Strategic Decision Making from Historical Events

Why Chrysler’s Decision succeeded while Challenger’s failed?

Chrysler’s decision succeeded because the company adopted a corporate strategy to challenge bankruptcy, encouraging the government to bail it out. Despite the company’s huge debts, it was always trying its best to improve.  For example, the company was determined to raise the remaining amount of money not provided by the government by freezing and cutting wages. Challenger’s decision failed because of the leaders’ compliance as they were quick to adopt a wrong approach to make a bad decision. For instance, NASA did not consider the challenger launch’s constraints and went ahead with their decision even after receiving warnings from their contactors that the solid rocket booster had a problem.

Type of Decision

 Both Chrysler and Challenger scenarios were category II types of decision-making. In both cases were complex, and the outcomes were uncertain. For example, in the Challenger’s case scenario, the launch was limited by the unpredictable environmental impact limiting the launch. Additionally, the displacement was high with minimal survival at the end.

Was the decision-making open or closed?

            In Chrysler, the decision-making process was open as the desired objectives were attainable.  The company could rise back to profitability after settling the loss. In Challenger, the decision-making process was closed. The objectives were unattainable and relied on the external environment. The bad weather, such as high temperatures, hindered the launch of the Challenger.

Constraints realized

            In the Challenger’s launch, the constraints were safety concerns led by the leaders’ compliance, who ignored the reported design problems from the contractors who noticed some flaws in the rocket’s boosters. Besides, environmental constraints such as bad weather hindered the launch.  In Chrysler’s case, financial constraints were realized. The company relied on banks, the government, and other lenders for money assistance to recover from bankruptcy.

The Political Climate

            In both cases, the political climate was unstable. In the Challenger launch, the leaders did not consider others’ opinions but made wrong decisions.  NASA ignored the advice from the contactors about the faulty design in the solid rocket booster and proceeded to take up the risk. In Chrysler’s case, the period of the financial crisis and numerous panics triggered public debates among interest groups due to escalated unemployment rates and recession.

Why NASA Insisted on launching Challenger that day?

            They insisted because they had miscalculated the risk and dangers associated with the joint seal faults and thought the fault was very minimal to stop the exercise. Additionally, NASA had reduced the budgets; hence, postponing the launch would add extra expenses, which they did not want to incur.

Why did the US Government elect to provide loan guarantees to Chrysler?

            The government elected to provide loan guarantees to Chrysler to prevent the company from defaulting its financial obligations. Also, the company was performing well initially, contributing greatly to the economy. The government feared that the company’s collapse would lead to a high rate of unemployment which is a major blow to the country.

 Political “fallout.”

            I think the bailout of 1979 created political indifferences among leaders who did not support that move. They felt that the government was misappropriating the taxpayer’s money to support a company that could downfall again; instead, the government should have offered it a loan.

Implications of NASA

             NASA was pressured to reduce the budget and to align its operations to be more predictable.  They were compromising safety to save on cost.

Strategic Options

In both cases type, A strategic option was adopted.  A high level of uncertainty characterized both cases. For example, The bailout could probably not solve all the financial crises of the Chrysler company.