Process of Decision Making - Essay Example

The Situation A small general store which deals in different products and conducts their business by supplying different products to customers within the locality was looking to undergo a change. The store was looking to move from the small kirana store to a more better placed and managed departmental store so that the customers experience while purchasing the product could be improved. The store was looking to function like a departmental store where people could move around the store and pick up products they like from the different brands that they have. The store would not be as big or huge as other supermalls but would be capable of meeting the needs and requirements of the society. The decision to undergo a change from a kirana store to a departmental store was made by the manager after realizing the manner in which the locality was growing and increased development of building and other complexes provided an opportunity through which the business potential could increase. The other factor which had influenced the decision was that it was the only kirana which was big and had different type of products. In addition to it a nearby locality has also witnessed a change as a kirana in that place changed into a departmental store and was a success. The owner of the kirana was impressed by the business potential and found that there existed an opportunity through which gains could be made and took a decision to undergo a change. The proposed change didn’t work out as required because the owner of the store wasn’t able to develop the departmental store as desired and the opening of a supermall increased competition and made it difficult to ensure that they had all products as the super mall had. In addition to it the bargaining power of supermall was better and they were able to provide better bargain to the customers. Apart from it moving from the traditional store made them loose a lot of customer and thereby had an impact on the decision as the sales and revenues decreased. Analysis The decision which the store took shows that the business was looking to move forward but should have been analyzed through the rational model of decision making. This model would have provided an opportunity where the problems could have been analyzed, the different options could have been searched and the best one would have been picked. This would have helped to analyze the decision which was taken by the manager from different perspective and would have included different situations. This would have thereby improved the decision and would have helped to develop the change plan in a better way (Colman, Pulford & Rose, 2008). The mechanism would have also helped to understand the market condition, competition and provided a complete knowledge regarding the future opportunities which were available. The use of bounded rationality theory ensures that the process of decision making is rationalized by the information that individuals have, the limitations of their mind and the limited amount of time that they have to make decisions (Smith, Ulhoi & Kesting, 2012). This theory shows that a person is limited with time, knowledge and efforts and requires to bring about a change in which decision are taken by having more information so that the different options which the person has maximizes. The overall process of decision making further shows hastiness and not looking at all the changes which is coming along. This resulted in moving from the traditional method of working and working on a model which is different. To ensure better development and an opportunity to reduce the risk the most important aspect would have been analyzing the entire situation through different framework and areas and using the bounded rationality model which would have analyzed the business better. This would have given a better view and perspective and would have provided an opportunity through which the decision model would have improved. The overall process would have thereby ensured better returns and would have created an opportunity through which the performance gets shaped up. The process of decision model also shows lack of communication as the manager didn’t look at consulting people or conducting a research to find out whether the strategy to undergo changes would be beneficial or not (Favereau, 2001). Improving the process of communication and developing an informal chain through which the customers attitude towards the change would have been analyzed would have helped to pursue strategies accordingly. The model of bounded rationality concentrates on this areas and looks at analyzing the different factors and areas through which better decisions can be taken and help to analyze the different options carefully. The different models also highlights the importance of using different different approaches which can be used to take decisions are Psychoanalytic, Behaviouralist, Humanist and Cognitive behaviour (Margaryan, Milligan & Littlejohn, 2013). The different approaches looks to take decisions based on different dimensions and factors which needs to be analyzed and considered while looking to arrive at a decision so that the decision making process provides effectiveness. This reduces the risk and provides a cover through which the different dimensions of the business are better understood. The overall process of decision making thereby needs to understand the smaller aspect associated with decision making and needs to concentrate on smaller matter through which performance can be enhanced. The process of change needs to be facilitated by a mechanism where the different aspect which improves decision making and reduces the risk are taken. The overall phenomenon thereby needs to concentrate on areas where the surrounding factors are considered and based on it wise decisions are taken. Reflection I feel that the process of decision making which has been adopted by the owner of the kirana store is flawed as the owner has taken the decision based on whims and desires. The fact that the manager didn’t analyze the actual scenario and the manner the environment is revolving and changing it has resulted in multiplying the pressure and increased the level of intensity. The use of bounded rationality model which analyzes the different limitations which individuals have and based on it develops strategies so that the different options can be analyzed needs to be understood. I further feel that the process of decision making looked at bringing the change through which operational efficiency and gain would have been achieved. The fact that the manager didn’t use the different models of decision making and instead took decisions based on what he felt was correct turned out to be wrong. The bounded rationality model would have reduced the limitations which the individuals have and would have maximized the effectiveness of decision making as it would have analyzed the different options from different areas so that the process of decision making is improved (Gigenzer & Goldstein, 1996). Further the use of bounded rationality model would have provided the opportunity through which all the external and internal factors would have been evaluated and based on it decisions would have been taken (Kahneman, 2003). This would have reduced the risk or at least would have helped to develop a plan through which risk could have been mitigated. This would have ensured that the owner looks at different factors and analyzes the same through the process and lens of different variables and factors so that the decision making process is improved. This would have improved the overall process through which decisions are taken and would have reduced the level of risk for the business. The process would have also ensured that the mechanism which was used for decision making would have ensured effectiveness and would have reduced the risk for the business (Gilbert, 1996). The overall process of decision making thereby needs to understand the smaller aspect associated with decision making and needs to concentrate on smaller matter through which performance can be enhanced. The process of change needs to be facilitated by a mechanism where the different aspect which improves decision making and reduces the risk are taken (Zavyalova, Kosheleva & Ardichvili, 2011). The overall phenomenon thereby needs to concentrate on areas where the surrounding factors are considered and based on it wise decisions are taken. This will ensure maximum effectiveness and will improve the process of decision making so that the working culture is able to bring the required change and improve the manner in which decisions are taken within the organizations. References Colman, A. M., Pulford, B. D., & Rose, J. 2008. Collective rationality in interactive decisions: Evidence for team reasoning. Acta Psychologica, 128, 387–397. Favereau, O. 2001. Theory of information: From bounded rationality to interpretative reason. In P. Petit (Ed.), Economics and information (pp. 93–120). Dordrecht: Kluwer. Gigenzer, G., & Goldstein, D. G. 1996. Reasoning the fast and frugal way: Models of bounded rationality. Psychological Review, 104, 650–659. Gilbert, M. 1996. Living together: Rationality, sociality, and obligation. Lanham: Rowman and Littlefield. Kahneman, D. (2003). Maps of bounded rationality: Psychology for behavioral economics. American Economic Review, 93, 1449–1475. Prasad, P. and Prasad, A. 2000. ‘Stretching the iron cage: the constitution and implications of routine workplace resistance’, Organization Science, 11 (4), pp.387–403. Available from: http://sfxhosted.exlibrisgroup.com.ezproxy.liv.ac.uk/lpu?title=Organization+Science&volume=11&issue=4&spage=387&date=2000 Pye, A. 2005. ʻLeadership and organizing: sensemaking in actionʼ, Leadership, 1 (1), pp. 31–49. Available from: http://lea.sagepub.com.ezproxy.liv.ac.uk/content/1/1/31.full.pdf+html Smith, P., Ulhoi, J. & Kesting, P. 2012. Mapping key antecedents of employee-driven innovations. International Journal of Human Resources Development and Management, 12 (3), 224 – 236. Zavyalova, E., Kosheleva, S. & Ardichvili, A. 2011. Human resource management and development practices in indigenous Russian companies and foreign MNCs: a comparative analysis. International Journal of Human Resources Development and Management, 11 (2/3/4), 179 – 193. Read More