Intuitive or Systematical Thinking for Decisions of Huge Capital Outlay

In: Business and Management

Submitted By quhaotiain1987
Words 2451
Pages 10
‘Decisions involving huge outlays of capital are almost always classic gut decisions: they involve risky, inherently ambiguous judgements between unclear alternatives.’ Do you agree? Justify your answer using decision-making theory and relevant examples from at least two industries.

With the development of globalisation, numerous international business and investors come across decision-making every day, and sometimes need to discover solutions for high capital investment in different environments. Some people suggest that most of those decisions are generated out of top managers’ intuition to make vague directions in uncertain environments. This essay argues Managerial decision making consists of intuitive thinking and systematic thinking: both are important but more systematic thinking should be used particularly in decision making of huge capital outlays. This essay will demonstrate the argument by defining relationship among decision, information and environment; strengths and issues of gut decision (intuitive thinking), systematic thinking; in addition, intuitive and systematic thinking are supported by theories through historical and current approaches and industrial applications respectively.

First of all, the availability of information influences outcome of decision making. “Decision” (Schermerhorn Jr, Davidson, Poole, Simon, Woods, and Chau 2011p.70), is to choose the most suitable way of sequence of activities. In management theory, Schermerhorn et al. (2011) suggests that decision is made upon information available, and the quality of information alters different environment for decision making. Regarding the decision comes to certain environment, risk environment and uncertain environment, the probability of generating outcome decreases when environment becomes less certain, while uncertain environment has the fewest alternatives and lowest…...

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