observation review

Topics: Decision making, Flipism, Decision theory Pages: 9 (1500 words) Published: October 10, 2014

The Decision

In 2007, the commodity company which my father was working for made a decision that the traditional soap pack will be placed by a new one. This decision was made by the boss of my father. He listed a large number of statistical data and the increase rate of the market share of a competitor. The research results of people’s reaction to the new package is also being shown. He claimed that nowadays the package of that competitor is more popular among customers although it’s not very obvious, and their company cannot stop the increase of the market share of their competitor with only the budget of commercial expense and the extraordinary distribution system. But this research made by my father’s boss was not very well-proved because most of the people who take charge of the research were working on another program. Few month after, my father’s boss announced that the old package will fade out from the market permanently and it will be replaced by a new package. This news spread very quickly and my father’s boss said that the new package will change the bad situation. After that, there were a large number of people had a try on it. It seemed like the decision made by my father’s boss is always right because he is an old staff in this firm and he has decades years of marketing experience. But the situation didn’t last long. In the two weeks after the new package came out, the company research shown that the change of the package have a very bad effect on the sale of the product. All the factors shown that the company ignored the psychological impact of this change. Finally, my father’s boss got fired. (289 words)

Analysis of the Decision

According to the article, BOUNDED RATIONALITY, when people want to make a decision, they always want to make a right choice in a rational way. But the fact is that it’s impossible for people to make the rational choices all the time. Rationality failure happens when the decision-making environment is not match to the choices made by the people who made the decision, and this is what we called“bounded rationality showing through” (Jones, as cited in Simon 1996b). This idea are also hold by other authors. The article, managing under uncertainty, a qualitative approach to decision-making, states that people’s decision would be faultless and logical forever if all people were always rational. But the reality is that even the easiest decision has some factors which cannot be discovered. Even if all the information are available, we still cannot make sure that the way which we dealing with the data is 100% correct. According to this theory, in this case, the decision maker, my father’s boss, made the decision irrationally because the environment of decision-making is quite different with the decision he made. Customer’s behavior after the new package came out was quite different with his expectation. Fitzgerald (2012) claims that bounded rationality is a kind of method which take consider of many limitations. The first limitation is that the information cannot be collected completely and it won’t be 100% correct (Fitzgerald, 2012). In this case, the information which collected by my father’s boss might not accurate and this condition is an important factor of his failure. The statistic data might be incomplete and people’s reaction to the new package can be one-sided. The second limitation is that we cannot always assess the quality of the information correctly (Fitzgerald, 2012). There are a lot of factors which can leads to the wrong assessment. In this case, the analysis of people’s reaction, for example, leads the decision-maker to a wrong conclusion because of the wrong assessment. Another important factor is that people’s judgements are always affected by emotions, gut feeling, preconceptions and preference (Fitzgerald, 2012). In my case,...
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