: Decision-Making With A Strategic Emphasis: Earth Baby, Inc.

Topics: Decision making, Costs, Risk Pages: 3 (922 words) Published: November 8, 2013


Unit 4: Decision-Making With A Strategic Emphasis: Earth Baby, Inc. Kaplan University
GB519-04N Measurement & Decision Making
Professor: Gene Sullivan
Date: February 27, 2013

Decision-Making & Strategic Analysis

A common problem in companies today is the tendency of top decision-makers to neglect the long-term strategic goals and focus on short-term goals and profit. Although decision-makers must consider both short-term and long-term effects in making sound business decisions, relevant cost analysis and strategic analysis are significant aspects of the decision-making process (Blocher, Stout, & Cokins, 2010, p. 430). Without careful strategic analysis, decision-makers could mistake a positive relevant cost analysis as a business advantage, while overlooking the potential negative impact on the company’s image and its sales. It is important for decision-makers to think and plan strategically, and to start with specific strategic goals in all decision-making situations. It is important for companies to consider strategic factors when performing a relevant cost analysis for special-order decisions. A special-order decision occurs when a company has a one-time opportunity to accept product or service orders on special terms. To illustrate, consider the special-order situation facing Earth Baby, Inc. (EBI). Earth Baby, Inc.

Earth Baby, Inc. produces organic baby food, clothing, and toys for health-conscious parents. With its introduction of a new line of premium organic baby foods and its excellent reputation for superiority, EBI is able to sell its products at prices higher than those of their rivals. The company distributes these products through high-end grocery stores, pharmacies, and specialty retail baby stores. The founder and CEO of EBI recently received a proposal from the vice president of Great Deal, Inc. (GDI), a large discount retailer. The...

References: Agans, R., & Shaffer, L. (1994). The hindsight bias: The role of the availability heuristic and
perceived risk. Basic and Applied Social Psychology, 15(4), 439-449.
Blocher, Stout, & Cokins (2010). Cost Management: A strategic emphasis. McGraw-
Hill/Irwin.
Borth, K. (2011). Are you ready? Smart Business Columbus, 19(5), 6.
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