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The Decision-making Approaches and Individualism Vs Collectivism

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During the third semester, I had an opportunity to engage in a simulation known as ‘Marketplace’ with other four teammates. In this simulation, we were asked to run our own portal computer business as a virtual team. (Specifically, we were expected to employ a combination of theories and decision-making approaches in practice; however, the practice made us aware of a fact that academic theories not always do not necessary generate desirable outcomes.) In this report, I will evaluate the decision-making approaches and theories with my experiences, and I will also analyze better models which we did not applied. This report will analyze rational decision-making in practice, the understanding of bounded rationality, the influence of remote working on my team and collective thinking and Individualism vs collectivism.

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Rational decision making involves four steps which are formulating a final goal, setting the standard, listing probable alternatives and making analysis. (Rational and Nonrational Decision Making | Boundless Management, 2020) Also, rational decision-making helps in improving the quality of decision. (Krumboltz, Scherba, Hamel and Mitchell, 1982) In quarter 6, my team leader provided two options about financial strategies. One relates to taking out bank loans. Meanwhile, we could launch two more sales offices and increase the fixed capacity. The option would pave the way for Q7 and Q8, because seasonality and regional economic tend to achieve a peak, according to the industry news. The other option was not borrowing the money from bank, but we could open just 1 sales office. Obviously, we all preferred the first option because the information of industry news was extremely believable for us, which can be explained by source credibility theory. (Hovland, Janis and Kelley, 1953) Indeed, this decision did help us enter a new market, but we did not take account into the behaviors of other companies. Therefore, our products were less competitive during the quarter 7, as well as the sales situation was not optimal, which resulted in a lack of funds as well. It is evident that reality is different from what we expected, as environment is changing constantly. With hindsight, we should pay attention to the competition of products, market share and external threats, even when we had set up a correct direction. Apart from rational decision making, we also employed strategic decision making in the quarter 5, which is mainly about the long-term goal of a company (Gartensterin 2019) According to Gartensterin (2019), Strategic decision-making is mainly about the long-term goal of a company. In quarter 5, my team decided to invest in R&D of two licenses contemporarily, which can be utilized in quarter 7, while other groups commonly invested in only one license R&D. Consequently, we were able to launch a new generation of products that had applied the branding new technology. Besides, we could trade our licenses to other groups if we met financial problems. Although we still had trouble with funds in the last quarter and a lack of capacity, the decision helped my team regained the second position in the total market. On the other hand, we had drawn a great picture for our company, but we were not good at handling daily tasks, which are also an integral part of business running. With hindsight, if I could play this game again, I would encourage my teammates to formulate short-term targets step by step and deal with tasks of each quarter patiently after making the long-term goal. Furthermore, there is another useful decision-making approach we did not adopt properly, which is intuitive decision-making (Appendix 1). Specifically, managers might make decisions based on their prior experience when there is not enough information about the environment. (Hensman and Sadler-Smith, 2011) More importantly, it helps managers make decisions rapidly. In fact, we should entry in the Europe market in earlier quarter than the 5th, because the competition there is not that intense. Unfortunately, we had no guts to dabble in the segment with little information provided, in addition to the limited experience in running a business.

The term ‘Bounded Rationality’ is related to the limitations of knowledge and ability of decision makers. (Simon, 1990) This means, managers are only able to make relatively rational decisions, and it is impossible to make a perfect decision, because the bounded information and capacity. For instance, in quarter 3, our company created almost 0.3 million excess capacity, because my team hurried to expand the market share so as to stay competitive in the selected segments. Although we finally achieved the goals, we had to pause the advertising, deal with the stock and redesign the products in the next quarter. This unexpected result had disappointed my team, and let we learn that it was quite risky to maximize the capacity at the very beginning. With hindsight, over-confidence was a breeding ground for optimal bias. (Matheson, Asher and Bateson, 2008) Actually, we are unable to predict what would happen in the market and what tactics the peer companies would employ. In this case, the process of our decision making was quite fast and reckless. Apart from that, few team members challenged any decision seriously. Afterwards, I would like to be a black hat if I had a chance to participant in this simulation again, I would directly express the judgement and point out the potential risks. (De Bono, 2017) Obviously, ‘black hat’ is necessary for a team, as it helps team reduce the mistakes and ensures the implementation of decisions. In particular, I would judge whether our products could satisfy the market in order to achieve the goal of sales. Furthermore, I would ask my team to contact other groups and compare the capacities, which might help us run the business better.

Initially, at the norming stage of my team, we had employed participative decision making, so as to encourage each teammate to voice his or her mind. Then the expanded knowledge pool and the strengthened communication would increase solidarity within the virtual team. (Harrison, 1985) After that, we also employed the self-regulation theory, which aims to promote a high job performance in a team. (Kuhl, Kazen and Koole, 2006) In fact, although my team made a great effort to ensure each member engage in the teamwork and discuss the problems sufficiently, the process to make decisions was slow and complicated to some degree. Working in varied time zones poses another challenge to our remote teamwork. Three of my teammates came back to China due to the COVID-19; thus, we cannot deal with the uncertainty timely. (Olson and Olson, 2003) For instance, we had to trade our licenses with other companies in quarter 7, because of the financial shortage. Unfortunately, when other company would like to trade with us actively, we always had to wait for all of teammates vote for it. This might lead us to miss the potential purchaser, and even lose the opportunity. When look back, it is necessary to assign corporate responsibilities clearly, and it also should be rigorously followed throughout the simulation, which would promote a more efficient and productive decision-making process. (Small Business.com, 2020)

As all my team member are from the same country, we had achieved a high level of cohesiveness, and we have little problems in communicating and understanding with each other. However, my team usually reach a consensus without any judgments. Instead of personal expression, each member was inclined to trust decisions of others. This had negatively affected our decision making that entailed groupthink. (Janis, 1971) For instance, my team decided to motivate employees by raising the level of salaries in the quarter 4, which would help our company improve the sales of products. In addition, we would also invest a large amount of money in this intervention in order to drive our sale force over than average level among the peers. Unfortunately, this was mainly related to the cash flow shortage in the last quarter. In fact, the value of products depends on circumstances, price and market. (Harvard Business Review, 2020) In my opinion, the investment in sales force, such as new products R&D and capacity, could be better utilized. In other words, we should not waste money on unnecessary aspects. With hindsight, it is necessary for us to invite fresh perspectives, like asking for suggestions from outside expertise like teachers. The perspectives could help us avoid the illusion of unanimity. Besides, we could encourage an open discussion in which decisions can be reassessed. (Fernandez, 2007) Apart from that, in terms of uncertainty avoidance, it is defined as people are less likely to make decisions when the future situation is unknown and ambiguous. As a Chinese team, we tend to be ambitious and adventurous, willing to take a risk when there is a temptation of high returns. For instance, the decision on 2 licenses R&D during quarter 5 drove us to go through a rough period. Although we had predicted the risk of pouring that much funds to R&D, we still did so when considering the long-term benefits without any disagreements. As a result, Chinese people may be overconfident to make investments when facing to potential benefits. With hindsight, I understand that it is necessary to take uncertainty and changes into account, even if there is an opportunity to increase profits. After all, everything has a price. Also, an awareness of avoiding uncertainty avoidance helps me pay attention to underlying risks again.

According to the bar chart above, the score of Individualism is quite low with 20, therefore, Chinese is collectivism. (Country Comparison – Hofstede Insights, 2020) Meanwhile, collectivism is linked to risky consensus, which means collective people are more likely to believe thoughts shared by others. (Triandis, 2018) Individualism is related to the self-reliance and freedom, which means people are more likely to trust themselves, and concentrate on their own benefits. (Kagitcibasi, 1997) In terms of my team, high degree of collectivism is a negative influence on us in this simulation. As the problems mentioned above, my team was lack of viewpoints while trying to deal with tasks. For instance, when our team leader provided suggestions, we were willing to comply with him; thus, no one would like to oppose or judge. Also, it is embarrassed for collectivism people to propose different views. In fact, judgement has played an important role in the process of decision-making, because it could sufficiently prevent the wrong decisions at the beginning. In one word, the unanimous background negatively affected our decision making. If I had a second chance, I would like to participate in the team with diversity. This means, a team consist of people from different cultures; therefore, team members would share their views based on various backgrounds. Additionally, a diverse cultural team would reduce the effect of collectivism and groupthink. Indeed, decision making process and communication would be a bit more complicated when compared to current team, but decisions could be more mature and less risky.

To sum up, although the result of this game was not satisfactory for the whole team, it was a great opportunity to put the academic theories in practice. Moreover, I have gained a better understanding of the decision-making approaches. Now I realize that rational decision making has limitations due to the inability of human beings. Various cultural background develops diversity, which entangle the decision-making process to some degree. Also, cultural diversity is necessary for a virtual team, and it is important to invite fresh perspectives from outsiders when stuck in group thinking. With hindsight, I would employ the appropriate theories in suitable situation.

References

  1. Courses.lumenlearning.com. 2020. Rational And Nonrational Decision Making | Boundless Management. [online] Available at: [Accessed 31 July 2020].
  2. De Bono, E., 2017. Six thinking hats. Penguin Uk.
  3. Fernandez, C.P., 2007. Creating thought diversity: the antidote to group think. Journal of Public Health Management and Practice, 13(6), pp.670-671.
  4. Gartenstein, D., 2020. What Is Strategic Decision Making? [online] Small Business – Chron.com. Available at: [Accessed 31 July 2020].
  5. Harrison, T.M., 1985. Communication and participative decision making: An exploratory study. Personnel Psychology, 38(1), pp.93-116.
  6. Harvard Business Review. 2020. Business Marketing: Understand What Customers Value. [online] Available at: [Accessed 2 August 2020].
  7. Hensman, A. and Sadler-Smith, E., 2011. Intuitive decision making in banking and finance. European Management Journal, 29(1), pp.51-66.
  8. Hofstede Insights. 2020. Country Comparison – Hofstede Insights. [online] Available at: [Accessed 10 August 2020].
  9. Hovland, C.I., Janis, I.L., & Kelley, H.H. (1953). Communication and Persuasion. New Haven, CT: Yale University Press
  10. Janis, I.L., 1971. Groupthink. Psychology today, 5(6), pp.43-46.
  11. Kagitcibasi, C., 1997. Individualism and collectivism. Handbook of cross-cultural psychology, 3, pp.1-49.
  12. Krumboltz, J.D., Scherba, D.S., Hamel, D.A. and Mitchell, L.K., 1982. Effect of training in rational decision making on the quality of simulated career decisions. Journal of Counseling Psychology, 29(6), p.618.
  13. Kuhl, J., Kazén, M. and Koole, S.L., 2006. Putting self‐regulation theory into practice: A user’s manual. Applied psychology, 55(3), pp.408-418.
  14. Matheson, S., Asher, L. and Bateson, M., 2008. Larger, enriched cages are associated with ‘optimistic’ response biases in captive European starlings (Sturnus vulgaris). Applied Animal Behaviour Science, 109(2-4), pp.374-383.
  15. Olson, J. and Olson, G., 2003. Culture Surprises in Remote Software Development Teams. Queue, 1(9), p.52.
  16. Simon, H.A., 1990. Bounded rationality. In Utility and probability (pp. 15-18). Palgrave Macmillan, London.
  17. Small Business – Chron.com. 2020. What Is The Importance Of Establishing & Assigning Responsibilities For Project Team Members? [online] Available at: [Accessed 3 August 2020].
  18. Triandis, H.C., 2018. Individualism and collectivism. Routledge.

 

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