Advantages and Disadvantages of the Rational and Group Decision-Making Models - Literature review Example

MAINTENANCE MANAGEMENT by Student’s Name       Code+ Course Name Professor’s Name University Name City Date Maintenance Management Introduction Following our merger with Preston Commercial Lettings Company and the poor condition of the company’s stock, the board of directors requested for a critical evaluation of the refurbishment and maintenance program. This report presents the evaluation of the decision-making model as well as the strategic plan the company has to adopt in order to update the company’s stock to the current legal model and to meet the customer’s expectations. We acknowledge the fact that decision making plays a very important role in the success of any enterprise. As such, it is important for companies to choose the right decision-making model. We also highlight how important strategic planning is important in setting the direction and guiding the daily business activities the company engages in. Decision-Making Models Koontz and Weihrich (2006, p.123) define decision making as the selection of a course of action from amongst alternatives. Decision making is an important aspect of planning as it involves a commitment of resources, direction as well as reputation. The decision-making process entails the evaluation of all the alternatives the organization has. Apart from facilitating the implementation of managerial processes, decision making also important in policy formulation and planning. Additionally, decision-making facilitates successful business operation, and it also allows for managerial performance to be evaluated. There are different methods that teams utilize to make decisions. These different methods are known as decision-making models. The decision making a firm decides to use often depends on the situation in which the company finds itself in. Effective utilization of the different decision-making models makes it possible for the quality of the final decision a team makes to be maximized. The main decision-making models include the rational decision-making model, the group decision-making model, the political model as well as the instinctive model. For the current report, we will discuss the rational and group decision-making models and how the company can utilize the two models. The Rational Model The rational decision-making model involves a step by step process, which makes use of facts and analysis in establishing a decision. This model does not focus on insight and subjectivity, but places emphasis on subjectivity, analysis as well as logic. The model follows sequential activities that include classifying and defining the problem or opportunity, setting objectives and criteria, generating creative alternatives, analyzing the alternatives and selecting the most feasible alternative, planning and implementing the decision as well as following up and evaluating the results (Nieuwenhuizen, ‎Badenhorst-Weiss and ‎ Rossouw 2008, p.46). The main assumption that the rational model makes is that people tend to make those choices that minimize costs while maximizing benefits. Apart from that, the model also assumes that a person making a choice has the right information regarding the alternatives and that there is a measurable criterion for collecting and analyzing the information. Ahmed and Triana (2008, p.48) the assumption that the decision maker has complete information is problematic since people are limited information processors. Additionally, the model assumes that the person making the decision has the resources, cognitive ability as well as time to compare and contrast each alternative. Another important assumption of the rational decision-making model is that decision-makers and other relevant entities involved in the decision-making process are unitary actors who have preferences. The final decisions the actors make are based on these preferences, which are consistent, clear and stable. According to Nieuwenhuizen, ‎Badenhorst-Weiss and ‎ Rossouw (2008, p.48) a decision maker who makes use of the rational model tends to look for the best possible solution. They are of the view that the rational model is most effective if the decision that is required is non-programmed and high risk. Alhstrom and Bruton (2009, p 267) argues that the rational decision-making model has had a significant impact on different aspects of business management. They point out that the model forms an important basis for decision-making since it is the most widely used model in practice and that it is possible to contrast it with other decision-making models. Ahmed and Triana (2008, p.48) are of the view that the decision-making process under the rational model involves many actors who have many and sometimes conflicting objectives. As such, identifying the problem and establishing preferences may be affected by political as well as technical forces. For problem identification and preference setting to be successful, it is often necessary for coalitions to be built. Policies made through this model are not only aimed at finding solutions to certain problems, but to also ensure that the coalition of support is held together. Advantages of the rational decision-making model Since it is based on data collected and analyzed through scientific methods, the rational decision-making model minimizes the chances of making incorrect assumptions, errors as well as distortions, to name but a few sources of poor management decisions The rational model is a knowledge-based model that relies on the available information. As such, it promotes quality and consistent business decisions by minimizing the uncertainties and risks associated with making information without using the right information Since it is a step by step approach, the rational model facilitates the making of an optimal decision. The various steps in the sequential path allow the decision maker to identify the various potential shortcomings of the decision and how these shortcomings can be averted. Disadvantages of the rational decision-making model The model makes an assumption that people have perfect information. However, individuals rarely have all the information since some of the information might be hard to access or unavailable. Making decisions using the rational approach requires careful analysis of the data. Both the collection and analysis of data might be time-consuming, thereby making the rational model of decision making inapplicable in situations where quick decisions are required. The model may be inadequate if the decision that is to be made is a complex one. This is because the rationality of a decision maker is limited by their ability to analyze and evaluate competing alternatives and when the decision is more complex, so do the limits of making a rational choice greater. The Group Decision Making Model Zhang et al. (2006, p.39) define group decision making as a group making situation, where more than one person is involved in the decision-making process. They point out that each group member in the group decision-making model has their motivations and attitudes and that they recognize the existence of a common problem. The model acknowledges the fact that multiple perspectives are required for a decision to be made. Multiple perspectives are important when the decision environment is more complex as the case with our company. The decision-making process has been made complex by the merger, which now means that the number of decision makers has gone up. The decision groups in this decision-making model have to work more collaboratively for a successful decision to be arrived at. A satisfactory solution in such a model is one that is accepted by most members of the decision group. The group members usually attempt to reach a common decision in a trusting and friendly manner. Differences may arise in this model, and when they do, approaches such as voting schemes, negotiation as well as consensus (Bryson, 2011). In the group decision-making model, the group decision covers the whole process of transfer from generating ideas for problem-solving to implementing solutions. Additionally, group members may be located in the same or different locations. Additionally, not all group members might have full information for decision tasks. Since the model allows decision to be made by group members working in different locations at different times, communication, collaboration and assess to different information sources may be necessary. Another important aspect related to group decision making is negotiation and bargaining. It is important for the decision group to be negotiable in order for a consensus-based solution to be attained. Successful group decision making requires taking into consideration all the needs and opinions of the group members. As such, the effective and efficient function of the group has a direct impact on the final decision. Just like the rational model discussed in this report, the group decision-making model also involves a number of processes including defining of the decision problem, determining the requirements, establishing the objectives and goals and generating goals. Apart from that, other processes include identifying criteria and selecting a group decision-making tools. The first step, which is to define the decision problem, makes it possible for all the group members to clearly understand the problem and for a common goal to be established. After defining the group problem, the necessary requirements are then identified through examination of the available data and resources. The group decision-making process involves many individuals who might have varying opinions. As such, conflicts might easily arise during the decision-making process. Advantages of the group decision-making model The model involves more than one person. This means that more data and information can be accumulated within a short time The more than one people in the decision group means that a broader perspective can be achieved. As a result, more alternative positions can be taken into consideration under this model The many people who get involved in the decision-making process are likely to be more satisfied with the decision and would thus support it Since it brings many different groups together, the model can serve both political and communicative functions. The group decision-making process is more democratic compared to the individual decision making. As a result, the model is easily acceptable and applicable in most societies where democracy is the norm The decision making under this model is participative in nature and this provides a basis for the subordinates to learn and develop skills such as subjective information analysis The larger number of individuals who take part in the group decision-making process means that the biases that often arise in individual decision-making process are eliminated Disadvantages of the group decision-making model Differences in the status among the different group members may lead to certain individuals or an individual dominating the decision-making process. This often occurs through force of personality which may lead to far fetching consequences including resentment among group members Involving many people in the decision-making process may lead to the emergence of conflicting self-goals as different group members try to promote their personal views and agendas. As a result, the group focus may turn into infighting and quest for power as opposed to liberating on the key issues at hand The group decision-making model may also expose certain members to the social pressure towards conformity. This is especially the case when the desire to reach a mutual agreement is greater that the desire to arrive at the best alternative, resulting in a phenomenon known as groupthink. Members who disagree with the group decision would often not raise an objection due to the fear of being called uncooperative by other members of the decision group The group decision-making model is also time-consuming and is therefore not suitable for quick decisions. Bringing together the decision group and evaluating the different alternatives often takes a lot of time. The model does not identify the person who is responsible for the final outcome. As opposed to individual decision making in which responsibility lies with one person, the group decision-making model distributes responsibility among the different group members. This often encourages the group members to feel less responsible for the outcome of the decisions. Adopting a Strategic Plan An effective strategic plan needs to communicate the objectives of the company of the five-year period and the ways through which the firm wishes to achieve these objectives. Strategic planning has emerged as an important aspect of organization management over the past few years. The process helps the management of an organization to set goals and objectives, to streamline the resources and energies on these goals and objectives and to strengthen the various business operations with the main aim being to achieve the firm’s goals and objectives. According to Steiner (2006, p.3) strategic planning is part of the management function and that it supports strategic management. On the other hand, Simmerson (2013, p.4) is of the view that strategic planning allows the firm to take into consideration the internal and external information available to the firm. This in turn makes it possible for the firm to minimize both costs at risks while optimizing outcomes and results. As mentioned earlier, an effective strategic plan should highlight the company’s mission and vision. Apart from that, it needs to be driven from the top down, meaning that the organization leaders play an important role in the planning as well as implementation process. Any strategic plan employed by a business takes into consideration both the internal and the external business environment (Bryson, 2011). As a result, it needs to be communicated to the different stakeholders within and without the company. For all companies, the importance of a strategic plan becomes apparent with the changing business environment. It is important for the business to utilize a disciplined strategic planning approach as it ensures that the company stays ready for any changes in the market. For any strategic plan to achieve long-term value, it has to be considered as an ongoing business process. The market and economic conditions change over a long period. An effective strategic plan should not be rigid, but it should also change as the economic conditions change. The strategic planning process involves a number of steps with the basic ones including defining and reviewing the activities, mission, values as well as the activities of the firm. This is usually followed by the analysis of both the external and the internal business environment, which is then followed by identification of strategic issues (Grünig, Kühn, Kühn, 2005). Other steps that are taken in strategic planning include developing strategic goals and objectives, implementing the plans and evaluation of the plans. It is important for the organization to decide whether the time for undertaking the strategic plan is appropriate or not. For our organization, the time is very appropriate as it comes after the company has just merged with another partner and the stocks need to be updated (Hodgkinson and Starbuck, 2008). The strategic plan would help the organization leadership identify the areas where the resources and energies should be directed to. It is important for the leadership to ensure that the strategic planning is not carried out when the company is facing a crisis or when it is undergoing managerial changes. This would ensure that the focus on the organization goals is not altered by other competing forces (Tallant, 2011). Benefits of Adopting the Strategic Plan The strategic plan will provide the much needed direction and focus by enabling the organization leadership to identify what is important and the role that each business element has to play in order for the organizational success to be attained. Since the company is newly merged, the strategic plan will enable the firm to make fundamental decisions about the markets it wishes to operate in, the values it seeks to exhibit as well as the skills that the company’s employees need to have. The plan is also beneficial as it will help the firm evaluate its progress up to now and identify the key areas that need improvement. The plan will also enable the company to identify the resources required for optimal success to be attained. Drawbacks of Adopting a Strategic Plan The strategic planning may end up being very costly as it might require the hiring of strategic planners and allocation of more resources towards collection and analysis of both internal and external organizational information. This in turn might result in low profitability levels for the company The process of strategic planning is also complex as it is made up of many processes that are interconnected. The chances of a strategic plan being implemented successfully might be low due to the complexity of the processes as well as the heavy commitment of resources towards organizational goals. Recommendations Despite the several drawbacks associated with strategic planning, it is recommended that the company comes up with a strategic plan because: The plan could facilitate the collaboration of the different managers in the newly merged company. The strategic plan is likely to lead to increased communication between different levels of managers, which in turn would facilitate increased communication It would also be effective in ensuring that resistance to any organizational change is minimized. The plan would communicate any changes that the organization wishes to undertake, thus allowing employees to be ready for these changes. The plan should be formulated as it would help the leaders identify and communicate the company’s strategic intent and objectives. Another reason the company should maintain the strategic plan is that it could lead to improved resource allocation The plan would also help the firm analyze its past progress and identify the key areas in need of improvement moving forward Since the current business environment is quite competitive, a strategic plan would help the company realize a sustainable competitive advantage. References List Ahlstrom, D. and Bruton, G. (2010). International management. Australia: South-Western Cengage Learning. Ahmed, K. and Sánchez Triana, E. (2008). Strategic environmental assessment for policies. Washington, DC: World Bank. Bryson, J. (2011). Strategic planning for public and nonprofit organizations. San Francisco, CA: Jossey-Bass, a Wiley Imprint. Grünig, R., Kühn, R. and Kühn, R. (2005). Process-based strategic planning. Berlin: Springer. Hodgkinson, G. and Starbuck, W. (2008). The Oxford handbook of organizational decision making. Oxford: Oxford University Press. Koontz, H. and Weihrich, H. (2007). Essentials of management. New Delhi: Tata McGraw-Hill. Nieuwenhuizen, C., Rossouw, D. and Badenhorst, J. (2008). Business management. Cape Town, South Africa: Juta. Simerson, B. (2011). Strategic planning. Santa Barbara, Calif.: Praeger. Tallant, J. (2011). The Importance of Strategic Planning in the Business Environment. New York: GRIN Verlag. Read More