Question

Explain rational and non-rational decision-making concepts and provide a business example where you would justify using a rational and non-rational concept.

Answer 1

Rational decision making is based on pure data and analytics. These decisions are calculated and pondered over in a objective manner. While non-rational decisions tend to be based on hunch ,emotions or intuitions and aren't as hardcore calculated choices.

For example:

If a business is to acquire a new supplier ,it will go through all the available suppliers that suits it in the market ,but would choose the one that is purely beneficial based on data like cost ,quality etc which would make it a rational decision.

Imagine the business has had the same supplier for 10 years and now new technologies allows other suppliers to offer similar quality at lower prices,rational decision would be to switch to a new supplier but sometimes business houses tend to hold on to certain aspects of dealing that may not be rational. A business may choose to keep the same supplier ,and it would make it a non-rational decision based on emotional connection and satisfaction.