Essay: Usefulness of Rational Decision-Making for Managers When Making Strategic Choices

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Management

The Usefulness of Rational Decision-Making when Making Strategic Choices

Successful achievement of work duties in white-collar professions frequently involve the implementation of lengthy decision-making processes on which other staff and costumers depend. Lack of competence in driving decision-making processes makes it hard for workers to carry out their work tasks, hinders other staff to plan and carry out their work, and may lead to work stress for everyone involved (Allwood & Salo, 2012). Any decision-making circumstance necessitate a definition of the dilemma, recognition of criteria, assignment of accurate importance to criteria according to partiality, understanding of the options, evaluation of each option based on the criteria, and lastly, picking the alternative with the highest worth (Rationality in Decision Making, 2003).

This process of decision-making is known as rational and is anticipated to lead to the most favourable results. Yet, in the daily life of a manager, it appears that decisions are made without such an involved process. The practice of management seems to present a seemingly non-rational procedure of decision-making. By looking at such real life practices of decision-makers, researchers have recognized the real world occurrences of bounded rationality of managers in making decisions that are successful (Rationality in Decision Making, 2003).

Main Body

"Strategy is the direction and scope of an organisation over the long-term: which achieves advantage for the organisation through its configuration of resources within a challenging environment, to meet the needs of markets and to fulfil stakeholder expectations" (Strategy: What is strategy, n.d.). Strategic decisions are the decisions that are concerned with the entire environment in which the firm functions, the entire resources that they have available and the people who make up the company and the line that exists between the two.

Strategic decisions are recognized as being top-level management decisions. Yet, the decision-making is done at different management levels all throughout the organization. Other terms that are used to refer to these top level management decisions include: strategic planning, corporate planning and strategic decisions. Generally, strategy formulation, particularly which defines vision, mission, objectives, and strategies are areas of top-level management. Visions and missions are usually defined very early on in the process. Objectives are occasionally reviewed and changed but strategies are reviewed and changed on a regular basis. Consequently, in this whole process middle and bottom level management also place a direct and indirect role. Strategic issues necessitate top-management decision and entail the allotment of large amounts of company resources. Strategic decisions have considerable impact on long-term success of the company and they are future oriented in nature having multifunctional consequences. Strategic decisions are corporate level decision thus they tend to be both values oriented and conceptual in nature. Such decisions are also differentiated by larger risk, expense, and profit potentials (Nature of Strategic Decisions and Nature1 of Strategic Management, n.d.).

At the other end of the gamut, functional decisions are action oriented and have comparatively short-term focus, entail low risk and modest expense. Strategic decisions also envelop strategy assessment, options, achievements, and appraisal. Strategy formulation is not the answer unless the devised strategies are correctly put into practice. Therefore strategic decisions also cover how strategies are put into practice in regards to designing effective organizational structure, designing required resources, defining plans and policies, among others (Nature of Strategic Decisions and Nature of Strategic Management, n.d.).

Rational decision making entails a cognitive course where each step follows in a logical order from the one prior to it. It is founded on thinking through and weighing the choices in order to come up with the best possible outcome. Steps in a rational decision making include: defining the situation or decision to be made, identifying the significant criteria for the course and the outcome, considering all likely solutions, calculating the consequences of these solutions in regards to the likelihood of fulfilling the criteria and choosing the best option available (a Variety of Rational Decision Making Models, 2012).

For the function of strategic decision making, organizations can be measured as interpretation systems. Organizational understanding is defined as the procedure of translating events and developing a common understanding and theoretical methods among members of upper management. "Organizational interpretation about strategic issues is more than bureaucratic staffing. Generally, members of organizations support strategic leaders' interpretations by creating and maintaining the organization's capability to gather information about environmental threats and opportunities and efficiently analyzing, evaluating and internally synthesizing this information to support the strategic decision making process" (Strategic Leadership and Decision Making, n.d).

Organizational interpretation procedures are important to strategic decision makers on two levels. At the first level, they decrease the vagueness of strategic issues by looking at data from the environment. At the next level, these procedures decrease the doubt that is often associated with strategic issues. For instance, decentralized examination performed by field organizations, lower level divisions, and individual specialists helps to create more insights into strategic issues at a quicker pace. The critical advantage to strategic decision makers is that they can react to strategic issues more rapidly and with higher quality decisions (Strategic Leadership and Decision Making, n.d).

If leaders allow their organizations to treat each disagreement with environmental change as an exclusive experience then, despite performance results, these leaders are not obtaining the full ability of organizational interpretation. When organizations develop the prospective for organized learning then triumphant and ineffective experiences will influence their future scanning and understanding processes in a favorable way, which will lead to overall success (Strategic Leadership and Decision Making, n.d).

Change is a constant and never-ending course of organizational life. Even though companies would like explain, predict, and control the process, organizational change frequently does not come about as it was expected to. Breakdowns in the models of change take place when organizations do not change in a way that is consistent with their conceptual model. Breakdowns are seen as discrepancies or gaps between the change process that is taking place and the one that has been set down in the organization. For example, a change agent with a participative and consensual model of planned change would see a breakdown when participants oppose or do not follow the change plans. These breakdowns offer important junctures for change agents to react with an action strategy or a reflection strategy (by, 2005).

In order for a company to improve their strategic decision making they must have a good change management process in place. Change management is the process of continually revamping an organization's direction, structure, and capabilities to serve the ever varying needs of external and internal customers. Change is a constant feature of organisational life, both at an operational and strategic level. As a result, there should be no doubt regarding the significance to any organisation of its capability to recognize where it needs to be in the future, and how to direct the changes required to get there. Consequently, organisational change cannot be divided from organisational strategy, or vice versa. Due to the significance of organisational change, its administration is becoming a highly necessary managerial skill (by, 2005).

Since the need for change is often unpredictable, it tends to be reactive, irregular, ad hoc and often brought on by a particular situation or organisational crisis. Even though successful management of change is acknowledged as a necessity in order to survive and succeed in today's highly competitive and endlessly developing environment. The failure rate of all change programmes that are started is about seventy percent. It is often suggested that this meager success rate indicates a basic lack of a valid framework of how to implement and manage organisational change. What is currently available to academics and practitioners is a wide range of contradictory and confusing theories and approaches that not many understand (by, 2005).

Over a period of time, managers often develop rules of thumb to minimize the need to process information for making decisions. These judgments that are made by managers are based on the development of rules of thumb. This provides an easy way for managers to overcome the pressure of time while trying to make decisions in a highly complex world. While using this scheme is a pervasive managerial behavior, it cannot be said that it is always used with accuracy and complete awareness. It has been found that managers use these rules of thumb without even being conscious of the suitability of the specific situation on hand. It is possible that there are biases, which have crept into the repertoire of the manager's experience (the Financial Express, 2003).

Most people in their work life would have experienced consequences of bias, both as decision-makers and as those influenced by decisions of others. Such bias is predominantly damaging in the case of people associated decisions. In a lot of cases such bias in decision-making is a direct consequence of bias. Researchers in decision-making have acknowledged three categories which seem to affect the way people make decisions: availability bias, representativeness bias and anchoring and adjustment (the Financial Express, 2003).

When making organizational decisions it is important for… [END OF PREVIEW]

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