Discussion

 Task: Post the Discussion Response for two students with at least 150 words with separate in-text citations and references

Question Under Consideration:

After reading the chapter section and the online article/mini lecture on Groupthink, use periodicals and other accounts of policy or decision making to investigate a major governmental or business decision that may have been the result of Groupthink. Post a link to the article online or attach it to your message. Try to use a different example than classmates who may have posted before you.In the body of your post, offer a summary of the decision-making process and the implications of the decision. 

Dialogue with your classmates about these decisions and the overall concept of Groupthink. 

Snehal Ulhas Salunke Week 6 Disscussion: Snehal SalunkeCOLLAPSE

Sears Corporations had been experiencing a huge downfall in shares in the year 2013-2014. On Feb 2014, the adjusted loss per share was 96 cents amid dismal domestic stores sales (Levine-Weinberg, 2014). The company had seen a series of ups and downs since Eddie Lampert, then Chairman merged it with K-Mart in 2005. From that point, Sears had seen itself falling out of favor from sales point of view. This post takes a look at decision making process that would have transpired this business catastrophe.

The roots of the problem lied in the decision to merge Sears and Kmart, which in reality were ailing brands at that time. Eddie Lampert at that time aimed to turn it into a member-oriented store (Levine-Weinberg, 2014). Sears had introduced “Shop Your Way Rewards” program that allowed customers to earn 10 points (1 cent) for every dollar they spent shopping at K-mart or Sears, which did not pan out well in terms of customer engagement. Handling a corporation of a size of Sears requires sticking to current picture in the retail business and it would certainly need a person with a good experience in retain industry. Lampert, who installed himself as the CEO hailed from hedge fund management background (Levine-Weinberg, 2014). This is where the decision faltered in the first place.

Since 2013, the time when Eddie Lampert assumed CEO’s chair, there was a tendency to consider small successes instead of focusing on the evident loss in sales. To quote an instance, executives at Sears thought that higher percentage of sales going to members of Shop Your Way Rewards program was a sign of higher engagement. The reality was far different, as sales had been dwindling (Levine-Weinberg, 2014). It is a clear indication that the executives and CEO are not being rational in terms of their analysis. For any decision making to yield the right results, it is necessary to have a pragmatic approach. There needs to be rationale which also includes facing the problem and some harsh truths head on. Another evidence, that shows the executives out of touch with reality was that Lampert had considered 10% online sales growth as noteworthy, whereas the industry benchmark for e-commerce space was bigger than that.

In the above case, we come to know that executives had reached a consensus of the insignificant positives without confronting the current situation, which is a sign of groupthink setting in. Usually, group decisions benefit from a pooling of information and opinions, which in turn helps making rational decisions based on evaluation of alternate solutions at hand (Bang & Frith, 2017).  While applying critical thinking it is important to expect to be wrong (Kinicki, 2021, p. 424). In case of Sears, the group members converged too quickly leading to amplifying biases (Bang & Frith, 2017).   The executives at Sears did not seem to bring their own take while solving a problem of creating presence in the e-commerce space along with competitors like Amazon.com. The practice of groupthink resulted in continued dismal performance for Sears in terms of sales further diminishing its revenues from $53 billion at the time of merger to $22 billion in 2016. Further, in October 2018 Sears filed for Chapter 11 Bankruptcy (Delventhal, 2019).

References :

Bang D, Frith C. D. (2017). Making better decisions in groups. R. Soc. open sci. 4: 170193. Retrieved from http://dx.doi.org/10.1098/rsos.170193 

Delventhal, S. (2019). Who Killed Sears? Fifty Years on the Road to Ruin. Investopedia. Retrieved from https://www.investopedia.com/news/downfall-of-sears/ 

Kinicki, A. (2021). Organizational Behavior (3rd ed.). New York, NH: McGraw Hill

Levine-Weinberg, A. (2014). Is Groupthink Taking Hold at Sears Holdings Corp? The Motley Fool. Retrieved from https://www.fool.com/investing/general/2014/03/07/is-groupthink-taking-hold-at-sears-holdings-corp.aspx