Mikala Eagle loved riding her skateboard and doing tricks

As a child, Mikala Eagle loved riding her skateboard and doing tricks. By the time she was a teenager, she was so good
that she began entering and winning professional contests. By her twenties, Eagle was so successful and popular that
she could make skateboarding her career. A skateboard maker sponsored her in competitions around the world.

The sponsorship and prize money paid enough to support her for several years, but she was barely getting by. Eagle
knew she would have to take her business in new directions so she decided to launch her own brand of skateboard. She
called it Soaring Eagle Skate Company. To finance her venture, she pooled her personal savings with money from her
friend Pete Williams, who wanted to invest in the company. Together they came up with $75,000. It didn’t take long for
young skaters to snap up Soaring Eagle skateboards. The launch was an instant success.

As the company prospered, Eagle considered ideas for expansion. Another of Eagle’s friends designed a line of clothing
she thought would appeal to Eagle’s skateboarding fans, and Eagle’s name on the product would lend it credibility.
However, Eagle discovered that the business of shorts and shirts is far different from the business of sports equipment.
The price markups were tiny, and the sales channels were different. Three years into the expansion, Soaring Eagle had
invested millions of dollars in the line but was losing money. Eagle decided to sell off that part of the business to a
clothing company and cut her losses.

Soon after that experiment, co-founder Williams proposed another idea: They should begin selling other types of sports
equipment—inline roller skates and ice skates. Selling equipment for other kinds of sports would produce more growth
than the company could obtain by focusing on just one sport. Eagle was doubtful. She was considered one of the most
knowledgeable people in the world about skateboarding, but she knew nothing about inline and ice skating. Eagle
argued that the company would be better off focusing on the sport in which it offered the most expertise. Surely there
were ways to seek growth within that sport—or at least to avoid the losses that came from investing in industries in which
the company lacked experience.

Williams continued to press Eagle to try his idea. He pointed out that unless the company took some risks and expanded
into new areas, there was little hope that they could continue to earn much of a return on their investment. Eagle was
conflicted. Her takeaway from their failed attempt to sell clothing was that they needed to be careful about expansion. But
Williams was adamant that they needed to generate new revenue streams. She could go along with Williams and take the
chance of losing more money, or she could take her savings and try to buy Williams’s share of the company and run
Soaring Eagle on her own.

DISCUSSION QUESTIONS.

1. How do the characteristics of management decisions—uncertainty, risk, conflict, and lack of structure—affect the
decision facing Mikala Eagle?

2. What steps can Eagle take to increase the likelihood of making the best decision in this situation?