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Case Critical Analysis

The document analyzes a case study about a film studio escalating its commitment to a troubled film production. It discusses the studio head's rational decision making in initially approving the film but then increasing budgets and changes due to the costs of abandoning the project and to maintain his reputation. Strategies for minimizing escalation like group decision making are analyzed but may not be effective in highly individualistic cultures.

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Huy Pham
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46 views

Case Critical Analysis

The document analyzes a case study about a film studio escalating its commitment to a troubled film production. It discusses the studio head's rational decision making in initially approving the film but then increasing budgets and changes due to the costs of abandoning the project and to maintain his reputation. Strategies for minimizing escalation like group decision making are analyzed but may not be effective in highly individualistic cultures.

Uploaded by

Huy Pham
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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AB105 : Case critical analysis

Questions

(a) Buck Knox followed the Rational Choice Decision-Making Process. Firstly, he identified the
problem that Big Screen has been performing below expectations. He thus chose a
programmed decision and approached Frazier for help, hoping that he would be able to
produce a film capable of redeeming Big Screen. When Frazier proposed Conquistadors,
Knox evaluated the possible decision outcomes and eventually signed the contract, an
alternative he deemed best for the company.

(b) The first instance of Knox’s escalation of commitment happened when he accepted Frazier’s
amended budget of $75 million. The second instance happened when Knox told Frazier that
the studio would put $5 million more into the production. The third instance happened
when they hired a sailing ship according to Frazier’s request.

Although the success of Conquistadors was uncertain, Knox still persisted because the costs
of terminating the project are high. It would mean forgoing the first $50 million invested.
This will not only take a toll on the Big Screen’s finances. It will also tarnish its reputation.

Furthermore, Knox was motivated to maintain his course of action as he had a high need to
defend his decision. The reputation of Big Screen and Knox himself depended on the success
of Conquistadors. Thus, pouring more money into the production signified his continued
support and proof that the choice to sign the contract was an astute one.

Also, according to prospect theory, people tend to feel more dissatisfaction from losing a
particular amount than satisfaction from gaining an equal amount. Consequently, we prefer
to take more risks to avoid losses. Terminating the production is a definite loss, which Knox
deemed more painful than the ambiguity of success associated with continuing to fund the
project.

(a) One strategy to minimize the escalation of commitment is to engage several people to
evaluate decision outcomes together. Many instances during film-making require estimates
or predictions. For example, estimation of time and cost of production. Hence, groups are
usually superior to individuals because of the breadth of experience that multiple individuals
possess. Also, group members are able to check on each other constantly and notice
problems sooner than if each of them work independently.

However, this strategy may be ineffective in countries which highly value Individualism.
Highly individualist people are independent workers who value sovereignty and control over
their own lives. Hence, they may feel circumscribed if such a strategy is adopted as there is
pressure within the group to conform and fit in. There may also be a clash of ideas, leading
to potential conflicts. This may in turn have an adverse impact on their project.
Another strategy is to ensure that the original decision-makers do not evaluate that decision
later. The separation of roles minimizes the self-justification effect because the person
responsible for evaluating the decision is not connected to the original decision.

Unfortunately, this strategy is less useful in countries with high Power Distance Index.
Decision-makers are usually bosses. In countries with high Power Distance Index, decision-
makers, who are usually bosses, adopt an authoritative management style. As such, they
would not be receptive to criticism by the people who evaluate their decisions later.

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