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Scenario One Reflection Paper

University of Phoenix

MBA 500: Foundations of Problem-Based Learning

April 20, 2006

Scenario One Reflection Paper

Leadership is a process of identifying and realizing opportunities for selecting a critical decision. Using an effective problem-solving approach helps leaders to define the right problem in order to define the potential solution. The Spartan Team was required to review the USAuto-AutoMex scenario and determine the effectiveness of applying the 9-Step Problem-Solving Model to their situation of cross border negotiations. This paper will identify challenges, possible solutions and end-state goals for USAuto and AutoMex using the 9-Step Problem-Solving Model.

Effectiveness of the 9-Step Problem-Solving Model

The 9-Steps Problem-Solving Model could be very effective on scanning the environment that leads to identifying the challenges and opportunities, managers can face in certain decision-making situations. According to Miles (2005), the decision-making process is a "process that involves taking a series of interrelated investigative steps and designing a plan to solve a problem or answer a need effectively in a manner that meets the needs and goals of the individual and the organization" (pp. 27-28).

In the USAuto-AutoMex scenario, identifying the internal and external challenges helped to frame the right problems and determine end-state goals. A challenge for USAuto was the need to increase its market share and profitability, and reduce the cost of labor so as to reduce the final car cost. On the, other hand an end-state goal for AutoMex was to develop a comparative advantage in manufacturing and increase their technology capabilities. Identifying the goals can help define the alternatives for the possible solution.

Another important step was to assemble a team of experts with appropriate specialized knowledge and skills in order to commence dialogue in order to begin outlining the nine steps.

Using dialogue to listen to the stakeholders as well as engage the experts to understand the first tier alternatives that can lead to the second tier alternatives and help implement the solution. This step involves brainstorming the alternative solutions. The following questions have to be considered: What are some possible solutions? What are my assumptions and constraints? What are some best case solutions? Identify the alternatives and involve benchmarking to see if someone has already implemented an extraordinary solution for a similar problem.

The 9-step problem-solving model was very effective in the USAuto-AutoMex situation because both companies were able to troubleshoot their concerns regarding the impending partnership. The Problem- Solving Model provides an approach to develop, analyze and assess the alternatives for the solution, throughout the process collecting the facts and information surrounding the problem. This process helped understand the situation well, frame the problem and define the right decision. The process also involves a set of questions, which help to reform the problems into opportunities, and engage other facts and information to accurately describe the situation. In the end all the involved information and facts can lead to a creative and valuable solution not only for the challenges in hand, but also the possibilities in the future.

Challenges of the 9-Step Problem-Solving Model

Labor cost, Financial Stability and Bankruptcy are three of the challenges USAuto faces as their fate draws near. Labor cost is clearly a major blow against USAuto. As stated by Luis Alvarado, Chief Executive Officer (CEO) of AutoMex, in a letter to Linda Henderson, US Auto's Executive Vice President (EVP) " We also thank USAuto for recognizing the value of our highly efficient and inexpensive labor. We view that as a major resource. In fact, it is just as much a resource as the financial backing that USAuto supplied to develop the engine".

Both, companies recognize and agree that the labor component can be a win win situation. However, being number one in new technology (Hybrid engine) boils down to financial stability, which is US Auto's second challenge and another major setback the company faces. In a board meeting, Luis Alvarado brought out an important point. He said, "AutoMex has been in business for three decades; we are a solid company with a lot to offer -- much more than the cheap labor you so obviously covet. On the other hand, Senor Delgado's research tells us that USAuto may not be on such solid financial footing. Given this, we feel that the counterproposal we made at the meeting -- equal profit-sharing and AutoMex manufacture of the hybrid engine -- is the only arrangement we can possibly consider. As such, we respectfully decline your offer of partnership". AutoMex, found a weakness in USAuto financials which is in line with step 9 of the problem-solving model. Mr. Delgado involves the collection of data and the conversion of that data into information.

Lastly, avoiding bankruptcy can be the final challenge USAuto faces. If USAuto does not revisit Step 6, which is Identify and Assess Risks, the company can be in dire straights. Risk assessment must be done (sharing Hybrid Technology). Patent licensing needs to be reexamined and do a risk assessment. According to step 6, this assessment can be used to rule out a solution that might have too high a risk. It is also used to identify potential risks of the possible two or three solutions and identify ways to address or mitigate the risks. The most important part of this step is to simply ask the right questions: What are the potential negative risks to the business? What are the potential positive risks to the business? What are the potential personal risks (positive and negative)? How much business risk and personal risk can we tolerate? Based on these questions and the magnitude of the decision and the resources to be invested, you may want to do a qualitative or quantitative analysis.

The Spartan Team identified a number of challenges and determined a number of ways the 9-step problem-solving model would be used to overcome these challenges in the future. Our group, the Spartans, decided that the decision-making teams representing both companies would determine which problems are worth resolving and implement plans that would contribute to conquering these challenges. This process would also include identifying and evaluating possible alternatives. In addition



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