taste and consistency. At the juice bottling plant,
into a powerful global juice brand. Decision making is playing “blend technicians” carefully follow the Black Book instructions
a crucial role as managers try to before beginning the bot-
beat rival PepsiCo, which has a tling process. The weekly OJ
40 percent market share in the Orange Juice and the recipe they use is “tweaked”
not-from-concentrate juice cate- 1 Quintillion Decisions constantly. Black Book also
gory compared to Coke’s 28 per- includes data on external fac-
cent share. And those managers needed to deliver it! tors such as weather patterns,
aren’t leaving anything to chance crop yields, and other cost
in this hot—umm, cold—pursuit! pressures. This is useful for
You’d think that making orange juice (OJ) would be rela- Coke’s decision makers as they ensure they’ll have enough sup-
tively simple—pick, squeeze, pour. While that would probably plies for at least 15 months. One Coke executive says the compa-
be the case in your own kitchen, in Coke’s case, that glass of ny’s mathematical modeling means that if a weather catastrophe
100 percent OJ is possible only through the use of satellite im- (hurricane or hard freeze) hits, the business can quickly regroup
ages, complex mathematical algorithms, and a pipeline solely and replan in a very short time frame: as little as 5 or 10 minutes.
for the purpose of transporting juice. The purchasing director
for Coke’s massive Florida juice packaging facility says that Discussion Questions
when you’re dealing with “Mother Nature,” standardization is 4-22 Which decisions in this story could be considered unstructured
a huge problem. Yet, standardization is what it takes for Coke problems? Structured problems?
to make this work profitably. And producing a juice beverage is 4-23 How does the Black Book help Coke’s managers and other
far more complicated than bottling soda. employees in decision making?
Using what it calls its “Black Book model,” Coke wants 4-24 What does Coke’s big data have to do with its goals?
to ensure that customers have consistently fresh, tasty OJ 4-25 Do some research on revenue analytics. What is it? How can it
12 months a year despite a peak growing season that’s only help managers make better decisions?