The paper "Rational and Psychological Decision-Making Theories and Models" is a perfect example of a Management Case Study. In everyday life, people are faced with various options. One has to choose out of these crowded options so as to arrive at a good solution. Decision making involves an evaluation of the options. Decision making becomes more critical in an organization where giving direction and providing leadership is integral. It is vital to note here that in every business venture, there is some risk involved. Indeed, some of the critical decisions made by the management on the way forward for an organization do involve so much risk-taking.
Thus, it is upon the company management to make decisions on the level of risks that are acceptable in the organization. To overcome challenges in the business world, entrepreneurs should be able to make decisions that drive towards market leadership. This has not been the case for Bags of Luck company has their managerial approach leaves a lot to be desired. In making decisions, there are numerous theoretical propositions that one can use to back her line of thinking.
This is not the case for BOL. The company operation does not show a clearly argued out plan. The problem the company has in terms of making poor decisions is in strategy formulation. Secondly, the firm’ s organizational structure should be reviewed as it is not serving them properly. The next concern in terms of a wrong decision is on business process, procurement & material handling. The last is on human resource management where the firm has no effective plan for handling its employees who are critical. To overcome these wrong decisions, the report recommends that planning and control should be enhanced so that they can have a formal organizational structure.
To attain this, the firm should hire a consultant to advise them in relation to their company size the structure they should adopt and the role of each office-bearer. The next would be to reduce bottlenecks in production process. The first is to improve on material handling so as to guarantee quality and smooth flow of products. The firm can adopt Lean production approaches like Kanban which automates the tracking of materials.
And in overall, the report recommends the professionalization of the organization to solve any other problems like financial planning. The decision-making process is an integral factor in the success of the business organization. For an organisation to attain market leadership and sustainability, strategic decisions need to be made. Organization management need to make decisions about internal operations & control, in relation to industry environment & larger macro environment they operate in. Oliveira (2007:12) posits that there are numerous perspectives that come into play when individuals are making decision.
This paper examines critical decisions evident in Bags of Luck Company (BOL)as a case study using the psychological framework of decision making. Moreover, the paper discusses the strengths and weaknesses of the decisions made by the concerned individuals in the case study. In addition, the paper proposes recommendations on how these individuals can improve their decision making in the future. In everyday life people are faced with various options. One has to choose out of these crowded options so as to arrive at a good solution. Decision making involves evaluation of the options.
Decision making becomes more critical in an organisation where giving direction and providing leadership is integral. Beresford & Sloper (2008:3) notes that theories of judgment, decision-making and choice fall broadly in two groups. The first they note is the normative theory of cognition that is based on how individual should think. The second is the descriptive theory of cognition that explains how individuals think. This paper will focus more on descriptive theory of cognition. Under descriptive theories, there are numerous models that have been developed to explain how people make decisions.
Brim et al (1962:9 cited in Hansson (2005:10) notes that decision making process involves five steps. These would be the identification of the problem first, obtaining necessary information, production of possible solutions, and evaluation of such solutions, selection & implementation of the strategy.
Alkhafaji, A. F., 2003. Strategic Management: Formulation, Implementation, and Control in a Dynamic Environment. New York: Routledge.
Alliance for work-life progress (2006). Work and life: what is total rewards? Retrieved on 29th July 2012 from: http://www.awlp.org/awlp/about/html/aboutus-whatis.html
Beresford, B. and Sloper, T. 2008. Understanding the Dynamics of Decision-Making and Choice: A Scoping Study of Key Psychological Theories to Inform the Design and Analysis of the Panel Study. ISBN 978-1-871713-24-4.
Cousins, P. D., Lawson, B. and Squire, B. 2006. Supply chain management theory and practice: the emergence of an academic discipline. International journal of operations and production management. Volume 26 Number 7, ISSN 0144-3577
Dettmer, H. W. 1997. Goldratt’s theory of constraints: a systems approach to continuous improvement. Wisconsin: ASQ Quality Press.
Emiliani, M. L. (2006). Origins of lean management in America: The role of Connecticut businesses. Journal of Management History, Vol 12; No. 2, pages 167-184.
Hansson, S. O. (2005). Decision theory a brief introduction. Department of Philosophy and the History of Technology, Royal Institute of Technology Stockholm.
Lipman, M. 2003. Thinking in education second edition. Cambridge: Cambridge University Press.
Oliveira, A. 2007. A Discussion of Rational and Psychological Decision-Making Theories and Models: The Search for a Cultural-Ethical Decision-Making Model. Electronic Journal of Business Ethics and Organization Studies. Vol. 12, No. 2.
Sohal, A.S., Keller, A.Z., Fouad, R.H. (1988). A Review of Literature Relating to JIT. International Journal of Operations & Production Management, Vol. 9 Issue: 3, pp.15 – 25.
Zhuang, L. 2011. The changing landscape for Chinese small business: the case of ‘‘Bags of Luck’’. Emerald emerging markets case studies, Vol. 1 No. 1.