The Problem Defined
As a step towards better understanding the rational decision-making process, we will apply the model to a simple case. The case background is as follows, Hallidie Machinery Company is faced with having to cut costs and make internal processes more efficient. They recognize that they may need to downsize, perhaps by closing the satellite factory in Oregon. They must decide if downsizing is the right approach and consider the effects that it would have on the company as a whole. Often individuals are confronted with intricate problems with facts from a variety of sources. One must remember when defining the problem often the most apparent problem is only a symptom of the actual one.
Identify and Weigh Criteria
The possible justifications that could affect the decision to close the satellite branch are profitability and the ability to respond to upcoming environmental regulation changes in the state of Oregon. The current facility cannot meet newly established regulations established by current laws. The cost to modernize could exceed $250,000. This branch has failed to show a profit during the five years of operation.
Generating and Rating Alternatives
In order to make decisions, various alternatives must identified and the probable outcome of the alternative must be forecasted. The possible courses of action to solve the problem involve shutting down the factory or investing in the modernization of the current facility. By measuring how well each alternative will achieve the defined criteria, a decision can be reached. Since the factory has failed to show a profit and the costs of upgrading the facility are so high, the probability of success is poor.
Course of Action
After full consideration of the options is complete, the alternative with the highest value should be selected. Therefore, the Oregon factory should be shut down because it cannot meet environmental regulations without putting a severe financial strain on the overall operation of the company.
Evaluate Decision
Learning from the decision-making experience is an important part of this model. If a decision is not evaluated, and it is not a sound one, the same undesirable decision will be made in the future. In the instance of Hallidie Machinery Company, the decision to close the satellite operation was a wise one, eventually the whole company had to shut down due to regulations becoming even stricter and a declining economy.
Conclusion
This paper has emphasized aspects of the rational decision-making model. It is relevant in certain situations, but not in others. This model is a well established and efficient method that reduces the chance for subjectivity by determining the preferred criteria, assigning weights and totaling the weights, so the criterion with the highest weight is usually the recommended decision. Managers must be decision makers and problem solvers. To deal effectively with the problems associated with decision-making, decision-making models are necessary.
References
Dessler, G. (2001). Management: Leading people and
organizations in the 21st century (2nd ed.) [University of
Phoenix Special Edition Series.] Upper Saddle River, NJ:
Prentice Hall, p. 115.
