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Managerial Decision-Making

In: Business and Management

Submitted By jzhu19
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This essay will describe the concept of managerial decision-making. It will look specifically at the ‘Rational Decision-Making Model’, exploring the shortcomings of this approach, and will suggest possible ways a manager could overcome these issues when striving to make a rational decision that will bring benefit to an organisation. Throughout this essay, empirical research and examples from academic literature will be presented to illustrate the discussion.

Decision-making is arguably the single most important process in an organisation, being a basic task at all managerial levels. (Heraclious 1994) Rational Decision Making can be defined as choices that are consistent and value maximising within specified constraints. (Bergman, Coulter, Robbins & Stagg 2008) The ‘Rational Decision-Making Model’ is a structured process for essentially making a logically sound decision. The model is made up of a series of steps, with the details often varying, but generally including; recognition of the decision requirement, diagnosis and analysis of causes, development of alternatives, selection of alternative, implementation, evaluation and feedback. (Heraclious 1994) A person making a rational decision would be logical, fully objective, and would strive to select an alternative that maximises the likelihood of achieving their goal. (Bergman, Coulter, Robbins & Stagg 2008)

There are a number of issues surrounding the effectiveness of the model for rational decision-making, and there has been a considerable amount of research into what these issues are. It is argued that the model is very limited in terms of how it can be applied in real life situations, only being applicable to relatively simple problems. (Heraclious 1994) Three issues that this essay will look at are; the unrealistic assumptions that the model makes, decision-makers bounded rationality, and the fact...

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