Psychological Traps in Decision Making – Enove (Part A)

Background: Peter Bismuth who is the President of Enove was caught with the responsibility of developing the company’s expansion strategy due to the unstable political and economic environment in Tunisia. This was a difficult decision because Tunisia which was one of the fastest countries to transition into a democratically elected government was also regressing 10 – 15 years due to this move.

Tunisia had just undergone a revolution called the Jasmine revolution in December 2010 which was a result of elections of 2004 and 2009 and the military general Ben Ali. By 2014 the Tunisia government had begun to recover from the aftermath of the revolution the setbacks in the political and economic arena and this was evident in the growth of the GDP

Decision Problem: To either expand the company in Tunisia or move to a more stable economic country

Objectives: To ensure ENOVE remains a viable and profitable company within or outside Tunisia by expanding.

Alternatives:

1. Remain in Tunisia and expand its business operations in its home country
2. Move to another stable economy preferably Morocco

Evaluation Criteria

1. Location and Infrastructure

Tunisia has the opportunity to become the manufacturing hub for Europe due to its location on the southern rim of the Mediterranean, thus it was positioned to benefit from its close proximity to a wide variety of different markets. It is less than 3 hours by flight to many major cities. This allowed access to 800 million customers. Also, the country has a developing network which allows for multiple modes of transport by road and rail. There is also multiple air and sea options available which carries huge tons of millions of merchandise regularly. Tunisia had a priority to invest in infrastructure and development projects.

•  Trade Partnerships

Tunisia was known to be very involved in establishing convenient ways of doing business within the country. This it has achieved by signing trade zones and bilateral trade agreements with countries and regional bodies. The country had signed an Association agreement with the European Union which resulted in the first free trade zone and thus serving as a catalyst for interest and investment in business operations within the country. Tunisia has more trade partnerships with neighboring countries thus leading to an increase in foreign business opportunities.

• Labour Climate

Tunisia has a large pool of low cost and well educated labour due to the young age of its population with 51% under 30 and 97% of youth educated in a state regulated school system. Their labour pool was viewed as well educated, hardworking and easy to develop.

The challenges however, where that the educated graduates were not trained in the fields that had the greatest demand. So while low skill manufacturing jobs were easy and cheap to fill, the more advanced design process were not as simple.

• Level of Corruption

Tunisia ranked 79^th out of 175 countries in corruption in port operations, customs and border control. There were also the regular strikes due to the habitual stagnation of the economy resulting in low wages. This strike actions results in the shutdown of the manufacturing ports for days or weeks. This can further cause loss in customers due to delay in inventory.

To be continued……..