Attributes of a Manager: Decision Making
Discuss about the Masters of Business Administration.
For human beings, decision making is a daily activity and there is no exception for that. On other hand talking about business or organizations this decision making process is an important practice or habit. In the new era of management people have to make a selection out of the available options. This selection requires decision making power. In the new era decision making is an important part of the management. This main function of the new management system requires mangers to make best decisions. Some researchers have stated that the efficient decision making consists of a series of steps this require input information at different stages of the process. This decision making process is responsible for an organization’s profit or loss depending upon the decision precision (Ajzen, 2015). Right and effective decisions can make profit for the company and the wrong ones will make losses for the company. Therefore, decision making process in corporate sector is the most crucial practice for any organization. In the process of decision making managers have to choose one set of action from a number of alternatives possible for the same scenario. In this essay decision making process has been discussed accordingly its different concepts or heuristics.
Capability of making right decisions or even making a decision is one of the different attributes which a manager should have. Consultation is the basic tool of decision making. Organizations use other effective communication tools in addition to the basic consultation for their decision making process. Along with these communication tools and consultation, discussion eventually supports and brings out the decisions required to the organization for its success (Blumenthal-Barby & Krieger, 2015). A decision, to make a move in the direction of success of the organization, must be carried out through a series of consultations with different people responsible for the organization’s growth or success. These decisions taken by the strategic managers are used to push new creative or innovative business initiatives to the future of the organization.
In the process of decision making the term Heuristics refers to the decisions taken by the people of society in order to solve complex problems. Simon has quoted that the human mind is less capable to solve such complex issues. Aim behind this quotation was to state that human minds are less capable of solving such problems at their own. Therefore, they need some external analysis or consultancy to make decisions for such problems. Solution of these problems is required for the rational behaviour of human being in the real world. Aspect of the rational restriction describes that how these decisions are to be taken according to the environment for which the decision might be successful or failed; whereas the rational behaviour defines the process of decision making which depend on various factors.
Heuristics in Decision Making
This decision take n by the mangers is defined as a set of actions intentionally chosen by the managers from a number of alternatives made to achieve the goal or objectives of the organization or management. This is a continuous process and an indispensable element of the management of an organization (Dane & Pratt, 2007). There are five concepts of decision making process. These concepts are defined as, Alternatives, Interpersonal issues, Uncertainty, Complexity, and High risk consequences (Melé, 2010).
Among these different types of models or concepts three most widely used concepts of decision making are Decision making with high uncertainty, Decision making with high risk consequences, and Decision making with alternatives.
In this concept manager or decision maker has not much knowledge about the problem or any state of the decision like nature of outcomes or/and its cost efficiency in order to obtain required information to make a decision. Knowing the information requirement for the decision making process id the most essential thing managers have to be aware of. Lack of knowledge about this requirement creates a situation of high uncertainty for the mangers to make a right decision (Dane & Sonenshein, 2015). In such cases, nature of the decision made, merely depends on the personality of decision making authority or manager making that particular decision. In this type of situations decision analysis falls in the domain of two extreme cases that are pure uncertainty and deterministic. Between these two extremes decision making under uncertainty falls. This scale defines the level of uncertainty of managers or decision makers with different level of knowledge. Risk creates an uncertainty or an inability to control the result or outcome of actions taken under the decision made by the managers. Taking risks or eliminating the risk is an effort made by the managers to control the possible consequences of the decision outcomes. Risks are uncertain to predict or eliminate as any efforts made to control one risk may increase other risks at the same time. Good solutions are not easy without good alternatives. Although decisions are made for one option a number of alternatives make it easy to take the best decision for the situation. This concept of decision making explores the following Characteristics of good alternatives, Generating different sets of alternatives, Screening, Strategy development, Refining the alternatives. In this process various alternatives are analysed and the best suitable alternative for the situation is chosen (Noval & Stahl, 2017).
Concepts of Decision Making Process
The above discussion for the decision making process can be concluded as the power of decision making differs person to person. Although decision is taken by the individuals but to make complex decisions everyone need external help, this help may be in terms of decision making tools or heuristics. With the help of such tools decision making is quite easy and right decision can be taken easily with less efforts or risks. Different concepts of decision making process are significantly important while taking some big decisions.
This report is made to understand the decision making process of an real world case scenario in which company has made a decision based on three different concepts of the decision making process. This report explains the whole scenario of the organization for the decision to be made for its future growth. This decision made by the organization was based on these three heuristics or concepts like decision making under high uncertainty, alternative decision making, and making decision with high risk consequences (Walmart, 2018). As the above essay defines these three concepts of the decision making process based on these concepts the real world scenario is analysed in this report. As the above essay states that human mind is not capable of taking complex decisions at their own external elements in the form of alternatives or risks is discussed in the report. This decision of acquiring Flipkart, the giant online retailer, is of most concern for the shareholders of Walmart. According to McMillon, strong presence of Flipkart in the sectors like, electronics, fashion, and digital payment are the major factors influenced the decision of Walmart directors.
The decision is taken by Walmart, an American multinational retail corporation operating a huge chain of hypermarkets, grocery stores, and discount departmental stores. Organization is headquartered in Bentonville, Arkansas. Company was founded by Sam Walton in 1962. Organization also operates and owns Sam’s Club Retail Warehouses. By January 2018, company has 11,718 stores in 28 countries and operating these stores under different names. In the late 11980’s, Walmart was at number 3 position in United stated, it was more successful in terms of profit than its rival competitors like Kmart and Sears. Walmart business was increasing continuously for last few years (Walmart, 2018). In 2005 this success made it to the minds of company directors that company should plan for doubling its business by 2015 and as a result of its success and effective management company planned to do the same (Iyengar & Pham, 2018). In May 2018 organization has acquired the Indian origin online retailer Flipkart for 16 billion US dollars. This decision of acquiring the giant online retailer of Indian market Flipkart was of the most concern for the share-holders of the Walmart as the Flipkart was facing huge losses in the recent past years (Peerzada, 2018). According to McMillon, strong presence of Flipkart in the sectors like, electronics, fashion, and digital payment are the major factors influenced the decision of Walmart directors (Maitland & Sammartino, 2015). As Flipkart was experiencing a huge loss share-holders of Walmart were concerned about this decision of organization directors or managers. Therefore, it is observed that this is the biggest decision made by the managers. This decision was based on the below three concepts of the decision making (Suneera, 2018).
- In the very beginning it should be noted that according to the current situation of Flipkart, company managers should start thinking about the opposite decision favourable to the situation.While operating in different countries and working under different named company was making only money in the selected countries. Acquiring the Flipkart will be the first mover in Indian market. Moreover, the availability biased is referred to the bias decision making under which the decision made by the managers becomes biased by looking at the statistics of the market figure in terms of profitability and other numeric figures of the market segment. In the above scenario of the acquisition was evaluated as the managers or directors of the organization see a great future of Flipkart in the coming future. For this company wanted an advantage by acquiring the one of the biggest market in the target country with a great future with few management changes.
- In the process of decision making there are no certain methods to measure the availability bias, but this bias can be measures easily by the analysis of revenue generated by the organization. Higher the revenue generated by the organization, higher will be the availability bias for managers or decision maker to initiate the investment in such type of decisions.
- In the complete aspect of the decision scenario mentioned above, it should be noted that availability bias makes the decision effective to a little extent only. In order to overcome such type of bias company should not implement any strategy. This decision of acquiring Flipkart would be biases if the company would have not entered the Indian market through such a big opportunity or way directly.
- According to the future vision of the company the decision outcomes of are already discussed by the executives and managers.
- The term representativeness refers to the mental ability of a person to the shortcuts they form just by looking at the current circumstances of the scenario. Decisions biased on the events having f low probability fall under this process of decision making. Under this process initiation is taken only after assuring the presence of strong context for favourable to the decision (Maitland & Sammartino, 2015).
- This biased can be measured by the common methods used in the general market environment.
- Under this process organization should not consider their personal opinions for making decision. Company should analyse all the circumstances of the environment and events happening in the environment (Ford & Richardson, 2013). Only after that company should take initiatives for the decision process. As the acquisition of Flipkart is looking interesting to the directors but at the same time this decision is of the most concern for its shareholder as per the scenario of Flipkart in the present market. Managers of Walmart can take over the Indian online retailer but they should not lean their focus on other outlets or stores in different countries.
- This bias suggests that human minds are designed to satisfy rather than optimizing the scenario. People attempt to make decisions that are good enough rather the decisions which are best suitable for the organization.
- When it comes to the strategies, it should be noted that organization should look for the cost of opportunity of implemented action of the company (Sanayei Mousavi & Yazdankhah, 2010).
Conclusion
The above analysis of the decision making process concludes that the decision power is not same in human beings. They need external elements like different biases or heuristics for making a right decision. The above mentioned biases or availabilities, representativeness, and bounded rationality are significantly important for making decisions. The above mentioned report relates the decision implemented by Walmart with different heuristics or biases of the decision making process.
References
Ajzen, I. (2015). The theory of planned behavior is alive and well, and not ready to retire: a commentary on Sniehotta, Presseau, and Araújo-Soares.Health. Psychology Review, 9(2), 131-137.
Blumenthal-Barby, J. S., & Krieger, H. (2015). Cognitive biases and heuristics in medical decision making: a critical review using a systematic search strategy. Medical Decision Making, 35(4), 539-557
Dane, E., & Pratt, M. G. (2007). Exploring intuition and its role in managerial decision making. Academy of management review, 32(1), 33-54.
Dane, E., & Sonenshein, S. (2015). On the role of experience in ethical decision making at work: An ethical expertise perspective. Organizational Psychology Review, 5(1), 74-96.
Ford, R. C., & Richardson, W. D. (2013). Ethical decision making: A review of the empirical literature. In Citation classics from the Journal of Business Ethics (pp. 19-44). London: Springer.
Iyengar, R., & Pham, S. (2018). Walmart is buying India’s Flipkart. Retrieved from https://money.cnn.com/2018/05/09/investing/walmart-flipkart-india-softbank/index.html
Maitland, E., & Sammartino, A. (2015). Decision making and uncertainty: The role of heuristics and experience in assessing a politically hazardous environment. Strategic Management Journal, 36(10), 1554-1578.
Melé, D. (2010). Practical wisdom in managerial decision making. Journal of Management Development, 29(7/8), 637-645.
Noval, L. J., & Stahl, G. K. (2017). Accounting for proscriptive and prescriptive morality in the workplace: The double-edged sword effect of mood on managerial ethical decision making. Journal of Business Ethics, 142(3), 589-602.
Peerzada, A. (2018). Walmart buys 77% stake in Flipkart. Retrieved from https://www.thehindu.com/business/Industry/walmart-buys-major-stake-in-flipkart/article23822890.ece
Sanayei, A., Mousavi, S. F., & Yazdankhah, A. (2010). Group decision making process for supplier selection with VIKOR under fuzzy environment. Expert Systems with Applications, 37(1), 24-30.
Suneera, T. (2018). Walmart on the Flipkart deal: “If it had been a smaller market, we may have passed”. Retrieved from https://qz.com/1296941/what-walmart-was-debating-before-buying-flipkart/
Walmart, (2018). Walmart. Retrieved from https://www.walmart.com/
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