Exploring Decision Making: Rational & Incremental Models in Management
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AI Summary
This report delves into the critical role of decision-making for managers, particularly focusing on the application and comparison of the Rational and Incremental Models. It highlights the importance of informed decision-making for organizational efficiency, referencing Henry Ford's wage increase as an example of effective decision-making. The report discusses the steps involved in decision-making, characteristics, and advantages, followed by a detailed comparison of the Rational and Incremental Models, including their respective processes, advantages, disadvantages, and critiques. The analysis emphasizes the pervasive nature of decision-making within organizations and the need for managers to make well-considered choices to foster growth and success. This document is available on Desklib, a platform offering a wealth of study resources for students.

Running Head: Decision Making
Decision Making By Managers: A Study on Henry Ford
Decision Making By Managers: A Study on Henry Ford
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Decision Making 1
Executive Summary
Most of the time the managers comes across the phase where they have to take the decisions,
which are needed for the efficient working of the company. The managers have to go through the
decision making process preciously because one bad step can lead to wrong decision which can
affect the working of the company in negative way. The most prominent example of making
effective decision of Henry Ford in 1914 when he doubled the wages of workers out of nowhere
so that he could tackle problem of absenteeism and low turnover. At that time the per capita
income was $354 and the value of his first car was $500, so he raised the wages of his workers
so that they can afford the car. It means he wants his workers to use the product they were
manufacturing. The support of Rational Model and Incremental Model in making the decision is
discussed thoroughly in the report. There are some disadvantages of these two theories, which
are taken to into considerations while coming to conclusion. The final conclusion is pervasive in
nature and it comes out after numerous inquiries and discussions. Whole procedure consists of
small steps where each step is taken once and after completion of first step, the next is taken. It
will have expansive consequences in a manner in which an organization grows. In actuality, they
are prepared for taking fundamental decisions, which are one of the various characteristics that
every director should have in each level of management.
Executive Summary
Most of the time the managers comes across the phase where they have to take the decisions,
which are needed for the efficient working of the company. The managers have to go through the
decision making process preciously because one bad step can lead to wrong decision which can
affect the working of the company in negative way. The most prominent example of making
effective decision of Henry Ford in 1914 when he doubled the wages of workers out of nowhere
so that he could tackle problem of absenteeism and low turnover. At that time the per capita
income was $354 and the value of his first car was $500, so he raised the wages of his workers
so that they can afford the car. It means he wants his workers to use the product they were
manufacturing. The support of Rational Model and Incremental Model in making the decision is
discussed thoroughly in the report. There are some disadvantages of these two theories, which
are taken to into considerations while coming to conclusion. The final conclusion is pervasive in
nature and it comes out after numerous inquiries and discussions. Whole procedure consists of
small steps where each step is taken once and after completion of first step, the next is taken. It
will have expansive consequences in a manner in which an organization grows. In actuality, they
are prepared for taking fundamental decisions, which are one of the various characteristics that
every director should have in each level of management.

Decision Making 2
Table of Contents
Executive Summary.........................................................................................................................1
Introduction......................................................................................................................................3
Concept of Decision of Making.......................................................................................................3
Steps of Decision Making............................................................................................................4
Characteristics of Decision Making.............................................................................................5
Advantages of Decision Making..................................................................................................6
Comparison between Rational Model and Incremental Model.......................................................6
Henry Ford Doubling the Wages.....................................................................................................8
Theories of Decision Making..........................................................................................................9
Rational Actor Model...................................................................................................................9
Process of Rational Decision Making....................................................................................10
Criticism of Rational Model Theory......................................................................................10
Incremental Model.....................................................................................................................11
Characteristics of Incremental Model........................................................................................12
Advantages of Incremental Model.........................................................................................12
Disadvantages of Incremental Model.....................................................................................13
Conclusion.....................................................................................................................................13
Bibliography..................................................................................................................................15
Table of Contents
Executive Summary.........................................................................................................................1
Introduction......................................................................................................................................3
Concept of Decision of Making.......................................................................................................3
Steps of Decision Making............................................................................................................4
Characteristics of Decision Making.............................................................................................5
Advantages of Decision Making..................................................................................................6
Comparison between Rational Model and Incremental Model.......................................................6
Henry Ford Doubling the Wages.....................................................................................................8
Theories of Decision Making..........................................................................................................9
Rational Actor Model...................................................................................................................9
Process of Rational Decision Making....................................................................................10
Criticism of Rational Model Theory......................................................................................10
Incremental Model.....................................................................................................................11
Characteristics of Incremental Model........................................................................................12
Advantages of Incremental Model.........................................................................................12
Disadvantages of Incremental Model.....................................................................................13
Conclusion.....................................................................................................................................13
Bibliography..................................................................................................................................15

Decision Making 3
Introduction
Winston Churchill once said: The price of greatness is responsibility (Seland, 2018).
Decision-making is fundamental part of present mechanism of the company. It is a basic
capability of the board. Decisions decide both managerial and various leveled exercises. A
decision may be described as “a procedure which is deliberately looked over a lot of choices to
achieve an ideal result.” It addresses a particularly balanced judgment and a vow to action.
(Anon., n.d.).
The first important function of management is to take decisions on problems and circumstances.
Decision-making overruns every single administrative activity. It is a consistent procedure. Basic
leadership is a vital part of the administration procedure itself. In every organization, there is
need for decision-making managers at some point of time for the best interest of the
organization. Decisions are future oriented which can helps in maximising the profits for the
company in the long run. All the daily business operations take place on the basis of managerial
decisions. Managers are given the responsibilities of making decisions, which will decide the
growth of the company so managers bear the heavy task of making decisions. The process of
making the final decision is very tricky. It can be done through expertise of various fields
(Anon., n.d.). Small-scale organization incorporates into every dimension of directors, big scale
organization mostly gets support of skilled persons who can give them variety of options but a
single person alone cannot take ultimate decision. The report aims to discuss the process of
decision making with the help of various theories.
Concept of Decision of Making
A decision is the final act of a process in which managers have option to choose among two or
more alternative options to accomplish the ultimate goal. This process is known as Decision
Making (Anon., 2019). Decision making is an crucial cycle within an organisation as it aids –
1. Best resource utilization- An organisation can save lot of time and cost if it uses
resources available like man, material, money, market and information in best way
possible.
Introduction
Winston Churchill once said: The price of greatness is responsibility (Seland, 2018).
Decision-making is fundamental part of present mechanism of the company. It is a basic
capability of the board. Decisions decide both managerial and various leveled exercises. A
decision may be described as “a procedure which is deliberately looked over a lot of choices to
achieve an ideal result.” It addresses a particularly balanced judgment and a vow to action.
(Anon., n.d.).
The first important function of management is to take decisions on problems and circumstances.
Decision-making overruns every single administrative activity. It is a consistent procedure. Basic
leadership is a vital part of the administration procedure itself. In every organization, there is
need for decision-making managers at some point of time for the best interest of the
organization. Decisions are future oriented which can helps in maximising the profits for the
company in the long run. All the daily business operations take place on the basis of managerial
decisions. Managers are given the responsibilities of making decisions, which will decide the
growth of the company so managers bear the heavy task of making decisions. The process of
making the final decision is very tricky. It can be done through expertise of various fields
(Anon., n.d.). Small-scale organization incorporates into every dimension of directors, big scale
organization mostly gets support of skilled persons who can give them variety of options but a
single person alone cannot take ultimate decision. The report aims to discuss the process of
decision making with the help of various theories.
Concept of Decision of Making
A decision is the final act of a process in which managers have option to choose among two or
more alternative options to accomplish the ultimate goal. This process is known as Decision
Making (Anon., 2019). Decision making is an crucial cycle within an organisation as it aids –
1. Best resource utilization- An organisation can save lot of time and cost if it uses
resources available like man, material, money, market and information in best way
possible.
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Decision Making 4
2. Opting for best alternate option- Decision-making is important because whenever there is
a problem, it has various solutions so taking financial and various other tools into
consideration to choose best alternative option to solve the problem.
3. Performance evaluation of managers- Decision- making is important to evaluate the
performance of manager. The number of correct decision taken by the managers will rate
him higher in performance appraisal.
4. Employees’ motivation- Decision- making is important for motivating employees as it
provides framework of working of the company to the lowest levels of the staffs. It helps
in transparency in the working and employees are motivated.
5. Pervasive function- Decision is to be taken at all level of the management such as
organizing, directing, staffing, directing and controlling (Anon., n.d.).
Henry Ford very well adopted this concept of decision- making. When he decided to raise the
wages of his workers then he had taken into consideration all the possible outcomes of it. His
decision is justified by the fact that his workers got motivated and started working more
effectively and gave his company double profit.
Steps of Decision Making
Step 1: Identification of decision
The first basic and most important step is to identify the nature of the decision, which a manager
is going to take. In 1914, when there was shortage of workers due to World War I and most of
the companies were on the verge of shutting down, Henry Ford knew what kind of decision he
has to take to cement his position in the market (Kindig, 2008).
Step 2: Collection of suitable information
Gathering of some relevant data before settling on the choice is necessary, appropriate data is
necessary and the source of data has been taken and the procedure of attaining it. This step
includes interior and outer "work." Internal data; manager will evaluate himself. External data;
managers have to see it on the internet, in journals, from other persons, and other various
sources. Henry Ford collected all the available information regarding the reason of high turnover
2. Opting for best alternate option- Decision-making is important because whenever there is
a problem, it has various solutions so taking financial and various other tools into
consideration to choose best alternative option to solve the problem.
3. Performance evaluation of managers- Decision- making is important to evaluate the
performance of manager. The number of correct decision taken by the managers will rate
him higher in performance appraisal.
4. Employees’ motivation- Decision- making is important for motivating employees as it
provides framework of working of the company to the lowest levels of the staffs. It helps
in transparency in the working and employees are motivated.
5. Pervasive function- Decision is to be taken at all level of the management such as
organizing, directing, staffing, directing and controlling (Anon., n.d.).
Henry Ford very well adopted this concept of decision- making. When he decided to raise the
wages of his workers then he had taken into consideration all the possible outcomes of it. His
decision is justified by the fact that his workers got motivated and started working more
effectively and gave his company double profit.
Steps of Decision Making
Step 1: Identification of decision
The first basic and most important step is to identify the nature of the decision, which a manager
is going to take. In 1914, when there was shortage of workers due to World War I and most of
the companies were on the verge of shutting down, Henry Ford knew what kind of decision he
has to take to cement his position in the market (Kindig, 2008).
Step 2: Collection of suitable information
Gathering of some relevant data before settling on the choice is necessary, appropriate data is
necessary and the source of data has been taken and the procedure of attaining it. This step
includes interior and outer "work." Internal data; manager will evaluate himself. External data;
managers have to see it on the internet, in journals, from other persons, and other various
sources. Henry Ford collected all the available information regarding the reason of high turnover

Decision Making 5
and absenteeism of workers in the company. According to the nature of problem, he took the
appropriate decision.
Step 3: Identification of alternatives
When the information is collected then it can be perceived that there are several choices or
alternatives through which the present problem can be solved. Opting for best alternative should
be done by checking about pros and cons of every alternative.
Step 4: Evaluate the evidence
Draw on data and slants to envision what it would take after whenever did the majority of the
decisions interestingly quite far. Study whether the need apparent in first step would meet or
settled using every decision. As chiefs experience this inside technique, they will start to support
some decisions: those that to have a higher potential for achieving objective.
Step 5: Choosing of best alternatives
After evaluation of evidence, managers are ready to select the best alternative. Managers can
choose more than one alternative depending upon the type of problem. After going to various
alternatives, Henry Ford came up with the idea of doubling the wages. He knew that this could
gave him huge profit in the long run and that what exactly happened.
Step 6: Taking action
Now managers can take positive action by implementing the best alternative they have chosen.
Henry Ford finally implemented and enforced the decision of raising the wages of his workers.
No one even could think of giving five dollars per day to every worker but Henry Ford thought
out of the line and came up with the decision.
Step 7: Review and outcome of Decision
In this last step, considering the eventual result of decision and check whether the result is
accordance with the motives setup in first step. If the decisions are not according to the need of
the company then there is need in the change of methods so that they can come to appropriate
decision. In Henry Ford case, the decision resulted in loss in initial days but after two years, the
and absenteeism of workers in the company. According to the nature of problem, he took the
appropriate decision.
Step 3: Identification of alternatives
When the information is collected then it can be perceived that there are several choices or
alternatives through which the present problem can be solved. Opting for best alternative should
be done by checking about pros and cons of every alternative.
Step 4: Evaluate the evidence
Draw on data and slants to envision what it would take after whenever did the majority of the
decisions interestingly quite far. Study whether the need apparent in first step would meet or
settled using every decision. As chiefs experience this inside technique, they will start to support
some decisions: those that to have a higher potential for achieving objective.
Step 5: Choosing of best alternatives
After evaluation of evidence, managers are ready to select the best alternative. Managers can
choose more than one alternative depending upon the type of problem. After going to various
alternatives, Henry Ford came up with the idea of doubling the wages. He knew that this could
gave him huge profit in the long run and that what exactly happened.
Step 6: Taking action
Now managers can take positive action by implementing the best alternative they have chosen.
Henry Ford finally implemented and enforced the decision of raising the wages of his workers.
No one even could think of giving five dollars per day to every worker but Henry Ford thought
out of the line and came up with the decision.
Step 7: Review and outcome of Decision
In this last step, considering the eventual result of decision and check whether the result is
accordance with the motives setup in first step. If the decisions are not according to the need of
the company then there is need in the change of methods so that they can come to appropriate
decision. In Henry Ford case, the decision resulted in loss in initial days but after two years, the

Decision Making 6
result could be easily seen as his workers gave him double profits. This shows that his decision
was correct (III, 2017).
Characteristics of Decision Making
Strategic decisions have the following attributes:
ď‚· They are tricky issues that are hard to characterize exactly.
ď‚· They require a comprehension of the issue to locate a reasonable arrangement.
ď‚· They occasionally have one best arrangement, yet frequently a progression of
conceivable arrangements.
ď‚· Questions about exchange off and needs show up in the arrangements.
ď‚· Solution benefits are hard to survey as to their adequacy, to some extent since they do
not have an unmistakable end against which viability can be judged.
ď‚· Other issues in the association are associated with answers for a central issue.
ď‚· High dimensions of equivocalness and vulnerability are related with arrangements.
ď‚· Realizing sought after advantages has impressive hazard.
ď‚· Strategic choices have contending choices that a speedy vital player can utilize
governmental strain which guarantee that a decision lines up with their inclinations
(Nutt & Wilson, 2010).
Advantages of Decision Making
ď‚· Diversity in Opinions- Diversified decisions can be helpful as they are suggestions and
opinions of different individuals having expertise in different field. It is better to have
more than one opinion or suggestion for a problem because it will give best way possible
to solve the problem (Anon., n.d.).
ď‚· Money and time saving- There is nothing as over the top as a horrible decision. A
decision is said to be terrible when the objectives set are shrouded, the targets are lost and
the effort notwithstanding imperativeness expended are wasted. A tolerable decision
saves time, money, imperativeness and results in the achievement of masterminded
focuses in the most functional way.
ď‚· Feeling of individual accomplishment and satisfaction- At the point when a pioneer
settles on a decent choice, which yields high positive outcomes, she/he can finally relax
and encounters satisfaction and a feeling of accomplishment. The pioneer could pride
result could be easily seen as his workers gave him double profits. This shows that his decision
was correct (III, 2017).
Characteristics of Decision Making
Strategic decisions have the following attributes:
ď‚· They are tricky issues that are hard to characterize exactly.
ď‚· They require a comprehension of the issue to locate a reasonable arrangement.
ď‚· They occasionally have one best arrangement, yet frequently a progression of
conceivable arrangements.
ď‚· Questions about exchange off and needs show up in the arrangements.
ď‚· Solution benefits are hard to survey as to their adequacy, to some extent since they do
not have an unmistakable end against which viability can be judged.
ď‚· Other issues in the association are associated with answers for a central issue.
ď‚· High dimensions of equivocalness and vulnerability are related with arrangements.
ď‚· Realizing sought after advantages has impressive hazard.
ď‚· Strategic choices have contending choices that a speedy vital player can utilize
governmental strain which guarantee that a decision lines up with their inclinations
(Nutt & Wilson, 2010).
Advantages of Decision Making
ď‚· Diversity in Opinions- Diversified decisions can be helpful as they are suggestions and
opinions of different individuals having expertise in different field. It is better to have
more than one opinion or suggestion for a problem because it will give best way possible
to solve the problem (Anon., n.d.).
ď‚· Money and time saving- There is nothing as over the top as a horrible decision. A
decision is said to be terrible when the objectives set are shrouded, the targets are lost and
the effort notwithstanding imperativeness expended are wasted. A tolerable decision
saves time, money, imperativeness and results in the achievement of masterminded
focuses in the most functional way.
ď‚· Feeling of individual accomplishment and satisfaction- At the point when a pioneer
settles on a decent choice, which yields high positive outcomes, she/he can finally relax
and encounters satisfaction and a feeling of accomplishment. The pioneer could pride
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Decision Making 7
his/herself dependent on the increases of the choice especially when it has improved the
fortunes of their groups and association.
ď‚· Avoiding Indiscretion- Other noteworthy pieces of fundamental authority systems
that indiscreet choices dependent on off kilter data or an energized reaction are kept up an
imperative detachment from. For the most part, these are the choices that are overseen or
excessive than anticipated. Frameworks which need a methodology which fuses various
people, particular system of data or reports most of the time works. (Anon., 2017).
Comparison between Rational Model and Incremental Model
The customary administrative way to deal with basic leadership, likewise called the rational
comprehensive model, focuses on the requirement for soundness in decision making. It looks to
present judiciousness by decreasing the quantity of choices and qualities that must be considered,
guaranteeing that the director realizes how to settle on sane choices and giving adequate data to
that procedure.
The rational-comprehensive model tells to decide the destinations, think about the conceivable
way to accomplish those goals, and pick the best option (Lombardo, 2019). One noteworthy
issue with this methodology is that goals are not clear in every case—there is frequently nobody
approach to characterize "evenhanded" or "the open intrigue." Thus, the levelheaded exhaustive
model accepts a level of comprehensiveness that may not really exist. In addition, characterizing
goals can be troublesome when the political help for a given program begins with an alliance of
different interests. Further, it might be unlikely given time requirements for an open overseer to
think about every single imaginable mean and gauge them as indicated by productivity, economy
and viability. At last, one might say that the levelheaded complete methodology is excessively
dynamic and produces implausible choices. (Anon., 2019).
The incremental model of decision making, in light of a political way to deal with open
organization, contends that the rational model is excessively unique and expects chairmen to
practice a level of judiciousness and exhaustiveness that is implausible. It focuses on the
requirement for open executives to be receptive to the political network, and its supporters
guarantee that it fits the open area better because of the fact that the commonwealth works in a
gradual way, not really a discerning or far reaching one. Goals in this model are frequently left
his/herself dependent on the increases of the choice especially when it has improved the
fortunes of their groups and association.
ď‚· Avoiding Indiscretion- Other noteworthy pieces of fundamental authority systems
that indiscreet choices dependent on off kilter data or an energized reaction are kept up an
imperative detachment from. For the most part, these are the choices that are overseen or
excessive than anticipated. Frameworks which need a methodology which fuses various
people, particular system of data or reports most of the time works. (Anon., 2017).
Comparison between Rational Model and Incremental Model
The customary administrative way to deal with basic leadership, likewise called the rational
comprehensive model, focuses on the requirement for soundness in decision making. It looks to
present judiciousness by decreasing the quantity of choices and qualities that must be considered,
guaranteeing that the director realizes how to settle on sane choices and giving adequate data to
that procedure.
The rational-comprehensive model tells to decide the destinations, think about the conceivable
way to accomplish those goals, and pick the best option (Lombardo, 2019). One noteworthy
issue with this methodology is that goals are not clear in every case—there is frequently nobody
approach to characterize "evenhanded" or "the open intrigue." Thus, the levelheaded exhaustive
model accepts a level of comprehensiveness that may not really exist. In addition, characterizing
goals can be troublesome when the political help for a given program begins with an alliance of
different interests. Further, it might be unlikely given time requirements for an open overseer to
think about every single imaginable mean and gauge them as indicated by productivity, economy
and viability. At last, one might say that the levelheaded complete methodology is excessively
dynamic and produces implausible choices. (Anon., 2019).
The incremental model of decision making, in light of a political way to deal with open
organization, contends that the rational model is excessively unique and expects chairmen to
practice a level of judiciousness and exhaustiveness that is implausible. It focuses on the
requirement for open executives to be receptive to the political network, and its supporters
guarantee that it fits the open area better because of the fact that the commonwealth works in a
gradual way, not really a discerning or far reaching one. Goals in this model are frequently left

Decision Making 8
dubiously characterized so they can direction the broadest political help, and ventures towards
progress are made gradually and steadily. The three stages related with this model are to rethink
the finishes, comes to an end conclusion, and settle on an acceptable choice.
The incremental model’s essential impediment is that it is excessively moderate. Putting together
choices essentially with respect to the help they create can prompt fixed status and gridlock,
making it exceptionally hard to react to changes in the public eye. While it is constantly
attractive to take responsiveness and political help into thought, it may not generally be astute to
concentrate on these to the detriment of different variables (Chuchu, 2012). Steady alterations of
arrangement can likewise prompt unfortunate and unintended results; when a later advance can
be executed, conditions may have radically changed, influencing past strides to appear to be
heartbreaking looking back. Maybe most genuinely, the steady model cannot immediate changes
in the public arena or lead in extensive scale adventures; it advances idleness and can really be
an obstruction when there is a need to act rapidly and definitively.
One of the intrinsic disadvantages of the arbitration and the lawful methodology when all is said
in done is that it is a type of incrementalism, and can be similarly as moderate and ineffectual in
achieving real strategy objectives. Nobody is arranging the "master plan" so the consequences of
gradual changes can be unfortunate and erratic. This methodology is additionally very tedious,
and limits support in the basic leadership process. (Anon., 2019).
Henry Ford Doubling the Wages
In 1914, Henry Ford made a major declaration that stunned the nation. It caused the budgetary
manager at The New York Times to lurch into the newsroom and ask his staff in a shocked
murmur, "He's insane, would he say he isn't? Wouldn't you say he's insane?" That morning, Ford
would start paying his workers $5.00 every day, over double the normal compensation for
automakers in 1914 (Anon., 2006). Likewise, he was decreasing the workday from 9 hours to 8
hours, a critical drop from the 60-hour workweek that was the standard in American assembling.
If the amount is adjusted according to inflation then it will come out approximately 118.67
dollars in 2015. It amount to 15 dollars per hour (Talton, 2016). This step led to motivation of
workers and they started working more actively and efficiently. The production raised
significantly and as a result the profit got doubled within first two years of decision of doubling
dubiously characterized so they can direction the broadest political help, and ventures towards
progress are made gradually and steadily. The three stages related with this model are to rethink
the finishes, comes to an end conclusion, and settle on an acceptable choice.
The incremental model’s essential impediment is that it is excessively moderate. Putting together
choices essentially with respect to the help they create can prompt fixed status and gridlock,
making it exceptionally hard to react to changes in the public eye. While it is constantly
attractive to take responsiveness and political help into thought, it may not generally be astute to
concentrate on these to the detriment of different variables (Chuchu, 2012). Steady alterations of
arrangement can likewise prompt unfortunate and unintended results; when a later advance can
be executed, conditions may have radically changed, influencing past strides to appear to be
heartbreaking looking back. Maybe most genuinely, the steady model cannot immediate changes
in the public arena or lead in extensive scale adventures; it advances idleness and can really be
an obstruction when there is a need to act rapidly and definitively.
One of the intrinsic disadvantages of the arbitration and the lawful methodology when all is said
in done is that it is a type of incrementalism, and can be similarly as moderate and ineffectual in
achieving real strategy objectives. Nobody is arranging the "master plan" so the consequences of
gradual changes can be unfortunate and erratic. This methodology is additionally very tedious,
and limits support in the basic leadership process. (Anon., 2019).
Henry Ford Doubling the Wages
In 1914, Henry Ford made a major declaration that stunned the nation. It caused the budgetary
manager at The New York Times to lurch into the newsroom and ask his staff in a shocked
murmur, "He's insane, would he say he isn't? Wouldn't you say he's insane?" That morning, Ford
would start paying his workers $5.00 every day, over double the normal compensation for
automakers in 1914 (Anon., 2006). Likewise, he was decreasing the workday from 9 hours to 8
hours, a critical drop from the 60-hour workweek that was the standard in American assembling.
If the amount is adjusted according to inflation then it will come out approximately 118.67
dollars in 2015. It amount to 15 dollars per hour (Talton, 2016). This step led to motivation of
workers and they started working more actively and efficiently. The production raised
significantly and as a result the profit got doubled within first two years of decision of doubling

Decision Making 9
the wages (Vitasek, 2017). In 1914, First World War broke out so there were lot of mass
destruction of life and property. People were in need of employment as their source of income
got destroyed due to war. He started paying more to people, which led to their motivation of
working. It is assumed that the reason for increasing the wages by Henry Ford is to widen the
market.
At that, time workers did not managed up with the allotted hours and conditions of the workers
in the factories. The problem became so big that in 1900s the turnover in Henry Ford’s factories
went to 400 per-cent which means that he had to hire 50,448 men in a year to maintain a
workforce of 13,623. Therefore, to reduce his expenses he doubled the wages. In 1913, the
absenteeism in company reached to 10.5 per-cent because most of the workers in the factories
were not satisfied with the working conditions. By 1913, the turnover raised to 370 per-cent. It
was revealed that in March 1913 more than 7,300 workers left the factory. Ford had lost
1,820,000 dollars because of turnover in 1913. These conditions led to the commencement of 5
dollars a day wage system. This was one of the best cost-cutting decision ever made which lead
to falling of turnover to 54 per-cent in 2014 and in 2015 it dropped to 16 per-cent (Perelman,
2016).
Theories of Decision Making
Rational Actor Model
Herbert Simon propounded this theory (Sambit, 2019). The fundamental thought of the
discerning performing artist demonstrate is derived from monetary hypothesis and utilitarianism.
The centre idea of the hypothesis depends on the possibility of "Financial man" who takes a wide
range of choice based on levelheadedness and utility. The financial man chooses to seek after a
specific procedure which thinks in his judgment reasonable and which will guarantee most
extreme utility. Therefore, sanity and utility are the two vital criteria that lie at the core of basic
leadership process (Nitisha, n.d.).
Process of Rational Decision Making
Set of steps in rational actor model (Cashman, 1993) are:
1. Identification of problem
the wages (Vitasek, 2017). In 1914, First World War broke out so there were lot of mass
destruction of life and property. People were in need of employment as their source of income
got destroyed due to war. He started paying more to people, which led to their motivation of
working. It is assumed that the reason for increasing the wages by Henry Ford is to widen the
market.
At that, time workers did not managed up with the allotted hours and conditions of the workers
in the factories. The problem became so big that in 1900s the turnover in Henry Ford’s factories
went to 400 per-cent which means that he had to hire 50,448 men in a year to maintain a
workforce of 13,623. Therefore, to reduce his expenses he doubled the wages. In 1913, the
absenteeism in company reached to 10.5 per-cent because most of the workers in the factories
were not satisfied with the working conditions. By 1913, the turnover raised to 370 per-cent. It
was revealed that in March 1913 more than 7,300 workers left the factory. Ford had lost
1,820,000 dollars because of turnover in 1913. These conditions led to the commencement of 5
dollars a day wage system. This was one of the best cost-cutting decision ever made which lead
to falling of turnover to 54 per-cent in 2014 and in 2015 it dropped to 16 per-cent (Perelman,
2016).
Theories of Decision Making
Rational Actor Model
Herbert Simon propounded this theory (Sambit, 2019). The fundamental thought of the
discerning performing artist demonstrate is derived from monetary hypothesis and utilitarianism.
The centre idea of the hypothesis depends on the possibility of "Financial man" who takes a wide
range of choice based on levelheadedness and utility. The financial man chooses to seek after a
specific procedure which thinks in his judgment reasonable and which will guarantee most
extreme utility. Therefore, sanity and utility are the two vital criteria that lie at the core of basic
leadership process (Nitisha, n.d.).
Process of Rational Decision Making
Set of steps in rational actor model (Cashman, 1993) are:
1. Identification of problem
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Decision Making 10
2. Search and allocate goals
3. Collection of information
4. Finding of alternatives
5. Evaluation of cost and benefits arising out of each alternative
6. Opting of best alternative
7. Enforcing the decision
8. Monitor and check
The rational model of decision- making expects that individuals will opt for the decision, which
helps to maximise the profits for the company. The chances of discerning conclusions are
anything but are intangible in monetary hypothesis. Overall, people will opt for those articles,
which will give them best utility with minimum expense. The rational model assumes:
ď‚· Manager is having appropriate data by which decision can be taken.
ď‚· Quantifiable criteria are present through which information can be accumulated.
ď‚· Manager is having has limited time.
(Anon., n.d.).
Criticism of Rational Model Theory
The rational model theory of decision- making initiative acknowledges that manager will make
resources for evaluate each alternative against the others. The target fundamental authority show
does not consider factors that cannot be assessed, for instance, moral concerns or the estimation
of magnanimity. The rational model of decision making does not include the factors which
cannot be assessed, for example, morality and unselfishness. It ignores the person’s personal
traits. The objective of this theory makes an inclination to the tendency for substances, data and
examination. (Anon., n.d.).
When the decision is more unpredictable then there are more chances that the limits are
unmistakable because they are settling on steady options. Apart from ceaselessly hoping for
propelling focal points during costs constraining, people are possibly prepared to pick a
commendable choice over the perfect choice. This happens because sometimes it is hard to
measure exactly and overview the reasons for decision making. (Anon., 2019).
2. Search and allocate goals
3. Collection of information
4. Finding of alternatives
5. Evaluation of cost and benefits arising out of each alternative
6. Opting of best alternative
7. Enforcing the decision
8. Monitor and check
The rational model of decision- making expects that individuals will opt for the decision, which
helps to maximise the profits for the company. The chances of discerning conclusions are
anything but are intangible in monetary hypothesis. Overall, people will opt for those articles,
which will give them best utility with minimum expense. The rational model assumes:
ď‚· Manager is having appropriate data by which decision can be taken.
ď‚· Quantifiable criteria are present through which information can be accumulated.
ď‚· Manager is having has limited time.
(Anon., n.d.).
Criticism of Rational Model Theory
The rational model theory of decision- making initiative acknowledges that manager will make
resources for evaluate each alternative against the others. The target fundamental authority show
does not consider factors that cannot be assessed, for instance, moral concerns or the estimation
of magnanimity. The rational model of decision making does not include the factors which
cannot be assessed, for example, morality and unselfishness. It ignores the person’s personal
traits. The objective of this theory makes an inclination to the tendency for substances, data and
examination. (Anon., n.d.).
When the decision is more unpredictable then there are more chances that the limits are
unmistakable because they are settling on steady options. Apart from ceaselessly hoping for
propelling focal points during costs constraining, people are possibly prepared to pick a
commendable choice over the perfect choice. This happens because sometimes it is hard to
measure exactly and overview the reasons for decision making. (Anon., 2019).

Decision Making 11
The decision of Henry Ford is well supported by Rational Model theory. The basic meaning of
this theory is to maximise the profit and Henry Ford’s decision of doubling the wages of the
workers eventually resulted in maximising of profit twofold. He identified the problem of not
getting enough profits and the reason leaving of his workers. He studied on various aspects and
reasons of the fault and came across various alternative options. He finally opts for the best
alternative to solve the issues of his company. He doubled the wages of his workers that resulted
to decrease of absentees and it further motivated his employees to work hard and effectively. As
a result, it leads to doubling of the profits within two years. It costs him lot of money initially as
giving five dollars to every worker every day.
Incremental Model
Incremental model tells about instead of making one immense jump towards tackling an issue,
the incremental model separates the basic leadership process into little advances. The procedure
of moving between and relies upon the blend of participation, instant, theoretical, and
implementation of different strategies. (Anon., 2019). Charles Lindblom propounded this model
of decision- making (Anon., 2017).
Distinctive focal points of the slow model are its ease and versatility. Since the difference
between the same old thing and proposed course of action at each stage is close to nothing, it is
consistently more straightforward to accomplish an understanding between different
accomplices, and battle is dodged.
The progressive structure shows a procedure for programming headway where the model is
presented and enforced. It includes both improvement and upkeep. The thing is complete when it
resolves all the problems of the company. The thing is rooted into various parts, which are all
organized and made openly. After finishing each segment then they are passed on the customer.
These licenses divides the usage of thing and keep a key detachment from a long improvement
time. This incremental model in like way supports the frightful impact of indicating new
guidelines. There are some minor issues with incremental model like that each new structure
must be made with past structures and any present frameworks. The undertaking of separating
thing does not produce any results. Nevertheless, in the event that there are such a large number
of assemble, at that point there is little included utility from each form (Anon., 2018).
The decision of Henry Ford is well supported by Rational Model theory. The basic meaning of
this theory is to maximise the profit and Henry Ford’s decision of doubling the wages of the
workers eventually resulted in maximising of profit twofold. He identified the problem of not
getting enough profits and the reason leaving of his workers. He studied on various aspects and
reasons of the fault and came across various alternative options. He finally opts for the best
alternative to solve the issues of his company. He doubled the wages of his workers that resulted
to decrease of absentees and it further motivated his employees to work hard and effectively. As
a result, it leads to doubling of the profits within two years. It costs him lot of money initially as
giving five dollars to every worker every day.
Incremental Model
Incremental model tells about instead of making one immense jump towards tackling an issue,
the incremental model separates the basic leadership process into little advances. The procedure
of moving between and relies upon the blend of participation, instant, theoretical, and
implementation of different strategies. (Anon., 2019). Charles Lindblom propounded this model
of decision- making (Anon., 2017).
Distinctive focal points of the slow model are its ease and versatility. Since the difference
between the same old thing and proposed course of action at each stage is close to nothing, it is
consistently more straightforward to accomplish an understanding between different
accomplices, and battle is dodged.
The progressive structure shows a procedure for programming headway where the model is
presented and enforced. It includes both improvement and upkeep. The thing is complete when it
resolves all the problems of the company. The thing is rooted into various parts, which are all
organized and made openly. After finishing each segment then they are passed on the customer.
These licenses divides the usage of thing and keep a key detachment from a long improvement
time. This incremental model in like way supports the frightful impact of indicating new
guidelines. There are some minor issues with incremental model like that each new structure
must be made with past structures and any present frameworks. The undertaking of separating
thing does not produce any results. Nevertheless, in the event that there are such a large number
of assemble, at that point there is little included utility from each form (Anon., 2018).

Decision Making 12
Characteristics of Incremental Model
ď‚· Risks can be managed easily as they are identified and solved preciously.
ď‚· Only some of the alternatives are considered.
ď‚· Decisions are taken after negotiations.
ď‚· As time passes by, the changes are made accordingly.
ď‚· Political considerations are important in determining outcomes.
Advantages of Incremental Model
ď‚· Flexibility
ď‚· Cost effective
ď‚· Every step is easily managed.
Disadvantages of Incremental Model
ď‚· Fragmentation of decisions
ď‚· Arbitrary exclusion
ď‚· Best policies may be overlooked
ď‚· Lacks appropriate response for large scale needs (Anon., 2009).
The decision of Henry Ford is well supported by this theory. The basic concept incremental
theory is using of small steps towards tackling the problem and overcome it. Henry Ford found
out the reasons of more turnover and making of less profit. After finding out the reasons of it, he
started planning the various alternatives through which the present problem can be solved and
came up with the strategy of doubling the wages of workers. In any company the biggest asset
are workers and to make them happy while they are working in the premises is a big task. If the
workers of the company are motivated and satisfied in every field like working hours, wages and
working conditions then they can produce positive results that can help company in attaining
maximum profit. The decision of Henry Ford led to the motivation of workers as they were
earning more than other workers were earning. The motivation of workers led to rise in the
production and within two years, Ford Company achieved double profit.
Characteristics of Incremental Model
ď‚· Risks can be managed easily as they are identified and solved preciously.
ď‚· Only some of the alternatives are considered.
ď‚· Decisions are taken after negotiations.
ď‚· As time passes by, the changes are made accordingly.
ď‚· Political considerations are important in determining outcomes.
Advantages of Incremental Model
ď‚· Flexibility
ď‚· Cost effective
ď‚· Every step is easily managed.
Disadvantages of Incremental Model
ď‚· Fragmentation of decisions
ď‚· Arbitrary exclusion
ď‚· Best policies may be overlooked
ď‚· Lacks appropriate response for large scale needs (Anon., 2009).
The decision of Henry Ford is well supported by this theory. The basic concept incremental
theory is using of small steps towards tackling the problem and overcome it. Henry Ford found
out the reasons of more turnover and making of less profit. After finding out the reasons of it, he
started planning the various alternatives through which the present problem can be solved and
came up with the strategy of doubling the wages of workers. In any company the biggest asset
are workers and to make them happy while they are working in the premises is a big task. If the
workers of the company are motivated and satisfied in every field like working hours, wages and
working conditions then they can produce positive results that can help company in attaining
maximum profit. The decision of Henry Ford led to the motivation of workers as they were
earning more than other workers were earning. The motivation of workers led to rise in the
production and within two years, Ford Company achieved double profit.
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Decision Making 13
Conclusion
It can be concluded that there are lot of responsibilities on the shoulders of the managers. The
process of taking correct decision is very complex because managers finds various solution for a
specific problem and every alternative seems to be correct. The skill and technique of managers
comes into actions when they have to opt for best available alternative after checking out all the
positive aspects of the all the available alternative. It can be said that managers have to choose
that option which will benefit the company in the long run out of all available correct options.
The decision of Henry Ford is the best example for choosing of best alternative to solve a
managerial problem. They have to go to the process of decision making very carefully because
one wrong step or move can led to choosing of wrong alternative which can led to further
downfall of the company. The decision by Henry Ford led to earning profits within two years
and because of this it can be inferred that Henry Ford opt for the best solution which solved his
multiple problems. The decision is well supported by Rational Actor Model Theory and
Incremental Model Theory. Managers have to maximise their profits while dealing with the
internal as well as external problem effectively and efficiently.
Bibliography
Conclusion
It can be concluded that there are lot of responsibilities on the shoulders of the managers. The
process of taking correct decision is very complex because managers finds various solution for a
specific problem and every alternative seems to be correct. The skill and technique of managers
comes into actions when they have to opt for best available alternative after checking out all the
positive aspects of the all the available alternative. It can be said that managers have to choose
that option which will benefit the company in the long run out of all available correct options.
The decision of Henry Ford is the best example for choosing of best alternative to solve a
managerial problem. They have to go to the process of decision making very carefully because
one wrong step or move can led to choosing of wrong alternative which can led to further
downfall of the company. The decision by Henry Ford led to earning profits within two years
and because of this it can be inferred that Henry Ford opt for the best solution which solved his
multiple problems. The decision is well supported by Rational Actor Model Theory and
Incremental Model Theory. Managers have to maximise their profits while dealing with the
internal as well as external problem effectively and efficiently.
Bibliography

Decision Making 14
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Decision Making 15
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Decision Making 16
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