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CorporateStrategyandDecisionMaking
Lecture3:RationalandAdministrativeModelsofDecision
Therationaldecisionmodel
Undertherationalmodelofdecisionmaking,theassumptionismadethatparticipantshaveagreedinadvancethatmakingadecisionistherightprocesstofollowandthattherulesandlanguageofdecisionmakingareunderstoodbyall.Therationalmodelaimsatmakingoptimaldecisionsonthebasisofacarefulevaluationofalternativecoursesofaction.Dependingonthecomplexityoftheproblem,computationalorquantitativetechniquesmaybeusedtoassistthisprocess.Themodelisclaimedtobethebasisofmuchdecisionmakinginprivateandcommerciallifeandiseffectiveundertheconditionsitassumes:afinitechoicesituation,relevantandunproblematicdata,andclearanduncontroversialchoicecriteria.Themodelviewsthedecision-makingprocessasasequentialseriesofactivitiesleadingfromaninitialrecognitionofaproblem,throughthedelineationandevaluationofalternativecoursesofaction,andtheselectionofthepreferredalternative,totheimplementationofaction(Dawson1986:182;Minkes1987:37–8).Thissequentialprocessisdepictedbelow(figure14.2inthetext).

Considerthedecisionprocessesinvolvedinthechoiceaboutwhichoftwonewproductsshouldbelaunched.Iftheagreedobjectivewasprofitability,rationalistswouldsaythatitisarelativelystraightforwardproceduretoestimateincomesandexpendituresassociatedwithbothproposedproductsandtodeterminethepreferredalternative.Inthesecircumstances,decisionmakingbecomeslargelyamatteroftechnicalexpertise.Wherethereareadequateinformation,clearchoicecriteriaandagreedgoals,thentherationalmodelissaidtoworkwell.However,notalldecisionsituationsareasclearcutastheexamplesuggests,andtheassumptionsindicatedabovecannotalwaysbepresumed.
Onemajorassumptionisthattherationalapproachprovides‘onebestway’toreachdecisions.However,theadvocatesoftherationalapproachpaylittleheedtotheorganizationalcontextofdecisionmaking.AspointedoutbyHicksonetal.(1986),thiscontextinfluencesthewayproblemsaredefined,informationgatheredandchoicecriteriaformulated.Theuseoflogicalframeworksandquantitativete