Strategic Business Decisions.

Discuss two strategic business decisions that led to operational risk in the case study.

Strategy business decisions or strategy planning refers to the long-term planning of the organisation. To be more precise, these are the decisions of the planning process that do have decisions of 5 years and more into the future. Among the strategic decisions that led to operational risk in the case study include the decision to convert and refurbish a cargo vessel into a passenger ship. Cost-cutting during the refurbishment process is another strategic decision that contributed to the operational risks identified in the case study. Precise elaboration is provided below, on these two decisions.

Converting cargo vessel into passenger’s vessel

The case study highlighted that the cargo vessel was converted into a passenger ship, which was not a model passenger liner. The case study clearly stated that “ The ship was built in 1952 as a cargo ship. In 1983 it was refurbished as a passenger liner that could accommodate 516 passengers and 200 crew members. Notwithstanding the changes that were made to the interior of the ship when it was refurbished, it was not a model passenger liner.”

As per  Abkowtiz (2008) suggestions, operational risk factors can be attributed to design and constructions flaws, which he elaborated and pointed that, major facilities like power stations, refineries, and ships, tend to be built with specific blueprints, or design specifications. The specifications will allow the structure to withstand different forces imposed on it such as puncture, blast, wind, or waves as the case study we have here.  Abkowtiz (2008) suggested that flaws in the design process and if not discovered in time, the structure will collapse completely in the event that pressure is applied to the structure. Which is the case with the sewage system, which was redesigned to suit the needs of the passenger ship.

Cost-cutting during the refurbishment process

The case study did highlight that, the sewage system was built suitably for a cargo ship, and when the refurbishments were made, the sewage system was not refurbished in accordance with the needs and requirements of a passenger ship, and the operational risk from the case study did arise from this problem. Abkowtiz (2008) pointed out that, operational risk factors do arise from deferred maintenance and economic pressures, which might be the root causes of not doing a good or excellent job when the ship was refurbished. Abkowtiz (2008) argued that economic pressures through limited funds, are not the root causes for operational risks, however, they are often identified as the catalyst to the operational risks. Abkowtiz (2008) defined deferred maintenance as a process of keeping the operations running, after discovering the mechanical problem, which is the case of Oceanos. The sewage system problem was a well-known problem, that was ignored for a very long time and should have been resolved to preserve the lives of the passengers.

Sailing during the winter season in the South African waters

Despite being somehow a short-term decision, but the decision to sail in the South African waters during the winter season can be among the strategic decisions. The reason here is that it takes a decision of the board to let the ship move from Europe to Africa. This contributed to the operational risks because the winter season is not the best time to sailing in the South African waters as the case study suggested. Strategic decisions can be defined by time or by the person in terms of position, in making that decision.