Advantages And Limitations Of Rational And Ethical Decision Making Models

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Advantages And Limitations Of Rational And Ethical Decision Making Models

Introduction

Decision making models are the frameworks that allow organisations to understand the issues and take systematic decisions after reviewing the whole situation or scenario. Different businesses can adopt diverse range of decision making models depending upon the objective and the kind of problems they are facing. The significance of decision making style is high on the growth perspectives of organisations and it determines the level of understanding among the companies regarding the nature of their business (Verma, 2014). The decision making should always involve various dimensions so that the final decision can become effective and efficient with regarding to addressing the identified issue or problem or initiating the changes (Patrick, Steele, & Spencer, 2013). In the current scenario, the decision making models applied in the organisation in different contexts are analysed and presented. The case study of several organisations and the impact of selected decisions on organisations, in terms of advantages and disadvantages, are analysed in the present report. The selected models are rational decision model and ethical decision making model and the discussed companies are Starbucks and Nestle.

Case study

Two cases taken in the present scenario includes the description of Starbucks and the rational decision making model is understood with the help of selected organisation. The case is that Starbucks have large amount of customer base and coffee industry is facing lots of competition from the rivals and as well as from the alternatives. Just to deal with such situations, the big data is incorporated for rational decision making to keep customer retained and satisfied with the services and product line. Aligning with the customer centric approach is essential for organisations to become highly effective and for the same purpose the role of rational decision making model is put into application.

Secondly, the ethical decision making model is applied on Nestle especially the way it incorporate effective decision making in improving its image, establishing better external communication and strengthening the positioning. Nestle deals in different kind of product range and to increase its market base adopt several strategies which sometimes raise questions on it ethical values and responsible business behaviour. The application of ethical decision making model can help in understanding the problems associated to Nestle and solutions to overcome the identified issues. Thus, the technicality of decision making along with the application and advantages are discussed below.

Two Decision model: Application

The application of decision model largely depends upon the identification of root cause behind the problems (Abubakar, Elrehail, Alatailat, & Elci, 2019). If one is clear with the business then its application become effective in generating the right kind of sustainable solutions. Managers need to understand the consequences of decisions on the identified problem and accordingly the internal strength could be increased (Neguluscu & Doval, 2014). Every model has its own advantages and contributions in shaping the decision making of the business entities. In order to get the leverage or ideology behind the model, firstly the problems should be identified, its root cause should be known and afterwards the model can be put into application.

Rational decision making model

In this decision making model the companies take decision in a very practical manner and focuses upon the gathering of required information to improve decision making. In rational decision making, the whole focus is paid on the immediate issue an organisation is facing and identifies the best possible solution without deviating from the objectives of the business entity. In modern society the decisions taking process is quiet complex activity which needs different activities and solutions to ensure the effectiveness of decisions (Chiheb, Boumahdi, & Bouarfa, 2019). Starbucks have incorporated the application of big data technology to strengthen the rational decision making model. The elements to be considered in rational decision making model are intelligence, design, choice, and implementation. Big data is a technology where the collection, storage and management of diverse range of data become simpler process and then it can be blend into decision making. To ensure the positive impact of the decision, the alignment between these three activities is required. On the basis of gathered information, several other kinds of alternatives could be identified and then their feasibility could be linked with the possible consequences. Thus, the intelligent phase means knowing, design phase means identifying the alternatives and then comes the choice phase which should be linked with the objectives. Starbucks is one of the large organisations all over the world known for its best service quality and product range. In the intelligence phase, Starbucks gathered information from different sources like Twitter, social media, reading cookies and analysing the search patterns; it all happens with the help of big data (Chiheb, Boumahdi, & Bouarfa, 2019). Once the data is gathered then the cited organisation determines its strategies on the basis of assessment of customer behaviour. Starbucks is incorporating technology in every aspect of business and most importantly, it is integrating various disciplines so that the advantage of technological advancement can be gained. Furthermore, the strategies are designed in the direction of designing new products, adding ingredients which are healthy and contain nutritional values.

Ethical decision making model

Ethical decision making model is the one where companies show commitment to comply with ethical responsibilities and dont pay much attention to ethical dilemma in taking the final decisions. The ethical decision making is the one where managers do best for the stakeholders and focus on transferring benefits to all the parties by its decisions. This decision making model is highly popular among the companies to ensure their sustainability and ensuring high level positive perception towards the brand. It is being identified that the ethical decision making model ensures the interest of public as well as several other stakeholders. Nestle, faced criticism during the baby formula promotional controversy and found troubles in maintaining its brand image (Fraustino & Kennedy, 2018). A study revealed that the role of crisis communication management technique is high in evolving the ethical decision making model (Fraustino & Kennedy, 2018) . It shows that when companies ignore to be ethically driven organisations and crisis happens then such technique should be mixed with the ethical decision making model. There are three stages of crisis communication which include pre crisis, crisis and post crisis stage. In Nestlés case it was found that it was involved in unethical promotion of its baby formula product in developing nations. The cited organisation was involved into unethical practices to allure people to buy such product. Nestle hired female employees who were dressed in nursing dress while marketing the product. It creates the impression among the customers that the baby formula is recommended product by the doctors which was actually a part of manipulation marketing. It become one major activities termed as unethical (Fraustino & Kennedy, 2018).

The problem becomes worse when the infant started to die or become ill due to the properties of baby formula and the way it should be used. It creates negative business environment for Nestle and when the cited company was asked about its practices, it remains hostile. It even leads towards the boycott of the brand and cost 1.5 billion dollars (Fraustino & Kennedy, 2018). Thus, the whole scenario suggests that in effective decision making the assessment of scenario is needed. The ethical decision making model also rely upon the proper communication where the involvement of companies in spreading information should be high. With these efforts the situation could remain under control and positive results could be obtained. The situation of ethical dilemma is also real for the companies where sometimes manager found it tough to segregate the ethics, profits and values and take wrong decisions which affect the image of an organisation.

Advantages and limitations

Rational decision making model is highly advantageous in terms of assessing the situation first and then taking the decisions (Uzonwanne, 2016). The rationality of the situations should always be known to the organisations so that the right framework for the decision making could be designed. The chances of errors could be reduced, lead towards the informed decisions, and allow understanding all probabilities and possible consequences. This kind of decision making tool generally takes time and prevents managers to take quick decisions. Under such circumstances, sometimes the problems gets bigger and organisations face serious consequences (Julmi, 2019). With the big data technique, Starbucks successfully understand its customer behaviour and take right decisions in positioning its brand. The determination of product development, coupons and discounts and personalisation become stronger due to rational decision making through data storage and analysis. Only limitation of using big data in rational decision making was associated with data sorting and the cost associated with the same. The technology, human expertise and time all should be available in abundance to generate perfect blend between big data and rational decision making for Starbucks.

The advantage of ethical decision making model is that in the current scenario where sustainability is highly required; ethical decision making allow ascertaining all the possible consequences of business environment. Further, the companies nowadays are looking for the building positive relationship with the customers and other stakeholders (Alvani & KarimiJahromi, 2016). Now, if the ethical decision making is put into application then it allow gaining the trust of stakeholders and confidence of customers towards positive and long term relationship. The ethical decision making model allows identifying the loopholes in value system of companies and accordingly the changes in decision making could be introduced. The limitation of ethical decision making model is that the level of dilemma in profit making and brand building remains very high. Maintaining the profits is also a challenge in front of the companies which should not hamper the ethical business activities; thus, this dilemma is one major problem. The managers also dont have enough knowledge and training to handle the ethical decision making and they show more inclination towards the profit making approaches (Selart & Johansen, 2011). Thus, with these limitations the application of ethical decision making gets affected. Nestle failed to comply with these principles of ethical decision making and only focus towards the profit minting approach. It works for Nestle in the beginning but later on the hefty penalty of 1.5 billion dollars and loss of reputation affects its market image at global level.

The findings of the entire discussion suggest that no matter what decision making model is applied by the organisations, the reasons and the consequences should be identified in detail. Starbucks realises that the competition is on height and it decide that it should understand the consumer behaviour in order to gain competitive advantage. To comply with the same, technique of big data was applied by Starbucks. On the other hand, the problem of Nestle was the distorted brand image or reputation after involving into the unethical practices. Thus, to deal with the same Nestle inclined towards the ethical decision making model. It brings improvements in its external communication tactics and spent heavily in winning the confidence of stakeholders by showing commitment towards the ethical values.

Conclusion

On the basis of above discussion, it become clear that the decision making techniques are wide in nature but the kind of issues an organisation is facing should determine the application of decision making model. Here the rational decision making and ethical decision making model is applied on two giants Starbucks and nestle respectively. It is found that Starbucks is gathering relevant information of the market situation to take rational decisions to improve its business. It is relying on big data techniques to gather the required information and designing better strategies. Furthermore, Nestle skip the basis component of ethical decision making model i.e. communication. Nestle found itself stuck in the unethical practices and faced criticism and still show casual behaviour towards the situations. It leads towards the boycott of Nestle and result in decline in profits. Thus, an effective decision making model largely depends upon the transparent communication and gathering relevant information. These models should be integrated well with organisational issues and the objectives companies want to be served from these models.

References

Abubakar, M. A., Elrehail, H., Alatailat, M. A., & Elci, A. 2019. Knowledge management, decision making style and organisational performance. Journal of innovation and knowledge , 4 (2). pp. 104-114.
Alvani, S. M., & KarimiJahromi, S. 2016. Ethical decision making in issues management. IOSR Journal of humanities and social sciences , 21 (7). pp. 34-39.
Chiheb, F., Boumahdi, F., & Bouarfa, H. 2019. A new model for integrating big data into phases of decison making process. Science direct , 151. pp. 636-642.
Fraustino, J. D., & Kennedy, A. K. 2018. Care in crisis: An applied model of care consideratins for ethical strategic communication. Journal of public interest comunications , pp. 1-23.
Julmi, C. 2019. When rational decision-making becomes irrational: a critical assessment and re-conceptualization of intuition effectiveness. Business research , 12. pp. 291-314.
Neguluscu, O., & Doval, E. 2014. The quality of decisions making process related to organisations effectiveness. Procedia economics and finance , 15, pp. 858-863.
Patrick, J. H., Steele, J. C., & Spencer, M. S. 2013. Decision making processes and outcomes. Journal of aging research , pp. 1-7.
Selart, M., & Johansen, T. S. 2011.. Ethical decision making in organsiations: The role of leadership stress. Journal of business ethics , pp. 129-143.
Uzonwanne, F. 2016. Rational model of decision making. In Global Encyclopedia of Public Administration, Public Policy, and Governance (pp. 1-6). Ede: Springer.
Verma, D. 2014. Study and analysis of various decision making models in an organisation. IOSR Journal of business and management , 16 (2). pp. 171-175.

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