Annals Of Business Administrative Science -Myassignmenthelp.Com

Question: Discuss About The Annals Of Business Administrative Science? Answer: Introduction Decision-making is a crucial process of every manager and top management of an organization. The decisions that a company undertake determine the success or failure of that company. Decision-making process, however, is not an easy process and it involves a lot of uncertainty and risks (Sharma et al., 2014). As a manager, you need to make affirmative decisions regarding various issues affecting the business operations. Herbert A. Simon, in his book titled, Administrative Behavior, tried to explain how an organization can be understood based on its decision-making processes. His key point that was so clear was the importance of decision-making in business operations, and therefore, he termed decision-making process as the heart of any administration (Simon, 2013). Nevertheless, in understanding how an organization works, it is crucial to put into consideration various factors and variables that affect the decision-making process. As such, psychology and economic theory come into play. Human behavior as well organizational behavior determines the operations of a company (Forgas George, 2001). As such, while trying to understand, how decisions are made by the managerial team, it is essential to realize how human behavior influences the decision-making process. Various concepts have been documented that shed light on different decision-making tendencies and how we can overcome cognitive biases. This paper, therefore, discusses Simons quote from the Rationality and Administrative Decision Making-section, to System 12 thinking, Bounded rationality, Judgement Heuristics, and Judgement and decision-making process. It will further, use case study scenarios to show the application of these concepts in decision-making process Simons theory Herbert A. Simon has contributed significantly to the economic organization through his explanations of decision-making processes. Simons work particularly in his book, the Administrative Behavior is very comprehensive and at the same time complex. If not keen, one can miss the point he was trying to pass across. Simons theory is based on a rational, classical, and ideal model concerning human decision-making process (Simonsen, 1994). The rational model proposed by Simon does not exist in real life. Therefore, it has received criticism from various scholars. Simon knew this and he encouraged people not to criticize the model but to look at the larger picture. The problem most people encountered was to understand how organizations make decisions and thereby, be able to design organizations with total rationality. Rationality, however, is a variable that determines how organization make judgements, develop values and goals, gather information, and make decisions. In Simons quote, he expounded on the issue of applying rationality behavior in problem-solving (Sternberg Frensch, 2014). He stated that the humans mental capacity is tiny in tackling complex problems as compared to the weight that the problems carry. And the solution could only be found on objective rationality. Human rationality gives the administrative theory meaning, and if there were no practical limits to human rationality, then, Simons theory would lose meaning. These limits, however, are not static and they vary depending on organizations environment where decisions take place. The primary task of the administration of any organization is to create an environment that is very close to rationality (Scott Davis, 2015) hence allowing individuals to make their decisions. Making rational decisions involves making a choice and deciding to do a task with the aim of achieving a particular goal. Limitation of the human brain to handle complex matters as explained by Simon can be attributed to the environment that surrounds an individual. The surroundings entrap and catch them in the ambiance of stress, thereby limiting their thinking capacity. Normally, when a child is born, the mind is very fresh, and as John Locke, the philosopher calls it, a tabula rasa, meaning its a blank sheet (Eriksen Nielsen, 2017), with no contamination. As the child grows and attains maturity, level of understanding jets in and can distinguish right from wrong and make their own decisions. During this stage, there is the formation of complex concepts and theories and application of rationality behavior. Simon also gave his ideas on an economic man and administrative man. For an economic man, he represents the objective rationality (Brette et al., 2017). It comes with limitation s, however, such as values, habits, unconscious skills, reflexes, and purpose conceptions. Surprisingly, these factors make a person to lose track of the goals of the organization due to the openness of his mind and freedom to choose. By employing a rational mind, various alternatives are provided from which an individual can choose. However, in actual behavior, its only a few options that come to mind. Though Simon in his quote indicated that man is limited by his brain capacity to handle problems, he further gave the difference between an economic and administrative man. An economic man tackles the real world head-on with all its complexity as compared to an administrative man who selects the most crucial and significant problems (Takahashi, 2015). Contrary to his belief, the human mind is so diverse that they can be able to tackle any problem provided they decide to do so. An administrative man is keen in seeking and finding a satisfactory solution to a problem by finding the best alternative. This is what is required for decision-making process as it is always oriented to finding and choosing the best satisfying alternative. Bounded Rationality Bounded rationality was a concept that was introduced by Herbert A. Simon. He is referred to as the father of the concept and organizational/ economic theory. The concept explains that during the decision-making process by an individual, the tractability of the problem is limited by his/her rationality (Todd Gigerenzer, 2003), cognitive capabilities, and time available. The concept traces back to Simeons theory and quote, where he stated of the inability of a mans mind to solve complex problems. Cognitive limitations which are closely connected to the brain affects the decision-making process significantly. The individuals, therefore, act as satisfiers, that is the administrative man as compared to the economic man. He aims, therefore, at finding a solution that is satisfactory as compared to finding an optimal one. The minds of humans as to find a complementary means of covering their limitations. Structures of the environment such as structural regularity, therefore, helps the hum an minds compensate for the limited resources. Despite the fact that the concept is so much known, its applicability in real business organizations is very minimal. The concept is rarely used for substantive purposes and therefore, it serves a rhetoric function (Poli?, 2009). Compared to Simeons theory, its treated so thinly and has been described as the concept that has been cited broadly but obtained little use. Heuristics, however, are known to enhance the process of decision-making. Judgement and decision-making process Decision-making process requires sober judgment. The effective and efficient process is vital to the success of an organization. In every situation that careful judgment has to be passed by various individuals, the final decision is usually influenced to a certain extent by biases (Bazerman Moore, 2008). Overcoming such biases is essential in making better managerial decisions. In achieving the best result in the process of decision-making, three approaches have been postulated. The quantitative approach which is connected to Simons theory where an individual observes the problem and defines the scope and consequently formulates the hypothesis. The hypothesis is tested, sensitivity analysis conducted, and possible solution of the problem estimated. In this approach, its like they are describing the administrative man of Simeons theory. The second is the decision-centered approach which is based on the bounded rationality concept (Kaplan, 2013). It finds a satisfactory solution to a problem. It assumes that the business environment contains various variables and its not ideal. The final approach involves a group of managers in decision-making process hence known as managerial roles approach. System 1 2 Thinking Thinking is very vital in the decision-making process. Thinking originates from the mind. Therefore, if your mind is not fresh or its contaminated, you cannot think clearly and therefore, there will be biases in the views given during the process of making decisions. Thinking can be explained using two approaches. First, the intuitive approach (Simon, 1987), whereby an individual thinks very fast and secondly, the analytical or slow treatment, whereby an individual thinks slowly. According to Simeon, careful thinking is crucial in the decision-making process. However, despite the high chances, it does not mean such an individual will introduce lots of biases in the process. Nor, does it mean a slow thinker gives unbiased views (Bechara et al., 2000). The concept is connected with Simons theory since cognitive capabilities is a common aspect of these theories. Significance of the different concepts in decision-making These concepts play a significant role in the decision-making process. Bounded rationality, for instance, allows one to compute the optimal decision after defining the problem, identifying decision criterion, weighting the criteria, generating alternatives, and rating the alternatives on the selected criterion. By doing so, one can make the best decision based on the best alternative chosen. (KRoehrich et al., 2014). The concept of judgment and decision-making process gives one insight on how judgment can influence the process of making decisions. Through this concept, also it explains interventions that can improve ones judgment to enable one to make effective decisions (Stingl Geraldi, 2017). People have divergent judgment, and this explains why people give different views when deciding on tasks to undertake. Its also true why there are differences in organization decision-making process. Therefore, through coaching and training as well as an understanding of this concept, it helps sharpen peoples decision-making capabilities and their judgment. Stanovich and West (2000), gave a detailed distinction concerning System 1 and System 2 about to cognitive functioning. System 1 is the intuitive system that is very fast, implicit, automatic, and effortless. On the other hand, System 2 is a slower reasoning, effortful, logical, explicit, and conscious. People, therefore, tend to use System 1 as compared to System 2 and they end up making costly errors. Understanding the concept helps an individual to apply various strategies that ensure they shift from System 1 to System 2, hence avoid decision-making biases. For instance, replacing the intuition with better and formal analytic processes as well taking an outsiders perspective which in turn leads to an efficient decision-making process. Bounded Rationality Case scenario (EL Farol problem) Understanding how bounded rationality concept works, it is important to analyze a case scenario, where there is a real application of the theory. Therefore, this section will discuss the Neural-Evolutionary Learning process in a Bounded Rationality Scenario. Decision-making process is vital in every organization, and the bounded rationality concept plays a significant role in influencing the decisions made. The case scenario of the neural-evolutionary framework focuses on the market models simulations to enhance the process of making decisions (De Arajo et al., 2004) Every individual and agent involved in such a scenario, make use of the neural networks population to make an affirmative decision. In this case, the concept of bounded rationality was put into text in determining agents capable of applying the bounded rationality concept in the El Farol bar case study. The agents were given a chance to choose amongst the available internal set of fixed strategies to give their views on what they think would happen the following week to the attendance in the bar. Interestingly, some agents could only give the strategies that they selected while others were able to come up with new strategies. Such individuals who were creative and gave new ideas could be described to go beyond the concept of bounded rationality. Biases in the scenario and how to overcome The bounded rationality concept states that an individual is guided by his/her cognitive mind, time frame, and rationality in making decisions. To ascertain the working of bonded rationality all factors in the case scenario should be constant. However, the cognitive aspect differs and thats why the agents could give different views (Frederick, 2005). Mutation of some parameters usually affects the outcome of the decision-making process. Therefore, to overcome biases in the scenario, it is recommended to adopt the dynamic learning model as compared to static learning. In the dynamic model, the individuals are given freedom to learn new techniques that they can apply in the creation of new ideas and in sharpening their minds. Static model, on the other hand, gives the individual fixed choices to select from and thereby limiting their capabilities. Improving decision-making process Bounded rationality is widely used nowadays in economic scenarios for reasoning modeling. In cases where the bounded rationality is employed, the behavior of the agents differs significantly with situations where agents are rational. Implementation of the dynamic approach in economic situations allows the use of tractable and traditional techniques in behavior analysis. The decision-making process is also improved since the agents can have a different capability to make decisions. Judgement and decision-making process (Case scenario) Judgment making is very vital in the process of decision-making. The case scenario of this concept will focus on Managerial Judgement and Strategic Investment in decision-making. Investment is crucial to the growth and survival of an organization. There are three main themes concerning managerial judgment. These include the heuristics, consensus, and framing (Harris et al., 2009). The concept is linked to organizational behavior and cognitive psychology. Biases and means of overcoming The heuristics usually influences the judgment of individuals in making decisions as well as the psychological aspect. During the period of uncertainty, the human judgment could be biased substantially due to psychological influences (Riabacke, 2006). Framing, which is the second theme of the concept, is a form of a cognitive bias that is experienced during the decision-making process. It explains why decision makers in an organization differ greatly in their views when presented with the same basic information. When the same concept is framed differently, it usually reveals the cognitive bias to a greater extent, and people start giving very different opinions. The consensus, which is the third theme is concerned with the group dynamics and how managers and other decision-makers influence others. The managers have the power to influence others, and this could be a positive influence in leading them to make good decisions. Influence on decision-making process The case study focused on determining how judgment can affect the decisions in an organization. It was noted that, in any organization and for better strategic investment decisions (SIDS), sober judgment is critical. SIDs remains to be the most important decisions that managers can make. These decisions are majorly influenced by critical judgment and analyzing the situation correctly to achieve the desired results. Otherwise, poor quality decisions typically result to be disastrous to the organization and may also lead to its collapse. The scenario gives the stages of the SID process that are core in the decision-making process. It begins with the identification of the project problems and opportunities, formulating strategic options, generating data and shaping the way forward. It goes further in persuading the top management to make decisions which are in line with the organization goals. Strategic decision-making encompasses the cognitive processes and formal analytical models tha t play a key role in decision-making process. System 1 2 Thinking (Case scenario) In the application of System 1 2 in a real-world case, we shall look at the study case of how system dynamics and system thinking affects the decision-making process in an organization. In system dynamics, it tries to understand the world better by analyzing the alternative policies, dynamic behavior simulation, choice of policies and their implementation. System thinking usually does not have the discipline of creating an explicit model as well as its simulation. Therefore, it relies on the use of unreliable intuition in the evaluation of complex structures and system problems (Forrester, 1994). System dynamics use, and implementation is overgrowing over the recent years due to its applicability in real world. The process involves the description of the system, simulation of the model, designing of alternative policies, education and debate and lastly implementation of the policy changes. During a celebration at Harvard Business School for a major anniversary, System 1 and System 2 thinking was put into test. People were put into groups of 50 each, and they were to observe and analyze the program of a certain system dynamic model. Usually, people can either use system 1 or 2 while giving their views. For this group of people, it was not an exemption, and there were different opinions presented. Biases When faced with a task, an individual respond either by using System 1 or 2. In system 1, we respond quickly without thinking of the consequences. The reason why many people get answers wrong or make the wrong decision has been attributed to some extent to the fact that they use System 1. Although, System 1 use can be employed in situations where we are ambushed or faced with a situation that needs immediate answers. System 2 on the other hand, takes time to analyze the situation (Evans, 2003). In the case of system dynamics, biases were observed amongst the groups. Its interesting that the groups could give different views when they were all given an advance information about the system. One group correctly gave the right description, relevant policies as well as recommendations while the other gave inconsistent information. Significance to the decision-making process The manner in which we analyze tasks before making a decision is important in determining the outcome. Those two groups could be described as one using System 1 while the other System 2. Using System 2 guarantee more success as compared to System 1. Therefore, System 2 is usually described as rational, and it helps individuals to make better decisions since they take their time to analyze the situation fast. Conclusion Decision-making plays a vital role in the management of organizations in the modern world. Its through decision making that the actions of both the organization and managerial team can be accounted. Making a decision means there are alternatives and hence you choose from one. 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