Models of Decision Making.
One poor decision that I made more than a year ago happened when I was a member of the committee of a small, preliminary business company somewhere in Texas, which was only starting to burst in less than ten years of operation. Having read from articles that IT had become such an integral part of the business strategies of most companies nowadays because it made lots of money, assisted in terms of management and information, and that it kept records safer and faster, the thought made me think that IT was really what we needed. We were on the brink of entering the next higher stage of business.
We did brainstorming about the next strategy to implement by the following year, so that the business would be more successful and prominent for the next stage of business. I suggested about investing with IT equipments, as this would have extended our markets and services to be able to reach out to more customers in further states. The decision turned out to be a poor one because of misapprehension and negligence, as well as the wrong choice of strategy and application.
Using the ‘rational model’ in making individual decisions, the decision that I used in performing an IT investment to the business can be outlined as follows:
I. Forming the decision
A. Identifying the problem
1. There was a problem in terms of functional and systems approach, as the manufacturing was not smooth and orderly, and the tasks were not done efficiently.
2.There was a problem when it came to supply chain management, especially that the ingredients should have already been ready by the time the orders were sent.
3.There was a problem when it came to efficient floor management, so that the preparation did not flow smoothly and quickly.
B. Generating alternative solutions
1. Improve functional system by improving strategies, tasks, and goals.
2.Improve supply chain system by exchanging tighter coordination with the supplier companies.
3. Improve IT system by using the investment finance.
C. Selecting a solution
1.The chosen alternative should solve or alleviate as much problems as it can handle.
2. The chosen alternative should be strategically and financially acceptable.
3.The chosen alternative should present values, information, and skills that could be availed from the existing environment.
II.Negative consequences of the decision
A.Negative financial consequences
1. About 68% of the total available fund did not bring about the expected results.
2.Overall profit landed at merely $97,000, with a loan amounting to $200,000 plus company expenses.
B.Negative motivational consequences
1.The staffs and the committee lost motivation after being announced that the company had lost more than half of the expected returns.
2.The staffs and the committee lost motivation because the company almost fell to bankruptcy.
C.Negative personal feedback
1. I lost my position as the second adviser of the finance administration.
2.I was almost fired from the company.
III.Importance of the decision
A.Importance to the company
1. The decision would have solved problems in functional, supply chain, and efficient floor management.
2.The decision would have created a link and opportunity with strong IT companies in the environment.
B.Importance to the higher staffs
1.Improvement in the functional and efficient floor management would have led to higher profits and bigger returns.
2. Improvement in profits and returns would have led to bigger opportunities and investments.
C.Importance to me
1.The decision, if it were successful, would have promoted me as the first adviser of the finance administration.
2. The decision, if it were successful, would have motivated me to do bigger projects amid the risks.
Three decision theories, which were exercised in the planning and implementation of the decision were the following:
First and foremost is the ‘rational model’, which centers on comprehensive rationality and the sense of the alternatives. The rational model arrives at a decision by going over the four distinct steps: first is identifying the problem; second is generating alternative solutions; third is selecting the solution; fourth and final is implementing and evaluating the solution (Baker III, 2001, p.1). It presents the decision-making process by helping me, first, in pointing out what exactly is the problem in the company; then by thinking of the alternatives that can be used, which would solve the issues that were at hand.
Second decision theory that was used in the planning and implementation of the decision is the ‘political model’, which uses the organization as a coalition, with procedural rationality having to control the decision making process. In this model, what controls are the following aspects: first is environmental uncertainty; second is resource dependence; third is task interdependence; fourth and final is goal conflict (Rotman School of Management, 2001, p.4). The rationality of the procedure appears to be most important.
Third theory that was used in the decision making process is the ‘instance-based model’, wherein decisions are based on instances and the chosen alternative sprouts through ‘accumulated experience’ (Gonzalez&Lebiere, 2004, p.8). Because we have known other companies that became successful after investing in the IT, such as Vanguard Group, then it became reasonable for us that our company will also succeed in terms of IT investment. We failed to conclude that the internal and external environments are two very important factors.
Based on my analysis in the recent pages, it appears that making judgments and decisions for a company should not rely solely on one person or group of persons. There should be brainstorming from different groups that believe on different ways and strategies. People make judgments almost too hastily. Each factor should be analyzed slowly and efficiently, especially when it comes to the finances and the returns of the finances.
As for me, I have learned the lesson that it takes two to tango… not just two, in fact; the more there is then the better. It is good to make decisions in pairs… but a great deal better if we do them in numerous pairs.
Baker III, E. (2001). Decision making. Retrieved November 23, 2007, from Dr. H. Eugene Baker’s Homepage: http://www.unf.edu/~gbaker/Man6204/Decision.PDF.
Rotman School of Management. (2001). Contingency framework: models of decision making. Retrieved November 23, 2007