Critical Thinking in Decision-Making

Critical Thinking in Decision-Making

Critical thinking applies to all facets or life, but its significance to business organizations has been particularly underscored. With organizations operating in an unpredictable, complex environment, the need to carefully analyze information before making decisions becomes very evident. Known as critical thinking, the deliberate and careful analysis of information has a whole range of business applications, one area being in diversification decisions and strategies. According to Duhaime, Stimpert and Chesley (2012), decisions about diversification are influenced by, among other things, managers’ beliefs regarding appropriate scope, as well as characteristics of different markets. Critical thinking therefore helps in making diversification decisions by evaluating the risks versus rewards associated from different courses of actions. As Markides (1997) observes, diversification is a high-stakes game partly because it is done in an environment that does not favor thoughtful deliberation. In addition, it is one of those corporate strategies whose seasonality changes very regularly. Given such factors, diversification decisions call for thoughtful evaluation of information pertaining to competitors and necessary strategic assets among other factors.

The Walt Disney Company provides an excellent illustration of the role of critical thinking in diversification decisions. The U.S.-based firm was founded in the year 1923 and operates in the entertainment industry (Rasch, 2018). Headquartered in California’s Burbank, Disney pursues the mission of inspiring, informing and entertaining people worldwide through unparalleled storytelling, innovative technologies, iconic brands, and creative minds. In 2018, the company announced its decision to consolidate operations into four key functional areas, namely Studio Entertainment, Media Networks, Direct-to-Consumer and International, and Parks, Experiences and Consumer Products. Disney was convinced that the decision would position the company for success in the future, making it more effective while providing a global framework that would enable the company to serve its consumers better.

In arriving the decision to diversify, Disney most certainly conducted an assessment of market trends as well as a projection of future needs and trends. For example, the company must have realized that consumers are increasingly demanding convenience, choice, and personalization more than before. This is why Disney decided to combine its international, technology, and distribution platforms to offer maximum convenience and personalization. In the same way, the company must have studied the way rival firms in the industry are doing their business, deciding to be more innovative and forward-thinking in order to remain ahead. A highly likely vital source of information for the diversification decision is the experience and expertise of the people selected to head the two key groups, with the new head of the Distribution unit having vast experience in transforming operations and success.

Based on Disney’s performance over the last two years, it may rightly be concluded that the company’s diversification plan has been fairly successful. The company continues enjoying great success and growth, with reports indicating that last year, Disney’s subscriber base grew close to 74 million (Barnes, 2020). This success may be attributed to sound decisions guided by evidence, logic, and arguments. Regarding logic, Disney acknowledged the constantly changing nature of the business environment. This logic made the company to restructure its operations in response to changes in how people consume entertainment services. Besides logic, Disney also relied on research-based evidence in its decisions. For instance, a 2017 research conducted by the Pew Research Center established that approximately 60% of young adults in the U.S. prefer internet-streamed content to conventional television. Such evidence informed Disney’s decision to create its own streaming platform.

References

Barnes, B. (2020). Disney+ passes 73 million subscribers as streaming takes center stage. The New York Times. www.nytimes.com/2020/11/12/business/media/disney-plus-73-million-subscribers.html

Duhaime, I. & Chesley, J. (2012). Strategic thinking: today’s business imperative. Routledge.

Markides, C. C. (1997). To diversify or not to diversify. Harvard Business Review, 75(6), 93-186.

Rasch, F. (2018). Business model simplified: with examples from global companies. IJBMR.

The Walt Disney Company. (2018). The Walt Disney Company announces strategic reorganization. https://thewaltdisneycompany.com/walt-disney-company-announces-strategic-reorganization/

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