Q1. Which family business decision-making process will be most affected by bounded rationality?
Are you looking for the answers to the above question? When you want to run a business, you have to make a number of decisions. Some of those decisions will be spur-of-the-moment; on the other hand, some will be taken after a long period of deliberation. But you can not just avoid making a decision.
As a business person, you have to have the skill of making the correct decision. There will be some instances when you will not have time or a person to make a consultation before taking any decision. Then, independent decision-making will be required.
So. before we directly jumped into searching for the answer to the ultimate question, it is important to get some ideas about the different types of decision-making for a venture. Here I will give you a thorough idea about the most popular and effective decision-making styles through the question – Which family business decision-making process will be most affected by bounded rationality?
What Are The Types Of Decision Making?
Being a leader, a person often stuck with decision-making. It is part of their job to make decisions that will be good for the entire organization, it’s a business cycle. Instead of considering a mere few, the leader has to consider a good for many.
In fact, there are a vast number of leaders whose efforts go unappreciated and end up being criticized. But the criticism is not for the decision they have made but for the decision-making style that they have adopted. The family business decision-making process also affects the tax-related aspects.
So, here are some common decision-making styles you should be aware of while considering the question of which family business decision-making process will be most affected by bounded rationality?
This style involves a leader giving up control and ownership of the decision. And as a result, a group can vote, and the majority vote decides the course of action. This is considered as fast and fair decision-making.
When the lack of responsibility is one of the major drawbacks. And for this, you can’t able to grow your business. A certain degree of group participation is the advantage.
The lack of group and personal responsibility turns out as a disqualifier for this decision-making style. But instead of that, this decision-making style has made its place in the business world.
If you want to become a CEO, then you have to think like a leader. When the leader involves the numbers of the organization, this decision-making evolved. This way, through the final control, will always be within the hand of leaders; a different perspective of a single situation comes into the light.
As the leader has the ultimate authority over the decision-making, the decision of the leader will be final though the outside pieces of information will be taken into consideration.
This decision-making process involves group participation, which definitely is an advantage. But the time this decision-making style takes is too much, and making this a thumb is down.
This style also asks the leader to give up control over the decision, and the complete group will be involved. So, the leader will no longer be individually responsible, but the burden will fall on the organization or group.
Do not misunderstand this with a democratic style as the entire group here agree with the decision irrespective of their misgivings. With a more accurate decision, the census style looks after teamwork with a better security system.
This style is really slow and time taking. Besides, involving the whole team in the decision-making is not at all an easy task.
When it comes to autocratic decision-making, it only allows a single person to make the decision. And being a decision-maker, the person needs to evaluate several possibilities, then choose a plan and lastly hand it over to the organization for implementing it.
And this simply will not include any input from any other individual. There are several aspects of this decision-making style.
Which Family Business Decision-Making Process Will Be Most Affected By Bounded Rationality?
Now, you know the different types of decision-making along with the advantages and drawbacks. So, now I will give you the answer to the question, which family business decision-making process will be most affected by bounded rationality in 2021?
The answer is the fourth decision-making style or Autocratic. The word “Autocratic” is originated from the Greek word “auto,” which means “alone” or “self,” and “Kratos,” which means “power.” so, an autocratic person is capable of governing all alone through his self-discretion.
Advantages of Autocratic Decision Making
The main advantages of the autocratic decision-making style are it saves a lot of time, and also, there are very few hindrances to action. Unlike the other styles, which simply involve more than just one person, autocratic decision-making involves only one person.
As a result, in autocratic, a lot of time of deliberating, communicating, debating is kept to a minimum. There will be situations when time plays a crucial role; the effectiveness of this autocratic decision-making style is undeniable.
In case the decision-maker is able to carry good judgment and also has the right type of attitude towards the group, the autocratic decision-making style will really work.
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Disadvantages Of Autocratic Decision Making
When we are considering autocratic as the answer to the question, Which family business decision-making process will be most affected by bounded rationality in 2021? We also need to totally aware of the drawbacks that the autocratic technique of making decisions brings with it.
As this style of decision-making totally based on one single person, who will guide the decision of a whole group, a considerable amount of trust is required on the intentions, conscientiousness, and wisdom of the particular leader.
We all are humans, and even the most effective person can make mistakes sometimes. So, distributing the power and responsibilities to one person will give more space for more deliberation, debate, along with far better consideration of any plan.
Frequently Asked Questions
Q1.Which family business decision-making process will be most affected by bounded rationality?
Which family business decision-making process will be most affected by bounded rationality? The correct answer to this question is the Autocratic business decision-making process.
Q2. What Are The Keys To Making A Family Business Successful?
The tips to run a successful family business are:
- Set boundaries
- Practice good governance
- Recruit from the outside
- Keep options open
- Make successful plans for the future.
Q3. What Is The Relevance Of Decision-Making In A Successful Family Business?
Family decision-making in a business basically creates an environment where the family members work towards a common goal. Any kind of decision-making in a business would is facilitated by the collaborative decision of a family.
So, now we get the answer to your question which family business decision-making process will be most affected by bounded rationality? And along with the answer, we also get to know all the disadvantages that the particular type of decision-making style will invite. As they say, nothing comes free, so in order to get something, you need to give something, just like this autocratic decision-making style has some disadvantages along with some stunning advantages.
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Jason Gibbs is a freelance content writer and enthusiastic blogger. He is the co-founder of Finance Team. He contributes to many authority blogs such as Sb News Room, EssayWritingGuides, TheBitcoinMagazine, TheCBDMagazine, and TheDatingDairy, Online Marketing Tools, Smart Business Daily, Emblem Wealth, RSL Online, TechNetDeals & TechTrendsPro & OnlineHealthMedia & FollowTheFashion.