Managerial Decision Making: Strategies for Minimizing Emotional Impact

This report delves into the intricacies of managerial decision-making, emphasizing strategies to mitigate the influence of emotions and motivations. It outlines practical steps for business managers, including implementing emotional intelligence, fostering awareness within teams, and adopting rational thinking to minimize biases. The report also addresses ensuring good future decisions by avoiding the escalation of commitment, focusing on organizational commitment models, and distinguishing between sunk and relevant costs. Furthermore, it explores the competitive escalation paradigm and competitive traps, providing examples to illustrate these concepts. Finally, it examines the collision of emotions and cognition, highlighting the conflicts that arise between desires and rational choices, and providing real-world examples to enhance understanding. This assignment aims to equip managers with tools for making sound, informed decisions.

Running Head: MANAGERIAL DECISION MAKING
Managerial Decision Making

MANAGERIAL DECISION MAKING 1
Steps to be taken by Business Manager for Minimizing the Effect of Emotions and
Motivations
The steps that will be taken as a business manager or owner for the minimization of the effects of
motivation and emotions on decision making are as follows:
First of all, the collision of emotions and decision making will be aimed to be minimized and the
implementation of emotion intelligence will be ensured which is often regarded as the strongest
predictors of success at work. Secondly, awareness regarding the emotional and motivational
state of people in the team will also assist in the approach of the team towards decision making.
Also, the adoption of rational thinking in the decision making process will not consider the
impact of motivation and emotions. Furthermore, structural approaches will be included as it
does not follow an intervening decision process and attempts for predicting the choices on the
basis of parameters of decision problems. Such steps will assist in obtaining long-term benefits
from decisions made by the team.
Ways for ensuring that the future decisions are good ones and are not an escalation of
commitment
In order to ensure that the future decisions are good ones and are not an escalation of
commitment, it will be confirmed that the organization does not invest into the courses of action
that are failing. Escalation of commitment into the course of action is usually the result of
judgmental biases, perceptual biases and impression management. The focus of the organization
should also be on the model of organizational commitment which has three major components
namely job satisfaction, investment and quality of alternatives. The proper consideration of such
components will ensure that the future decisions are also good. However, investment should be
made after keeping into consideration the sunk costs as they have a great impact on the returns.
Sunk costs can be defined as the cost which has already been incurred and therefore is incapable
of being recovered and are therefore often regarded as irrelevant costs. However, future costs are
also faced by the business such as research and development (R & D) expenses or inventory
costs which will be incurred in the future on the basis of the potential decision made and varies
from decision option to decision option and therefore are referred to as relevant costs for
decision making.

MANAGERIAL DECISION MAKING 2
Competitive escalation paradigm and Competitive Traps
Competitive escalation paradigm provides that a number of managerial decisions are concerned
with a series of choices instead of isolated decisions. A specific type of bias is always noticed
while approaching decisions. Commitment is often escalated by the individuals and this takes
place at an unconscious level, however, it is possible that this non- rational behavior can be
eliminated. It further provides that high personal responsibility of the individuals for failing
financial decisions portrays more commitment as compared to others having no personal
responsibility for earlier decisions. For example, before the merger, the worth of firms A, B, and
C are as follows:
A- $10 billion
B- $10 billion
C- $1 billion
Total- $21 billion
If A purchase C for $d dollars and firm C's (former) owners receive this in the form of $d worth
of stock in the enlarged firm A.
After the merger, the worth will be total$20.7 billion
A- $11.2 billion
B- $9.5 billion
Competitive trap can be defined as competing with others due to the fear of trying new things
and doing the own thing. Competition result in the production of copycats and therefore the
control is in the hands of someone else. The competitive trap can be avoided by the businesses
by focusing on their own business and their own initiatives and not focusing on beating other
businesses. For example, copying the advertisement strategies in newspaper by the businesses.
Collision of Emotions and Cognition
Cognition refers to the processes such as attention, problem solving, memory, language and
planning. Moreover, emotions can be defined as the strong feeling which derived from the mood,
circumstances or relationships of an individual with others. The collision of the emotions and

MANAGERIAL DECISION MAKING 3
cognition results in the emphasis on the interdependence of these two concepts in a way such that
they challenge the division of labor into separate emotional and cognitive domains. When
emotions collide with cognition, conflicts are faced between what we want to do versus what we
should do. This can be linked with the multiple selves theory which provides that the mind
consists of a subsystems which interact with other subsystems and therefore sometimes conflicts
arise leading to the symptoms of intrusion, pressure and invasion. For example, conflicts are
faced by the individuals when it comes to buying things they want (i.e. pizza) as compared to the
things they should buy i.e. (salad).