$1.$ Rational Perspectives on Decision Making

Read the Management at Work scenario below. Then use your understanding of rational decision$-$making process to answer the questions about it$.$

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Management at Work

Gingerforge is a local company that manufactures wrought$-$iron garden gates. You recently ran into Paula, the CEO of Gingerforge, at a Chamber of Commerce event. Paula asked for your advice on an important decision: Should Gingerforge expand its product line to include patio furniture, such as benches and tables? The CEO explained that Gingerforge just learned that its main competitor plans to start selling patio furniture next spring. Paula knows you have experience with different decision$-$making perspectives. Can you help her make the best decision possible?

First, you explain the rational decision$-$making process to Paula by outlining the steps typically followed by effective decision makers.

In the following table, identify the order in which these steps are usually taken.

Decision$-$Making Steps

Order

Select the best alternative.

Define the decision.

Identify the alternatives.

Implement the chosen alternative.

Evaluate the alternatives.

Evaluate the results.

After you review the six steps with Paula, she asks for an example of how to identify alternatives as she decides whether Gingerforge should start manufacturing patio furniture. Which of the following is the correct example to give to Paula?

Paula would assess each option in terms of feasibility, satisfactoriness, and consequences; she will want to consider how difficult or costly each option would be to implement and whether each option would provide a satisfactory financial return.

Paula would make a list of actions Gingerforge might take, such as leaving its product line as it is$,$ adding patio furniture, or deciding to enter some other niche market $($such as manufacturing wrought$-$iron bird cages$).$

Paula would articulate the specific issue to be decided: whether Gingerforge should add wrought$-$iron patio furniture to its product line.

Paula would decide that Gingerforge should keep its product line as it is to avoid the financial risk of making new products that may not sell, if its priority is to strictly adhere to its current budget and the company is risk averse.

While Paula likes the structure provided by the rational decision$-$making process, you caution her that it has some shortcomings. Why is the rational decision$-$making process difficult to apply completely in many situations? Check all that apply.

Managers cannot always obtain complete and accurate information.

Managers are limited by their values and unconscious beliefs.

Managers do not always evaluate situations rationally.

Managers usually have the resources to consider numerous alternatives.