Rational vs. Intuitive Decision Making

Rational vs. Intuitive Decision Making

Rational Decision Making

Analytical thinking involves a decision process that factors in the analysis made from a logical point of view (Malewska, 2019). It, therefore, means that the decision is based on facts. Rational decision making arises from a need to provide a solution to an existing issue/problem. Concerning the Qantas Airline dilemma faced by the CEO, a rational decision would involve analyzing facts related to the possible sale of the frequent flyer program. The sale of the program would result in a financial turnaround which the company currently needs. In this regard selling the program is would be a rational decision.

Intuitive Decision Making

It involves making a decision based on a hunch that cannot be put into words or described (Malewska, 2019). The expectation that the sale of the program would eventually negatively affect the company could be based on intuition. There is no evidence that sale would be the wrong choice in the future. In this regard, the anticipation would be based on outcomes that would have been experienced by other companies.

A decision made by the CEO to sell the program to make the financial turnaround would be deemed factual as it would involve actual financial figures indicating growth. Not selling would likely be based on intuitive decision making that would include a hunch foreseeing future issues associated with the sale. Good decision making has to factor in both intuitive and rational thinking. While facts are the solid base that determines a decision, a hunch/intuition is equally important. Even though it cannot be described or quantified, its existence affects the outcome.

Non-programmed Vs. Programmed Decision Making

Programmed Decisions

These involve structure and repetition. A programmed decision is made based on the previous solution (Wroblewski, 2019). In this regard, it can be delegated to senior and junior employees, depending on the type of decision in question. Companies have decisions that require a specific outcome. The Qantas situation is not a common issue and, as such, cannot function under a programmed decision. The issue at hand involves the sale of the frequent flyer program. The problem is not only new but is also critical since the company is in a financial crisis. The company has not been in a similar situation previously; hence both the issue and decision are not programmed. A programmed decision would dictate what the company is expected to do in such a situation. A programmed decision rides on a recurrent or previous problem, and the solution sought thereof. The issue at hand is neither frequent nor past; hence an earlier decision is nonexistent.

Non Programmed Decisions

These are, on the other hand, unexpected and new hence do not require a predetermined decision (Wroblewski, 2019). In this regard, the Qantas Airline situation is unique, therefore needing decision making probably not done before. The issue at hand is dire and critical and, as a result, could determine the future of the company as far as its existence is concerned. Decision making in this regard would be based on a solution whose intention is to keep the company not only afloat but profitable as well. A non-programmed decision is thus required and requires top management decisions. It is in this regard that the CEO is involved in the decision making process on whether to sell or not sell the frequent flyer program, which is the most profitable for the company. A decision whether to sell or otherwise would be non-programmed regardless of the outcome.

Strategic vs. Operational Decision Making

Strategic Decision Making

It involves a long term planning process with a growth result in mind. The process consists of creating, planning, and updating a strategic management plan. The strategic decision making is thus based on where the business is currently and is going. Determining where the company should be in the future is also part of strategic decision making. Determining how the plan will be executed is the final step (Withaar, 2019). Business internal and external factors, however, determine all these factors. External factors such as customers, economics, and politics, for example, impact strategic planning. Internal factors such as finances and business culture equally affect the strategic decision-making process.

Qantas Airlines, in this regard, is currently in a financial crisis. However, the CEO wants to bring it out of the crisis and achieve profitability by selling its most valuable asset. The sale will have long term effects; hence the strategic decision-making process focuses on long term business outcomes. The CEO will have to factor in all the external and internal factors affecting the company while making a long term decision. Finances, for example, are an internal factor affecting the company. The economic status, which is an external factor, is also negatively affecting the company.

Operational Decision Making

It is short term and involves the process taken to actualize the long term (strategic) plan. The decision making process involves the ‘how’ of the growth plan (Withaar, 2019). Determining where the business is and needs to be is not enough. Determining what needs to be done is also not enough. Knowing how it is going to be done actualizes the growth plan. In this regard, Qantas is in a financial crisis that it needs to get out of. Selling its most valuable asset (frequent flyer program) is a possible way out of the financial crisis. However, the CEO is to actualize the plan by selling the program. The CEO is yet to decide whether to sell or not. Both choices will have an impact on the growth of the company both in the long term and short term. Selling the program is deemed a short term solution since it is likely to affect the company in the future negatively. It is, however, essential to note that the short term growth is definitive. The long term adverse effect is, however, not absolute as it is a likely scenario.

CEO Decision Outcomes

It is in this regard that the CEO is faced with a tough decision to make due to the two outcomes involved. Selling the program will have a positive financial impact on the company. The involvement of another company may not necessarily lead to future adverse effects as implied. The company is aware of the potential threat due to the exposure of its valuable customers to the other company. Since the danger is already foreseen, the company could come up with a possible solution to counter the outcome. Solutions, in this case, could include revising the company’s strategic growth management plan. The revision would thus include new short term and long term plans that would buffer the likely customer exposure. Selling the program may be deemed as a betrayal of company culture since the company is famous for its reward and loyalty program. It is, however, essential to note that the program would cease to exist if the company went under. Not selling the program though culturally logical, would be financially irrational. As mentioned earlier, it is vital to consider logic and intuition in the decision making process. The CEO would thus have to factor both aspects when making the non-programmed decision that would have both short term and long term effects.

References

Malewska, K. (2019). Rationality vs. intuition in the process of managerial decision making.

Retrieved 4 March 2020, from https://www.researchgate.net/publication/331375333_Rationality_vs_intuition in_the_process_of_managerial_decision_making.

Withaar, L. (2019). Difference Between Strategy & Operational Decisions.

Smallbusiness.chron.com. Retrieved 4 March 2020, from https://smallbusiness.chron.com/difference-between-strategy-operational-decisions-31075.html.

Wroblewski, M. (2019). What Is the Difference Between Programmed & Unprogrammed

Decisions From a Business Perspective?. Smallbusiness.chron.com. Retrieved 4 March 2020, from https://smallbusiness.chron.com/difference-between-programmed-unprogrammed-decisions-business-perspective-25876.html.