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Decision Making Models Question

Management Notes > Decision Making in Organisations Notes

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Decision Making Models
Introduction/Set Context
According to Miller (2002) the making of decisions is of vital significance to all organizational stakeholders, as such a vast array of different models have arisen over the years, each of which put forward a new way of thinking about organizational decision making. A decision is a choice made from among available alternatives whilst decision making is the process of identifying and choosing alternative courses of action. Programmed decisions are repetitive whilst non-programmed decisions, occur under non routine and unfamiliar circumstances. There are four theoretical, models of decision making; the rational model, the process model, the political model and the anarchic model. The historical development of the literature went from a purely rational model through to the more politically motivated models. Choo (2007) attempts to suggest which model should be used, or which is most appropriate by arranging the models into a matrix depending on the degree of ambiguity/conflict and the degree of uncertainty that is present in the specific situation.

The Rational Model
Simon (1945) conducted work in the field of behavioural economics on the decision making process and acknowledged that decision making had to focus on being "satisfying" rather than "optimising" due to the fact that "decisions cannot be made in a completely rational manner due to limitations of organisational complexity and managers' cognitive abilities" (McKinnon,
2003, p.2). Cyert & March (1963) developed the behavioural theory of the firm which led onto the rational model of decision making. This model is best employed when there is both a low degree of ambiguity/conflict and a low degree of procedural uncertainty. A completely rational model of decision making requires that all available alternatives are found, all alternatives are evaluated according to all possible consequences and that the alternative is chosen that "best accomplishes the goal with the least amount of resources" (Choo, 2007, p. 212). The truly rational model ultimately assumes that managers are logical and as such will make logical decisions in an attempt to further the organizations best interests. This model is fairly idealistic in that it discusses how managers should make decisions rather than how they realistically do make decisions.

Simon (1945) provided on of the first critiques of rational choice and these limitations have led to a consensus that when the rational model is discussed, it is actually a discussion around the bounded model of rationality. However, it is difficult to work with, implement, or really understand a model which has had to change its terminology because it is comprised of so many unrealistic requirements.

The Process Model
Mintzberg et al. (1976) were proponents of the process model which outlines the way a decision presents itself. Choo suggests that this model is best employed when there is a low degree of ambiguity/conflict and a high degree of procedural uncertainty.
When goals are clear but the methods to attain them are not, decision making is in a process mode (Mintzberg et al, 1976),
divided into three phases. "Before a decision can take place, a stimulus of some sort needs to evoke it" (McKinnon, 2003, p.2)
and the identification of this stimulus is the first phase of the process model. The identification phase recognizes the need for a decision and starts to understand the issues around decision making. The development phase then follows which seeks a readymade alternative decision, or looks to design a custom-build a solution. Finally, in the selection phases, a solution is chosen from all the alternatives that were generated in the development phase and this solution is committed to action.

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