Critical Review: Theories in Managerial Decision Making (MGMT 20135)

This essay critically reviews key concepts and theories covered in a managerial decision-making course (MGMT 20135), spanning from self-awareness and leadership principles to decision-making frameworks. The essay delves into self-awareness, exploring the Johari window model and its impact on leadership effectiveness. It analyzes game theory, prospect theory, self-efficacy, and psychological contract theory, explaining their relevance in understanding human behavior and decision-making processes. Additionally, the paper examines the decision-making frameworks, including the K-T methodology, Lau's decision-making process, and the Benjamin Franklin method. The paper also covers risk analysis framework. Through the exploration of these diverse theories and frameworks, the essay provides a comprehensive overview of critical thinking and managerial decision-making in various contexts.

Running head: CRITICAL THINKING AND MANAGERIAL DECISIONS 1
Critical Thinking and Managerial Decisions
Student Name
Institution

CRITICAL THINKING AND MANAGERIAL DECISIONS 2
Introduction
This essay will discuss some of the models and theories that I have learned from week 1
to week 9. The paper will explore the techniques that are used to solve problems, make decisions
and lead environments. The concepts of self-awareness, strategic planning leading and
organization concepts are examined so as to link certain basic principles in order to create a
thriving and healthy working environment. Specific human services details are considered and
certain service delivery method to populations that are need-based including the workers serving
in this capacity.
Self-awareness and leadership
Self-awareness is knowing whatever that you are good at acknowledging what you are
yet to learn in the process. It includes taking responsibility of your mistakes and also admitting
every time when you don’t have the answers. When you have self-honesty, you will admit when
the opposite is true (Model, 2013). Because whether or not you acknowledge the weaknesses that
you have, everybody sees them anyway. So, people trying to hide their flaws actually highlight
them, which create a perception of lack of self-awareness and integrity.
The Johari window model is one of the few tools that emphasis on “soft skills” like
empathy, behavior, co-operation, interpersonal development and intergroup development. Within
the Johari window model, there are two factors that work (Suthakaran, 2011). One is what you
know of yourself and two how other people know you. The diagnostic of self-awareness is Johari
window model great accompaniment as it helps in exploring the qualities that makes people who
they are.

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The uniqueness of self-awareness diagnostic is not only does it explore “soft skills” of
individuals and their preference style of working but also how the participants would like to
learn; their learning styles (Ckark, 2018). Also, on an interpersonal level, acknowledging your
strengths and flaws can earn you other people’s trust increasing your credibility later increasing
leadership effectiveness.
Without understanding our emotions, weaknesses and strengths better, maintaining a
sense of the way we are affecting others becomes difficult. This is true especially when in
leadership position; people trust their leader to be following an overall vision. In case they make
emotional decisions without the knowledge of those emotions, they might put the vision at risk
by taking every opportunity that comes their way.
Theory of Games and Economic behavior
John von Neumann and Oskar Morgenstern came up with a groundbreaking
mathematical theory of social and economic organization based on game theory strategy. This
revolutionized economics and also the entire field of scientific inquiry yielded by it (Susan,
2013). Economic theory is a complicated mechanism of production and prices and of the
spending and gaining incomes. It has been found that, in the course of this development, an
approach to the problem is gained by human behavior analysis constituting the economic
community (Model, 2013). Even though disagreements still exist, this approach’s significance
cannot be doubted. The problem has been traditionally stated assuming that the customer desire
is to get maximum satisfaction and for the entrepreneur is making profits. Also Game theory is a
theory of interaction attempting to explain people’s interaction with one another.

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Prospect theory
Common sense may suggest that people combine the net gains with their associated
losses in order to make an evaluation whether they are desirable. Another way of viewing this is
through “utility” concept often used to describe desirability or enjoyment (Model, 2013).
Contrary to what research shows that individuals doesn’t rationally process information, prospect
theory was presented saying that people tend to differently value gains and losses from one
another. This resulted to basing decision on perceived gains instead of perceived losses.
Prospect theory assumes that losses hit people harder. That the emotional impact
associated with losses is greater than the one associated with an equivalent gain. This shows that
people prefer to settle for a reasonable gain, but are more likely to risk when they are in
situations in which they can limit their losses. In other words, losses are weighted heavily than
gains of equivalent amount. This theory explains why many people are biased when making
decision. When we understand these biases, we can persuade individuals to take action.
Self-efficacy theory
This is the belief that individuals have in their own abilities, especially the ability to
overcome the challenges in the near future and to successfully complete the task. In other words
you can say that individuals with high self-efficacy have a locus of control that is internal
(Snowdwen & Boone, 2017). Locus of control can be defined as where individual believes the
power of altering your events resides. If for example an individual immediately thinks “I only
failed because the teacher graded unfairly- I couldn’t do anything to improve my score” or “she
left me because she is cold-hearted and difficult to deal with, and am not” that individual has

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external locus of control meaning that he or she doesn’t have a sense of belief in his or her
abilities.
Students who have self-efficacy have high optimism and both the variables results in
positive outcomes: an academic performance that is much better, coping with stress better,
personal adjustment that is effective, better health and overall higher satisfaction (Karatza,
2016). Hence, self-efficacy leads to better decision making and improves overall performance.
Also there is a strong link between job performance and self-efficacy. This is due to vast
evidence suggesting that increase in the results of self-efficacy leads to better job performance.
Psychological contract theory
This theory is a relevant aspect of relationships in the workplaces and human behavior.
Primarily this theory refers to employer-employee relationship concerning mutual expectation of
outcomes and inputs. But still this theory can apply beyond workplaces to human relationships
and wider society (Ball, 2017). At the heart of this theory is a philosophy reflecting that its
deeply significant, dynamic and changing nature. The way we manage and define the
psychological contract and also how we understand it and the way we apply its principles in our
relationships- outside or inside of work- define our humanity.
Psychological contract concept within business, employment and work is very difficult
to measure and it’s extremely flexible as well (Dakshi, 2014). And although pre-employment
expectations can influence psychological contract beliefs, the psychological contract reveals a
wider array of obligation beliefs.

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The qualities and dynamic forces of psychological contracts are entrenched in this
theory’s principles. They are developed through an individual's organizational and social
experiences (Crossman, 2017). During the same time, their intellectual architecture is shaped by
boundaries in individual cognitive capacity (i.e., bounded rationality). For example, people pay
attention to only a portion of their environments information (Ball, 2017). They do this
selectively, attending to exceedingly salient or information that is accessed easily. (e.g.,
employees believe that their immediate boss speaks for the company.
Attention-grabbing and emotional events trigger effortful, and cognitive processing
(O'roucke, 2012). Direct experiences with supervisors and managers are salient, providing
relevant information the contract, from the pleasure of promised acknowledgment to the ones
who are more frustrated when promises are not fulfilled. As psychological contracts repeatedly
unfolds over the exchange cycles, general principle on how the experiences are assessed
influences the parties’ perceived for future obligations(Ball, 2017).
If an employee believes that his or her manager has fulfilled prior commitments, he or
she is most probably views his or her work like a relational focus, making him or her to most
likely react positively to the opportunities or requests so as to contribute to his boss in new ways
(Musslewhite, 2017). On the other hand, past fulfillments that lower are likely to reduce
subsequent obligation feelings towards the other person, prompting certain beliefs to revise. If
one fails to meet one's duties, this increases the other's doubts and monitoring and as such might
lead to a drop in the perceived value of the work arrangement.

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Benjamin franklin had many talents. Besides being a key founding father a one of the
famous in his day, he was a scientist, businessman diplomat and a philosopher (Diane, 2014).
His invention of a wood burning stove that is safe and lighting rod showcased his ability to
identify risks and develop ways that are innovative so as to mitigate it. He also pioneered streets
lights use to make Philadelphia safe (Rashmi & Lynda, 2014). He also pioneered fire
departments and night watchmen and even hygiene after the discovery that “dry bellyache” a
common malady during that time was symptoms of poison from lead from industrial methods of
production that were unsafe.
Franklin practiced risk financing principles through the use of fundraising efforts and
insurance associations, both personal and public (O'roucke 2012). He even followed some risk
management principles, such as crisis management and supply chain preservation, after he came
up with river blockades so as to protect his deliveries of paper supply and a militia organize to
protect locals from the Paxton boys, a criminal gang who, in Philadelphia in 1764 had led a
march.
Frameworks of decision making
According to Dakshi (2017), decisions are important in organizational operations because they
help an organization to address some of the things that affect their performance. Some of the
decision making frameworks covered in this course include the K-T methodology and decision
making process by Lau. According to Diane (2014), the K-T methodology which is also known
as kepner Tregoe method is referred as a problem analysis approach in which the issue is
disconnected from the decision.

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On the other hand, in the decision making process Lau suggests various steps that a person
should follow when coming up with a decision. These steps include, coming up with a critical
decision on how the decision should be made, undertaking some research, coming up with a list
of options, evaluating the available pros and cons, and picking the best option, preparing for
contingencies, and finally monitoring and learning the results (Diane, 2014). Other factors
considered during decision making process include SWOT analysis, the Benjamin franklin
method, and risk analysis framework.

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References
Diane, D. (2014). Self-Awareness Enhancement through Learning and Function (SELF): A
Theoretically Based Guideline for Practice. British Journal of Occupational Therapy, 73(7), 23-
45.
Suthakaran, V. (2011). Using Analogies to Enhance Self-Awareness and Cultural Empathy:
Implications for Supervision. Journal of Multicultural Counseling and Development, 39(4), 67-
87.
Rashmi, A & Lynda, K. (2014). Enabling Entrepreneurial Minds: Using Appreciative Inquiry as a
Pedagogical Tool for Uncovering Self- Awareness and for Generating Constructivist Learning.
Journal of Entrepreneurship Education, 17(2), 45-67.
Dakshi, W. (2017). Self-Efficacy as a Function of Life Regard: A Study of Gender Differences.
Journal of Psychosocial Research, 12(1), 56-78.
Susan, E. (2013). The Behavior Change Project: A Field Assignment in Empathy Building, Self-
Awareness, and Direct Clinical Practice. Field Educator, 3(2), 65-78.
O'roucke, M. (2012, April). Benjamin franklin: America’s origins risk manager. Available at
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