MGT422 Module 1 Background And Introduction To Decision Maki

Mgt422module 1 Backgroundintroduction To Decision Makingrequired Mat

Identify and explain the concepts of rational and intuitive decisions. Understand the distinction between tactical, strategic, operational, programmed, and non-programmed decisions. Apply rational models of decision making to real-world problems.

Paper For Above instruction

Decision-making is a fundamental aspect of management that influences organizational success and efficiency. Understanding the types and models of decision-making enables managers to select appropriate approaches for different situations. This paper examines the nature of strategic versus operational decisions, programmed versus non-programmed decisions, and the roles of rational and intuitive decision-making, applying these concepts to the case of Qantas’ potential sale of its frequent flyer program.

Strategic versus Operational Decisions

Strategic decisions are high-level choices that set the long-term direction of an organization, often involving significant resource commitments and affecting overall organizational priorities. In contrast, operational decisions are routine choices necessary for daily functioning and typically have shorter-term implications. According to Moshal (2009), strategic decisions involve assessing the external environment and internal capabilities to decide on the organization’s future course, such as whether to sell a key asset like Qantas’ frequent flyer program. Operational decisions, on the other hand, focus on implementing strategies and managing day-to-day operations, like customer service procedures or scheduling flights.

In the context of Qantas, the decision to sell the frequent flyer program is primarily strategic because it pertains to the long-term positioning and financial health of the airline. Selling the program could reshape the company’s revenue streams and competitive stance, thus fitting a strategic decision’s profile. However, if Qantas were to decide on minor adjustments within the program’s management or loyalty policies, these would be operational decisions.

Programmed versus Non-Programmed Decisions

Programmed decisions are routine and repetitive, often supported by established procedures or policies, making them relatively easier to automate or handle uniformly. Conversely, non-programmed decisions are unique, complex, and often non-routine, requiring tailored problem-solving approaches. Moshal (2009) emphasizes that non-programmed decisions typically involve unfamiliar situations with uncertain outcomes, necessitating novel solutions.

The decision of whether to sell Qantas’ frequent flyer program is a non-programmed decision due to its uniqueness and complexity. It involves assessing financial implications, brand impact, customer loyalty, and long-term strategic positioning. Since there is no predetermined procedure to handle such an unprecedented decision, it requires comprehensive analysis and customized judgment. Routine decisions like managing flight schedules or handling passenger complaints are examples of programmed decisions in airline operations.

Rational versus Intuitive Decision-Making

The distinction between rational and intuitive decision-making lies in the approach's basis: rational decisions rely on systematic analysis and objective data, while intuitive decisions depend on subconscious judgment, experience, and instinct. Moshal (2009) delineates these as opposite ends of a decision-making spectrum, with the rational approach emphasizing logical steps and evidence-based evaluation, and the intuitive approach drawing on managers’ tacit knowledge and gut feelings.

Applying these to Qantas’ situation, a rational approach would involve detailed financial analysis, market research, risk assessments, and scenario planning before deciding to sell or retain the frequent flyer program. For instance, analyzing the potential revenue from selling the program against the potential loss of customer loyalty and brand value aligns with rational decision-making. Conversely, an intuitive approach may see CEO Alan Joyce rely on his experience and instinct about the airline industry’s future, trusting his judgment on whether the sale aligns with the airline's strategic vision despite incomplete data.

Recommended Approach for Decision Making

Given the gravity and complexity of the decision, a rational decision-making process is advisable for Joyce. A systematic approach includes:

1. Identify the problem or decision: Recognize the financial distress facing Qantas and the potential sale of the frequent flyer program as a strategic solution.
2. Gather relevant information: Collect data on financial performance, customer loyalty metrics, market conditions, and competitor actions. Research potential buyers and the long-term impact of the sale.
3. Develop possible options: Besides selling, consider options like restructuring costs, alliances, or diversifying revenue sources.
4. Evaluate alternatives: Use quantitative models to analyze financial outcomes, scenario analyses for market reactions, and risk assessments to evaluate the pros and cons of each option.
5. Choose the best alternative: Based on evidence, select the option that maximizes long-term value while minimizing risks, which may include retaining the program or selling it with restrictions.
6. Implement the decision: Formulate an action plan, assign responsibilities, and communicate the strategy to stakeholders.
7. Monitor and review: Establish metrics to evaluate the decision's impact and adjust strategies as needed.

This structured process aligns with Moshal’s (2009) rational decision-making model, emphasizing information gathering, analysis, and systematic evaluation.

Decision-Making Style: Rational or Intuitive?

Alan Joyce’s six years of experience in the airline industry suggest that he would benefit from employing a rational approach, particularly in assessing a complex, strategic decision like selling the frequent flyer program. His familiarity provides a solid foundation for systematic analysis, data-driven evaluation, and scenario planning, which are central to rational decision-making.

However, even experienced managers incorporate intuition, especially when data is uncertain or incomplete. Joyce’s gut feeling about the market’s direction and confidence in his understanding of customer loyalty could complement rational analysis. Nonetheless, given the seriousness and potential long-term impact of the decision, a rational approach provides a more structured and justifiable framework.

For a new CEO from another industry without industry-specific experience, relying more on intuitive decision-making might be tempting due to unfamiliarity with the airline sector. However, Moshal (2009) advocates that unfamiliar decision-makers should favor rational processes, including comprehensive information gathering and analysis, to compensate for their lack of industry-specific intuition and reduce cognitive biases.

Conclusion

In conclusion, the decision to sell Qantas’ frequent flyer program is primarily a strategic, non-programmed decision requiring a systematic, rational approach that includes detailed data collection, evaluation, and careful planning. While intuitive judgment can complement rational analysis, especially for experienced leaders like Joyce, the complexity and significance of the decision warrant a structured, evidence-based process to ensure sound judgment and the best long-term organizational outcomes.

References

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• Kourdi, J. (2011). Effective Decision Making: 10 Steps to Better Decision Making and Problem Solving. London: Marshall Cavendish International.
• Moshal, B. S. (2009). Principles of Management. New Delhi: Global Professional Publishing Ltd.
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