Managerial Decision Making in Terms of Globalization - Essay Example

DECISIONS INTRODUCTION In these days of globalisation and global business ventures and spreading of multi-national organisations, managerial decisions in these organisations have far reaching effect1. Decisions can change from place to place, organisation to organisation and especially from country to country, as culture has a tremendous effect on the decision-making at any level. One culture could make a certain decision and another culture, under similar circumstances, could take an opposite decision according to the influence of its own culture. The essay will be on the decision making diversities and on programmed and non-programmed decision making and how diverse cultures could affect this process, taking United States and Japan as opposite cultures. This also takes into consideration the fact that decision-making is impossible to be the same in every organisation of a country, in spite of similar culture. But on the whole, it would be more or less identical and definitely, it would be totally different from organisations of another culture. DECISION MAKING PROCESS Decision making process of any organisation includes four steps: Recognising and defining the need, Search for alternative solutions, Evaluation of alternatives, and Decision - the act of choosing2. Various cultures have different ways of approaching a problem and solving it. It could a participatory method or the time-honoured authoritative approach, or the decision-making might involve a group, or the topmost manager could take the total responsibility of it on his shoulders. Country related cultural factors like high or low masculinity, weak and strong uncertainty avoidance, and different ways of assessing the problem can all affect the process of decision making. Even if the outcome could be poles apart, the steps of decision making are more or less the same: identifying the problem, criteria, and allocation of weights to criteria and the final decision. CULTURAL AFFECT ON DECISION MAKING: If problems are framed to two people, it would definitely result in at least slightly different solutions and it is not surprising that two countries with diverse backgrounds, race and culture should have organisations that would take unidentical decisions in solving a management problem3. Defining the problem itself could be from absolutely dissimilar angles. From the decision-making point of view, a wrong diagnosis of the problem could definitely lead into wrong decision-making. Sometimes managers act without complete knowledge of the problem in haste4. Identifying the relevant criteria is the next step of decision-making. Judging the weight of the criteria, so that the decision could be taken accordingly is another step. Before making a decision, it is absolutely necessary to look at the alternatives and apply them to the criteria and assess and decide on the best-suited alternative under the circumstances. If alternatives are not considered, there is always a mischance of leaving aside a better option. Rating each alternative against each criterion is the best way of taking a decision. Only after that, a decision could be arrived at and before the final decision, its credibility, far reaching affect and its suitability should be assessed. US AND JAPAN These two countries are absolutely different from one another in race, culture and outlook. Japanese had enormous success in industrial and technological field and since then they are pitted against United States in decision making. There is a crucial point that US has a top-down decision making process, where decisions come down from the top level and the rest are expected to follow it verbatim. But Japanese still believe in conventional society, and here the decisions are made at the operating level, 'a sort of bottom-up process' and such decisions are supported and approved by the organisation at all levels. There had been speculations in both countries about the success of the other's economy and researches have gone into the decision-making process that leads to the success. PROGRAMMED DECISION MAKING This kind of decision-making could be developed only around certainties, and mostly these are not revolutionary decisions and thus, this is also called routine decision-making. It is usually, without fail, based on the earlier precedents, customs, organisational policies and procedures, rules and regulations, developmental norms and the training the managers have gone through. Japan usually opts for such decision-making and this is a clear impact of the Japanese culture. In some of the eastern cultures, people do not like overwhelming challenges. This is not because they are cowards or cannot face difficulties. The simple reason is, for generations now, they dislike ambiguous and challenging situations and speculations that unfailingly frustrate them. Their philosophy is based on cautiousness and avoidance of taking risks. . They prefer a structural way of decision-making that simplifies most of the task, by reducing alternatives. They use premanufactured and pre-thought-out decisions like Criteria Filter, Best of the few, Cursory Exclusion and Routinization. The sub-categories of the above include: satisfying, delegation, parameter delegation, random choice, reaction, feelings, idleness, adoption short-range review etc5. This is also based on the concept that when supply of information in organization meets the demands for a decision, simple and similar decisions could be taken based on earlier precedents. But the disadvantage is that the problems should be simple, with only a few elements and all the elements should be similar and there should be a stable, or identical environment, because environmental change would need a different decision. . NONPROGRAMMED DECISION MAKING: Under ambiguous, challenging situations, programmed decision making would not be of great help, as individualistic decisions are necessary after thorough study of the situation. These are unprecedented situations and need special attention. Here the problem recognition ways and criteria, gathering of information, making of hitherto unmade decision and its implementation could be different from the previous alternative. Making decisions under risky and uncertain conditions is difficult for the managerial staff. United States managers usually face the decision making as an individualist affair, whereas Japanese managers do not like to take any risks. They pre-plan the whole decision-making process and foresee all the problems that might arise, when they could arise, and in what form. They do not like to take any risks that might give further problems to the organisation. This no doubt limits their field of decision-making. On the contrary, US managers have an unlimited area for managerial decision-making. But they also take enormous risks and sometimes that could be a gamble too. At the same time, not taking risks could be a low-lying gamble and excellent opportunities might go out of hand. Japanese face this indirect risk by being awfully cautious. It is an arguable point which method of decision making is open to more risks and challenges. Leadership techniques are always based on the country's history and hence, the US and Japanese leadership methods are unidentical. Negotiations and discussions are rooted in the culture of a particular society and they stay even though country has progressed unendingly. Decision making planning in US involves mainly being ready for any kind of situation, whereas in Japan, such planning is given considerable importance and future situations would be assessed and decisions would be planned according to the future problems. Hobstede spoke about culture6and four cultural variables. He argues that ethnocentrism has a slight racial feeling, where one feels that his own race is superior to other races7. According to him, country cultures differ by four dimensions. "They are labelled Power Distance, Uncertainty Avoidance, Individualism and Masculinity8." UNCERTAINTY AVOIDANCE: Uncertainty could come in many shapes and issues like time, future, anxiety, and result. "Different societies have adapted to uncertainty in different ways. These ways not only differ between traditional and modern societies, but even among modern societies. Ways of coping with uncertainty belong to the cultural heritage of societies and they are transferred and reinforced through basic institutions like the family, the school, and the state9." Uncertainty avoidance could be part of both US and Japanese decision-making process. Even though US companies have a record of facing uncertain decisions, it is never an ideal situation with them and Japanese anyway dislike such basis for a decision. CONCLUSION: Making rational decisions in the problem solving process is never easy, and Japanese have acquired a reputation of doing so, by acquiring pre-meditated skills of decision-making rooted in their culture and philosophy. Judgement under uncertainty is considered to be the toughest situation in decision-making. There is always a fight between 'will happen' and 'may happen' and even the 'might not happen'. There is this probability, expected value, risk considerations, and risky problems that might look different on hindsight. Decisions could be affected by framed pseudocertainty and certainty of choices. Whatever is the process of decision-making in different cultures, aim is the same: reduction of uncertain and unsure future for the organisation. Every decision taken by the managers would directly depend on the mindset, culture, philosophy, psychology and environmental impact. It is also noticed that adopting another culture's ways does not always pay. People are uncomfortable with alien decisions. BIBLIOGRAPHY: 1. Geert Hofstede, International Differences in Work-related values, Sage Publications, London, 1980. 2. Richard M. Cyert and Lawrence A. Welsch, ed., Management Decision Making, Penguin Books Ltd., Harmondsworth, Middlesex, 1970. 3. J. Bridge and J.C. Dodds, Managerial Decision Making, Croom Helm, London, 1975. 4. Michael Bacharach and Susan Hurley, Foundations of Decision Theory, Issues and Advances, Basil Blackwell, Oxford, 1991. 5. Max Bazerman, Judgement in Managerial Decision Making, 4th ed., John Wiley & Sons, New York, 1995. 6. Lee Roy Beach and Terry Connolly, The Psychology of Decision Making, People in Organization, 2nd ed., Sage Publications, London, 2005. ONLINE SOURCES: 1. http://www.virtualsalt.com/crebok6a.htm 2. http://www.winadvisorygroup.com/Who'sReallyRunningShow.html NON-PROGRAMMED DECISION MAKING: In a complex, diverse and difficult environment, contradictory and creative decisions have to be taken and here programmed decision-making does not work. 2) STRATEGIC ANALISYS, definitions, advantages and disadvantages, comparison, problems, solutions, be comprehensive and analitical and make sure that everything is in line with previous analisys and you answer for the topic question, use as many characteristics as possible for programmed and non-programmed, managerial problems, apply management theory DISCUSS THE WAYS CULTURE AFFECT PROGRAMMED AND NON-PROGRAMMED DECISION MAKING PROCESSES 3) CONCLUSION - do not repeat sentences from the text Read More