Theories and Models in Strategic Decisions

This document explores the Rhineland Model vs. Anglo-Saxon model and the Shareholder Theory vs. Stakeholder Theory in strategic decision-making. It also discusses the concept of sustainability and its impact on decision-making. Additionally, it examines the challenges and opportunities of theories and models in decision-making.

Running head: THEORIES-MODELS IN STRATEGIC DECISIONS
Strategy Decision-Making
Student’s Name:
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THEORIES-MODELS, SUSTAINABILITY IN MAKING DECISIONS 2
Rhineland Model vs. Anglo‐Saxon model
The Rhineland Model stipulates the sharing of information as well as building consensus
among all the people connected with the organization in order to permit long-term coordinated
economic and social objectives. The models set the high-income taxes but business is not taxed
heavily and has no protection-the end result is high paying employments which can now get
taxed so as to get the welfare of the state running. Additionally, besides shares and bonds, banks
get used as a main source of funds. The decision made are far-reaching, envisaged big
businesses, huge labor, and the government plans are big so that all are for the best good and in a
planned manner (Kantabutra, 2017).
The Anglo‐Saxon model, on the other hand, characterizes the undertaking of individual
or organization’s interests with no or very minimal intervention from the government. The model
exists in free market economies and most advanced nations. The system places the interests of
the stakeholders and labor below that of the shareholders and the top management. The
information that is uneven becomes the origin of estimation as well as profits, and the strategy is
concentrated on the running of short-run trade cycle. The basis of the model is strong property
rights as well as the enforcement of contract with low hindrances to free trade. It is established
that undertaking business in nations employing this model is easier because of few regulations
concerning labor markets. The weakness associated with the Anglo‐Saxon model is the failure of
the market emanates due to imperfect facts and instability when there is no national agenda in the
long-term run (Schiffels, Haak, Paajanen, Llamas, Popescu, Loe & Tyler-Smith, 2016).
Shareholder Theory vs. Stakeholder Theory
The shareholder theory posits that the managers of an establishment have the duty of
minimizing the returns of the shareholder. In relation to the theory, companies have the sole

THEORIES-MODELS, SUSTAINABILITY IN MAKING DECISIONS 3
responsibility of the stakeholders because of the evolving nature of the business’s pyramid. The
stakeholders set the remunerations of the managers and the managers have the role of making the
spending plans of the organization and this have to be in tandem with the objectives of the
shareholders (Visser, 2019).
The stakeholder theory states that the managers of an organization have an ethical role to
the stakeholders as well as all the entities linked to the organization. These comprise entities and
individual who benefit from the organization or those that the organization benefits from them.
Therefore in making decisions, an establishment needs to put the interests of all the stakeholders
(Cooper, 2017).
There is a misconception of the theories. In the stakeholder theory, it is misunderstood
that managers must employ any mean to ensure profits for the organization including unethical
practices as well as prohibiting CSR initiatives. This is not the case since the structure of the
organization gets based on ethical principles as well as CSR task to the society. The stakeholder
theory is misconceived and presumed that profits should be disregarded; however, profit is the
main aspect that needs consideration in determining the company’s impact on the stakeholders
(Visser, 2019).
The Concept of sustainability
Sustainability is a concept employed in business enterprises to ensure that there is an
application of good practices for the common good of humanity and the planet. It posits that an
establishment has the mandate of using the endowed resources in a maximum manner without
wastage and conserving for the benefit of the future generation (Bhamra & Lofthouse, 2016).
The concept of sustainability encourages establishment to come up with long-term goals that put
into consideration carbon footprint reduction in all the operations of doing business while

THEORIES-MODELS, SUSTAINABILITY IN MAKING DECISIONS 4
gearing to attain profits. The sustainable need gets achieved by lessening emissions, lowering
energy consumption, sourcing products that adopt sustainable practices, and making sure that the
physical wastes get disposed of properly with very minimal carbon footprint (Bosselmann,
2016).
The theory of Sustainability
Organizations get a competitive advantage when they employ sustainable practices
anchored on sustainable leadership. This is pinched on the theory of sustainability and is begged
on the triple bottom line approach where the environment, the social, the environment, and the
finances all get intertwined (Bhamra & Lofthouse, 2016). The baseline is the finances over
which all other components are dependent upon. The actions of every organization must have a
global perspective in comprehending the relationship that is in between the planet, humanity and
coupled with individual decisions that have impacted positively on the society and the
environment (Emas, 2015).
The Extent of Theories and Models on Boardroom Simulation
It is of interest that the models and theories are vital in the decisions making the process.
The cooperation of Shell and Gazprom require considerations of Rhine Model and the Anglo‐
Saxon model. The two organizations come from different regions (Altes, 2018). The US uses the
Anglo‐Saxon model which is characterized by individuals or organization’s undertaking business
with no or very minimal intervention from the government, exist in free market economies and
most advanced nations and places the interests of the stakeholders and labor below that of the
shareholders and the management (Groot, 2018). The Rhine Model is characterized by the
sharing of information and building consensus among people connected with the organization in
order to permit long-term coordinated economic and social objectives. Disregarding the negative

THEORIES-MODELS, SUSTAINABILITY IN MAKING DECISIONS 5
side of each theory, when combined, Shell and Gazprom will benefit when they come together
(Farkas, 2016).
Furthermore, shareholder theory gives managers of an establishment the duty of
minimizing the returns of the shareholder, therefore, company’s responsibility of the
stakeholders and making the spending plans of the organization which has to be in tandem with
the stakeholders’ objectives. The stakeholder theory gives managers a mandate to exercise
ethical decisions and practices on behalf of stakeholders and other entities linked to the
organization (Thijssens, Bollen & Hassink, 2015). Therefore in making decisions, the manager
needs to put the interests of all the stakeholders. In the boardroom simulation, the contradicting
views of the shareholders and stakeholder have to be balanced by the manager as a board
member. This is because the contradiction is going to result in strategic issues. The manager has
to enlighten both the parties of their roles in the organization based on the two theories and
equilibrate the two sides because they all are important in the organization (Martínez, Fernández
& Fernández, 2016).
Challenges-Opportunities of Theories-Models in Decision Making
In large corporations, there are a number of multifaceted units interlinked together so as
to work as an entity but in different capacities, specialization, and functions. The managers of
these organizations in exercising their tasks find themselves competing against the complexities.
As per Mitleton-Kelly, Paraskevas & Day (2018), multifaceted units within the organization
perform with proper management and specifically when allowed to operate as adaptive complex
systems. Under these scenarios, a manager has a responsibility of either running the organization
as a centralized functional entity or as multiple business units with loosely connected and
modular units. It is established by Hatch (2018) that systems that are loosely coupled and

THEORIES-MODELS, SUSTAINABILITY IN MAKING DECISIONS 6
modular perform well as compared to systems that are centralized with multiple complex units.
The loosely coupled units encourage competition between all the units for a common good
objective-to collectively succeed (Hatch, 2018)
Additionally, Hatch (2018) support the complexity proposition that when the surrounding
circumstances are not predictable, establishments that are high performers are less organized.
Thenmozhi (2015) augment this by asserting that organic structures perform highly at stable
environments.
Another aspect of decision making is on path dependency. This is where an organization
chooses a particular route in arriving at their objectives. The path dependency emphasizes
continuous processes that are self-reinforcing which begin with contingency, small as well as
critical events within the organization. As a manager, decisions need to be made so that the most
critical processes are given priority. Even as the initial choices are essential in path dependency
perspective, the intermediary activities and procedures amid the first ones as well as the result
do, nevertheless, oversee the progression (Singh, Mathiassen & Mishra, 2015). The other aspect
that determines the path to be taken in decision making is the financial point of the organization.
There are decisions that will require the use of resources so that they get realized. The manager
of the organization has to take into consideration the financial state of the organization.
Reflection
In my reflection, I find that large multifaceted organizations interlinks together as an
entity with different capacities, specialization, and functions. As a manager of such an
organization I find myself competing against the complexities. However, as per Mitleton-Kelly,
Paraskevas & Day (2018), multifaceted units perform with proper management when operating
as adaptive complex systems. I therefore have a responsibility of running the multiple business

THEORIES-MODELS, SUSTAINABILITY IN MAKING DECISIONS 7
units with loosely connected and modular units to greater performance. The loosely coupled
units encourage competition between all the units for a common good objective-to collectively
succeed. On the other hand, path dependency assists in decision making. This is where one
chooses a particular route in arriving at their objectives since dependency emphasizes continuous
processes that are self-reinforcing which begin with contingency, small as well as critical events
within the organization. As a manager, I am compelled to make decisions based on the most
critical processes by priority.

THEORIES-MODELS, SUSTAINABILITY IN MAKING DECISIONS 8
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