Strategic Management: "Why good leaders make bad decisions"

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Running Head: DECISION MAKING

Decision Making

Introduction
Decisions describe the process by which a course of action is selected as the way to deal with a specific problem. People at all levels in an organization are constantly making decisions and solving problems. For managers, the decision making and problem solving tasks are particularly important aspects of their jobs as with their single decisions that may confront a transformation and on the other hand if wrong decision is made the organizational value may get destroyed.
Whether the problem confronted by organizations is large and small does not matter as it is usually the manager who has to confront it and decide what action to take. Managers make decisions dealing with both problems and opportunities (Luthans, 1998). For example making decisions about how to cut costs by five percent reflects a problem whereas the managers also has to make decisions when there is an opportunity that can be exploited. If the firm has surplus funds, the manager has to decide whether the extra funds should be used to increase shareholder dividends, reinvested in current operations, or to expand into new markets.
In all these decisions it particularly depends upon the decisions undertaken by managers and executives if they took an appropriate decision it will directly or indirectly add value to the company and if decision undertaken is not correct may direct towards loss and destroy of the company image (Luthans, 1998). In present we can see a number of companies that had taken some right and some wrong decisions due to which some of them had attained prominent position whereas some of them had lose their position.
This addition of value and occurrence of loss on the basis of decisions we can confront that decision making is of significant importance for mangers' which are as follows:
? Managers who make use of rational, intelligent and systematic approach are more likely to come up with high quality solutions to the problems they face than the ones who do not use this approach.
? Rational decision makers have a clear understanding of alternative courses of action to accomplish a goal under a particular set of circumstances.
? Rational decision making is based on the information available with the decision makers and their ability to evaluate alternatives (Harris & Hartman, 2001).
? Decision making aims at deciding the best solution by selecting the alternative that most effectively facilitates goal achievement.
With this significance of decision making we can confer that the success and failure of an organization particularly depends upon the decisions of its owners and managers. This concept of "how decisions add or destroy value in organizations" can be understood prominently by analyzing the examples of some companies that made bad decisions in their business context and generated losses.
Examples of Bad Decisions
Bad decisions undertaken in businesses are numerous, that cannot be counted is someone tries to count. All the business that had encountered failure is just because of their bad decisions they had made in regard to their business operations. Decision making is an important and a difficult task for an individual. It is because; an effective decision making can transform a poor decision because of the change in the events. The decisions are based on predictions, but one cannot be sure about the effectiveness and the desired outcome from the decisions.
Decision making is a yardstick that renders organizations with a path to lead ...