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Utilizing Rational And Perception Decision Making Essay

1160 words - 5 pages

Utilizing Rational and Perception Decision-Making

A decision could lead us to satisfactory outcomes or, unfortunately a disastrous situation. Especially in the world of business, the complexity and uncertainty of the environment make the process of decision-making very significant in the execution of management. Top managers may differ in style in having decision-making. Some tend to rely on a rational decision making approach while some tend to rely on perceptual decision-making. Some may argue that decision-making is about perception rather than rational, therefore, managers should concentrate on perception decision-making. Instead, these two methods have a completely different process ...view middle of the document...

It also suggests that a positive relationship exist between the comprehensiveness and the performance of company. Therefore, a rational decision-making approach provides broader information that allows a better-prepared manager to undertake further decision-making process.

Given that an organization’s managers all focus on the practice of rational decision-making, it is assumed that the organization is strict and sensitive to timely and accurate information (Miguel, 2007). Managers are then able to reallocate resources in a form that is most responsive to the change of environment. As a result, when market opportunities emerge, an organization can quickly respond by utilizing resources. Beyond the outcomes associated with rational decision-making, it shapes the long-run resource portfolio, which is said to be favorable to sustainable development (Penrose, 1959). From the view of the entire firm’s life, it can be split into cycles of every rational decision-making encountered by the company. As the adjustment each time made by the firm are responsive to the environment, it provides the firm sustain and competitive advantage in the market.

However, due to the time needed in collecting information and calculating the cost and benefits and risk of alternatives, it is argued that in such a high-velocity environment, it is impossible to continue the process of rational decision-making, which is, sudden events appears to interrupt the process or new factors forcing managers to reconsider different factors. For instance, firm A is considering to cooperate with an oversea company in producing a product, when assessing the attributes of the oversea firm, firm A is invited by another company for a similar project, so firm A shift the target to the new firm. After assessing the new firm, firm A reject the invitation of the new firm due to its poor financial position. However, when it try to reconsider the oversea firm, the oversea firm has already accepted to cooperate with firm B. This possibility may sound odd but similar situations in which firms missing opportunities occur everyday.

The example shown above underlines the importance of quick decision-making in the world of business. According to Smith’s (2008) description, perception decision-making refers to a fast and emotionally based judgment made without an awareness of the reasoning processes involved. It is a common saying that perception decision-making is made on “sixth sense” or guts feeling, which may sound illogic. In fact, managers use their experience and lesson learnt and on fact, similar situations, process and concept stored to build a complicated and developed form of reasoning (Kurt M, 2007). To simplify, perception...

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