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

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"Critically evaluate the usefulness of rational decision-making for managers when making strategic choices"

Characteristics of strategic decisions

Long-term survival of the organization

Scope of organization activities

Resources and competences / Competitive advantage

Then strategy is concerned with the strategic fit to the external environment

Stakeholders' expectations

Power in the organization - The expectations and worth of powerful agents in and around the company

Strategy as Rational decision making

Set objectives

Understand problem

Determine options

Evaluate options

Improvement in strategic decision making

Involvement of different stakeholders

Organization should have focus and flexibility

Organization should learn the strategy



Strategic management is the process of determining clear objectives of the company, and evaluation of internal and external environment in order to form a strategy solution, implement it, assess the progression, and make adjustments accordingly. In this report we will discuss the usefulness of rationale decision making for managers while making strategic choices. The roles of global managers and their decision making limits will be highlighted. The discussion related to the cross-cultural synergy and ethical dilemmas in making rational decision. The high complex environment is constantly challenging managers while taking decision due to the technological advancement. Bontempo, Triandis, & Lobel, (1990) has demonstrated that decision options manager select can be affected through motivational proclivity. Strategic supervision is the process of managerial decision and course of action which investigates the long-term performance of the company.

Characteristics of strategic decisions

Following are the characteristics which explain the strategic decision with the help of various examples.

Strategic decisions should be made accordance with company's vision and mission

Strategic decision deal with company's growth

These are usually complex in nature

Concentrate on environmental changes

Customer care

Long-term effect

Competitive advantage

Impact on operations

Long-term survival of the organization

In order to survive in the long-term organizations usually implement effective strategy, which in turn give them high profits. For instance, Volkswagen in Brazil has brought the innovation in the industry of automobile across the world with the help of its unique supply chain model. The company has no factory to manufacture its buses and trucks; they have 400 suppliers who disseminate different spare parts in order to manufacture. In this way, VW decreases its suppliers to 8 and contracted with them. The basic idea theme name was Modular consortium, where these suppliers come along with their supplies and assembled it up. It is just like a mini workshop they have inside the factory where they are producer and as well assembler. This model was unique to supply chain; there were no workers in company except the department of quality control, which is accountable to check the progression (Zilbovicius & Salerno 1997).

Scope of organization activities

Rational decision making typically implement various approaches according to the situation, and external threats of the environment. It is primarily based on the assumptions that signify how a rationale decision should be made. For, instance, the key objective of Volkswagen activities was that they were assisting its business to cut their labor cost and gaining the advantage by selling their trucks and buses at lower price (Zilbovicius & Salerno 1997).

Resources and competences / Competitive advantage

Strategy is all about manipulating the tactical capability of the company in term of its competence and resources in order to provide new opportunities. In this way Volkswagen made excellent image and attractive offers to retain its customers, and competitors were also not able to compete them in cutting their manufacturing cost (Zilbovicius & Salerno 1997).

The strategy is concerned with the strategic fit to the external environment

Companies need felicitous position for the continuous threatening environment. For instance, the extent to which a service/product meets the determined market demands. This might possess the configuration of a small business, which is trying to grab a remarkable niche in the market. Whereas, multinational companies are looking to buy up good deals that have already established a good image and have strong market position. Brad Garlinghouse has pointed out that Yahoo! was strenuously accomplished in many environments (Johnson & Scholes 2008).

Stakeholders' expectations

The model which mainly focuses on the stakeholders' behavior is Consequential model. This model pinpoints the outcome of a decision in order to demonstrate whether the decision is rationale. The core guideline of this fundamental as a principle for making decision is utilitarian approach. Utilitarian is the conscientious phenomena that managers always respond to generate the greatest possible equality of good over detriment for everyone influences by our rational decision making. Making a decision which speculate the interests and lead towards maximizing the utility for all and team members' influence by a decision is not easy. There are three aspects that manager should know about stakeholders expectations are (Johnson & Scholes 2008).

The first aspect as to know the stakeholders

The second aspect is what manager is liable to deliver from the viewpoint of the stakeholder

Retain your stakeholders responsibilities to the actuality of the project

Power in the organization - The expectations and worth of powerful agents in and around the company:

The order of direction given by a manager in his punctilious ability carry a particular amount of prominence and more so in an unstable situation where competent leaders usually viewed as holding more legitimate power than they actually hold. Groups, individual, and other organizations instigate significant issues for instance, whether a company is expansionist or more interested with consolidation, or where the constraints are drawn for the organization's operations. For instance, in some organizations power can be seen unjust or have negative impact on employees, it usually results in ineffective outcome by the employees in the organization (Johnson & Scholes 2008).

Strategy as Rational decision making

Set objectives

The objective of every organization is to maximize profit, but in order to entail the set of clear objectives manager's decision is significantly considerable. As a logical decision maker, manager should determine all the aspect which affects the particular project or task. It involves cost, culture, technical skills, and ability to go beyond by exploring the new tactics. The model of optimization propose that manager should make decision by keeping these fundamental into consideration such as the definiteness of purpose, which is clearly define. The second fundamental is to determine all the decision standards that fulfill the need of particular project. Accurately measure the standards, having know-how of each alternative, and accurately evaluate each option to accomplish the task (Drummond 1996).

Understand problem

The manager should recognize the issue and it's the time to take particular decision needed and classify the issue to be solved. Usually the problem is difference between the desired and actual standpoint. Therefore, managers usually act without interpreting the core issue to be solved or explain the issue in terms of a recommended solution. Effective managers generally involve their team members while making decision; they discuss the problem thoroughly, listen to the team member's point-of-view, and make rational decision, which also influence the mutual consent among workforce (Cooke & Slack 1991).

Determine options

This step generally involves the flawless solution that is measured by multiplying the proposed effectiveness of substitute on each standard times' the weighting of each benchmark for a particular solution. Altogether these measurable are an assessment of each option against the weighted reconciliation benchmark. The effective and flawless alternative must then be executed.

Evaluate options

Each option must now be assessed against the weighted standard. This is usually difficult part of the decision-making formation because it needs the decision maker to anticipate the prospective future results of each option. This often requires the decision maker to determine all the possible substitutes that will fulfill the decision making standards. Hence, the rationale decision making for managers is the ability to reckon the effects of each alternative.


After, analyzing all the pros and cons of the possible choices, managers usually determine the best option, which organization takes into consideration for implementation. The significant task is the identification of the design strategy to handle with the particular strategic variable established earlier in the first part. The best strategic option, which is being selected for execution is not the last part of the strategic formulation. Management should develop the policies that explain the fundamental rule for implementation. Policies give the direction for making rational decision, and assist the collaborative networks effectively (Cooke & Slack 1991).

Improvement in strategic decision making

In today's world most of the companies require a manager who holds a spirit, clear vision, and also intelligence. In this current environment managers should hold an art of making such decisions which are in favor of organization success. A question that usually rises while understanding the need to develop strategic implementation, and its outcomes is to know the main purpose and relevant benefits (Drummond 1996).

Strategy provides a definite direction towards a particular way of success, which involves rational decision making. For instance, how operations will be executed, who will do this, what are the finance resources, what type of issues we will face from the external environment.…[continue]

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