Essays on Bounded Rationality and Decision Making Process Assignment

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The paper "Bounded Rationality and Decision Making Process " is a perfect example of a business assignment. While working for an airline company during my attachment, the airline decided to retrench some of its staff. The decision to retrench was influenced by the fact that the company was using so much money on remunerations and was getting very little in return as profits. To maximize profits, the decision to retrench was reached by the Chief Executive Officer of the company. In addition, the company also decided that it would reduce the number of destinations as well as frequencies to some destinations that were seen as less viable. After executing this plan, the company for sure was able to save up to $1 billion dollars in revenue annually, which was previously used to cater for salaries.

This saw the company’ s performance at the stock market improve and the company was also able to improve employees’ salaries and working conditions. Nevertheless, after 2-3 years of the downsizing period, the airline industry saw an increase in competition with foreign airliners venturing into the market.

The airlines were able to tap new markets in terms of destinations as well as increase frequencies in various destinations, formally operated by the company in question. As a result, the company started losing market to its competitors which affected the company’ s revenues. This led the company to a crisis, as it was not able to sustain its operations. The employees started asking for their benefits as the majority of them left to work for the competitor airlines, which offered better terms. Consequently, shareholders were worried and investors shied away from buying stocks, which resulted in a drastic fall in value in the stock market.

At the moment, the company is falling and it needs more than a miracle to get it back to its feet. 2. Use the theory of bounded rationality to explain the decision-making process in this situation. Leaders are responsible for making noble decisions in an organization in order to save the company from sinking situations, or in improving the performance of the organization. However, the criteria that decisions are made is not always rational as people would expect.


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Simon, H. (1991). Bounded Rationality and Organizational Learning. Organization Science 2, (1): 125–134.

Wayne J. T. (2009). Leadership: Bounded Rationality, Mentor Leadership Training, accessed on 13 September 2012 from

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