Decision Making In Business: A Summary
Organizations are involved in decision making process in order to direct their course of action and achieve maximum profit. Individual with the authority and power make rational decision depending on the predetermined organizational goal. They have little or no interference in the process of making decision from the stakeholder, because individual s is expected to apply bounded rationality.
The bounded rationality is where an individual is guided by their knowledge and information they have about the organization, and their cognitive ability about the estimated outcome of each alternative possible solution they have to consider in order to make a decision.
The list of individual preferences and the constraints facing the process are considered when coming up with the best alternative or choosing the course of action. As argues by Miller (1996, p.80), individuals will choose the solution to a problem that maximizes profit for the organization. However, this choice is affected by issues of personal interest among those with the power and therefore only a negotiated choice is taken through the process of problem solving.
The process of decision making is faced with limitation especially in situation where an action is taken before the decision is made. There also have been inconsistencies between the strategic plan and the operation level, the decision of who to involve, where and to what extent leaves out key individuals in the process of making decisions.
Where there is no demarcation of power, the situation is even worse. Therefore, there is need to define how the decisions making process will be, before the time for making decision emerges.