Managing under Uncertainty - Case Study Example

The situation Mr. Jason was a production manager of local preserves company. Due to the rapid growth of the company,the owner, Mr. Lewis appointed the production manager who was Mr. Jason to come up with relevant decisions of managing the expansion of the range of products and services of the company and the feedback was expected by the owner in two weeks’ time. This forced Mr. Jason to approach Mark and Alan who were well conversant in the field of sales. Unfortunately, Mr. Jason was pressurized by the owner who directed Mr. Con, who was the retail manager of the company to moderate the models or the decisions in the formal meetings. The pressure that Jason received made him to be more stressed since the time frame was not favoring him to come up with the best models of expansion of products and failure to do so, then the owner could be forced to restructure the company. Due to the limited time, Mr. Jason hurriedly came up with a decision of employing fresh undergraduate labor force to increase labor to meet the product expansion rate instead of employing skilled personnel who have being in the field for a long time with the needed experience since he presumed or was influenced by the fact that the freshly undergraduate personnel were to be paid less hence the company was to make more profits. Unfortunately, this led to low quality products and the customers lost trust in the company hence the company lost a lot of its customers as they diverted to other products. Due to Mr. Jason’s decision, the company almost collapsed and this forced the owner to restructure the company and Jason was demoted to a junior retail sales manager. Analysis The idea that decision makers regardless of their level of knowledge need to work under three unavoidable requirements, that is, just limited and frequently temperamental data is accessible, cognitive limitation of their minds, also human personality has just limited ability to assess and procedure the data that is accessible, and finally just a limited measure of time is accessible to settle on a choice is well known as the bounded rationality. Consequently, even people who expect to settle on objective decisions are sure to make fulfilling as opposed to boosting or upgrading decisions in intricate circumstances (Dyckman et al. 1969, p. 108). These limits or rather bounds on rationality likewise make it almost difficult to draw up contracts that involve each possibility, requiring dependence on dependable guidelines as seen on account of Mr. Jason. Mr. Jason felt forced by the holder’s assignment of a strict two week time outline for a decision. Therefore the decision was liable to bounded rationality in which accessible data is limited (Manson. 2006, p. 997). Financial information was not sourced; rather, Jason instinctively assessed different probabilities of money related results. This circumstance agrees with the thought that gatherings and people under time limitations may structure imprudent or untimely decisions in view of loose data, regularly bringing about decision fulfilling as opposed to looking for the best alternative. Availability heuristic and common biases generally give sensibly great results rapidly and effectively, however, it can unpredictably fail. They can likewise fall flat in predictable ways and are remarkable as the biases of shrouded traps. A large portion of these availability heuristics can function admirably or can transform into destructive biases in any of the phases of critical thinking, however the subtle elements vary relying upon what phase of critical thinking somebody is in. Correspondingly, the vast majority of the availability heuristics are utilized by individuals of all cognitive styles, however again the points of interest vary relying upon what cognitive style these individuals are utilizing. This availability heuristic is taking into account the conviction that after one has considered alternatives one by one, and then he or she will choose an alternative immediately he or she discovers one that is agreeable or sufficient to meet their base level of adequacy. This availability heuristic may be utilized when there are constrained working memory assets accessible and it is evident when Mr. Jason, after having a string of thoughts, he decided to apply the idea of employing fresh undergraduate personnel with the aim of paying them less compared to how he could have paid the more skilled and experienced personnel not knowing that this could put the company into the risk of producing low quality products (Strough et al. 2011, p. 59). The association could have overcome issues of individual heuristic biases and controlled the stream of issues in gathering talks by receiving the businesslike system of having a formal motivation process and not leaving all the tasks to Mr. Jason since he came up with solutions that best favored him hence availability heuristic biasness. A lot of people make decisions based on the gain values or loss values rather than directing the decision to the outcome which is final. Also other people examine these profits or rather gains and losses from a perspective of heuristics and this is well known as the prospect theory. The prospect theory tries to showcase the choices and decisions made in the real life as opposed to the optimal choices and decisions (Hardman. 2009, p. 241). Mr. Jason applied the concept of prospect theory by focusing on the profits the company was to get by having less expenses of paying less to labor force not knowing that the decision could lead the company to having the risk of getting same loss as to the profit the company was to earn. Also the idea of expected utility theory which involves decision hypothesis that involves the individual’s perspectives that goes hand in hand with the choices initially had uncertain results or rather outcomes was not utilized by Mr. Jason (Fishburn. 1970, p. 75), reason being, the time frame and pressure from the boss didn’t allow him to involve the critical managerial perspectives. Reflection It is clear that from the two week frame that the production manager of local preserves brought no clear decision outcome since it was not enough for critical decision managements or rather decision making process. I would have given more reasonable time the product manager so as to take into account the eight steps of decision and choice making models including the bounded rationality, heuristic and common biases and so on. Also I could have appointed the production manager to come up with a committee to handle that situation which was at hand since having a committee will get rid of the availability heuristic as the committee will come up with a general product expansion decision and not individual point of view like in the case of Mr. Jason who came up with his own decision hence committing availability heuristic. This clearly implies that, a committee reduces chances of availability heuristic or any other form of heuristic (Oh et al. 2012, p. 9869). The owner of the production of the local preserves company is the one who is responsible of admitting or rather allowing the problem to fall into the trap of the typical thinking of choices and decision making like the heuristic anchoring of bias of the previous data and information and also working with that line of typical thinking. Instead of this, he could have encouraged the concept and the ideas of the theories of decision making. I could have eliminated the risk of the theory of bounded rationalities by allowing more reasonable time for the production manager to access more and relevant information so that he can edit and evaluate it as per the perspective of prospect theory so as to come up with the required decision for the product expansion (Gil. 2001, p. 55). So the owner of the company is responsible for discouraging the thinking traps that are involved with the choice and decision making. Maybe this could have seemed irrelevant but at long last, it could have resulted into more thought and approaches that are prior to the project at hand, hence providing it with the relevant direction. The product expansion was a crucial aspect for the company and the owner of the company could have taken it as an event which is a trigger, and listed it in more details the approaches and results expected for its achievements in implementation. The theory of process again by a well-known scholar, Godwin Watson states that the ideas, facts and insight that are shared within a group or rather members of a committee results to approaches and strategies that could not be achieved by a single person (Urena et al. 2015, p. 17). I could have encouraged Mr. Jason to come up with a hypothesis that ensures certain axioms like the labor force are satisfied so as to come up with a decision that will lead to more profits earned as per the theory of expected utility. On the last reflection, I believe that if the production manager could have involved in the eight step decision making like the rational choice theory that ensures satisfying benefits from making logical and prudent decision, then the best decision could have being achieved. References DYCKMAN, T. R., SMIDT, S., & MCADAMS, A. K. (1969). Management decision making under uncertainty: an introduction to probability and statistical decision theory. London, Macmillan. FISHBURN, P. C. (1970). Utility theory for decision making. New York, Wiley. GIL-ALUJA, J. (2001). Handbook of management under uncertainty. Dordrecht [u.a.], Kluwer Acad. Publ. HARDMAN, D. (2009). Judgment and decision making. Malden, MA, Wiley-Blackwell. Manson, SM 2006, Bounded rationality in agent‐based models: experiments with evolutionary programs, International Journal Of Geographical Information Science, 20, 9, pp. 991-1012, Academic Search Premier, EBSCOhost, viewed 25 February 2015. Oh, J, Yang, J, & Lee, S 2012, Managing uncertainty to improve decision-making in NPD portfolio management with a fuzzy expert system, Expert Systems With Applications, 39, 10, pp. 9868-9885, Academic Search Premier, EBSCOhost, viewed 25 February 2015. Strough, J, Karns, T, & Schlosnagle, L 2011, Decision-making heuristics and biases across the life span, Annals Of The New York Academy Of Sciences, 1235, 1, pp. 57-74, Academic Search Premier, EBSCOhost, viewed 25 February 2015. Ureña, R, Chiclana, F, Morente-Molinera, J, & Herrera-Viedma, E 2015, Managing incomplete preference relations in decision making: A review and future trends, Information Sciences, 302, pp. 14-32, Academic Search Premier, EBSCOhost, viewed 25 February 2015. Read More