SHAHEENA HAFEEZ
MSMS011
QUESTION# 01
Discuss what is meant by the term 'decision making'. Identify types of business decision
and classify the decision discussed within this case study.
Decision making is the process of making choices from amongst several options. Decisions
are made at all organizational levels – from strategic to operational.
Decisions may be classified or categorised in many ways such as by the
organisational level and the degree of structure to the decision i.e. repetitive, routine,
and require judgments.
Some decisions are semi structured - in such cases, only part of the problem has a
clear-cut answer, provided by an accepted procedure. Decisions (selecting the right
action from a series of choices) can be structured (decision rules are known) or
unstructured (not known – highly uncertain/ ambiguous situations) and may be made/
taken at a variety of levels (operational/ tactical/ strategic) within the organization.
In the case of structured decision making the organization may formulate decision/ business
rules specifying what action is required in a given situation.
OPERATIONAL DECISIONS tend to be structured, frequent with more certainty, often
relying on data/ information from within the organization.
STRATEGIC DECISIONS on the other hand are unstructured, made less frequently and
may use more information sourced form outside the organization. In this case the decision is
strategic, non-routine, semi structured, with no clear cut answer.
QUESTION#02
A variety of models and processes have been offered to suggest ideally how people
should or describe how they actually do make decisions. Some writers discuss rational,
bounded rational and intuitive or value‐based models. Describe and discuss the models.
A variety of models and processes have been offered to suggest ideally how people should or
describe how they actually do make decisions. Some writers discuss rational models where
decision makers adopt VALUE MAXIMISING CALCULATIONS and pursue alternatives
that best meet organisational goals, whilst other writers recognise real-world situation and
cognitive decision maker constraints where rationality may be bounded. The rational model
(problem structuring, search for alternatives, gather data about alternatives, evaluate
alternatives and select, implement and monitor), has a number of inherent weaknesses. For
example, it is rarely possible to consider all alternatives since there are too many and some
alternatives will not have occurred to the decision maker. It may be impractical to consider all
consequences and accurate information may not be available; furthermore, generated or
purchased information has a cost.
Consequently, decisions are often made on incomplete, insufficient and only partially
accurate information. Finally, decision makers as individuals may lack the mental capacity to
store and process all the information relevant to a decision and frequently lack the mental
ability to perform the mental calculations required.
DESCRIPTIVE MODELS
Descriptive model of decision-making investigate how individuals actually make decisions.
Each decision made by an individual or group is affected by a number of factors. These
include: individual personality and values, group relationships, organizational power
relationships and political behaviour, external environmental pressures, organisation strategic
considerations and information availability (or lack of). Bounded rationality refers to
individuals making decisions by constructing simplified models which extract the essential
features from problems without capturing all their complexity. Research suggests that
decisions may be subject to bias (prejudiced predisposition or a systematic distortion caused
by the application of heuristics - simple rules used to solve problems). With turbulent
environments there is greater uncertainty and a lack of information available for decision-
making.
Consequently, rational decision-making may be seen as more appropriate in a stable
environment whereas intuitive and subjective decision-making may dominate in turbulent
environments. A similar issue concerns the programmability of decisions. Routine decisions
are made according to established procedures and rules whereas adaptive decisions require
human judgement.
QUESTION# 03
Discuss the decision making process in this case study: was it rational, bounded
rational, intuitive, subjective/value based?
Some combination of all – rational consideration of costs, balanced with a value-based need
not to deviate from custom (culture of job security).
QUESTION# 04
List/ summarise the factors influencing the decision at Southwest Airlines: what would
your decision have been?
Cost argument: Online bookings effectively disintermediate the call centre and reduce the
need for HR; excess HR are an unnecessary cost
Strategy Argument: southwest is a large low-cost airline. Airlines rely on key inputs such as
aircraft, fuel and labour in order to operate. Like any airline it is sensitive to jet fuel prices
and other operating costs.
Culture argument: An established practice of job security Students may also consider the
choices -Do nothing -Forced redundancies and closure of X call centres/ forced relocations --
Voluntary (incentivised but potentially costly) or no redundancy and natural attrition and/or
voluntary relocation
