Chapter 4, Problem 1DT

Summary Introduction

To determine:

If satisficing settling for second best.

Introduction:

Satisficing:

Making decisions and pursuing the course of action which will satisfy the basic necessities to achieve a goal. It is a strategy used in decision making that involves searching alternatives and coming up the best solution which meets the requirements.

Answer to Problem 1DT

Solution:

A study on if satisficing is settling for second best or not?

Explanation of Solution

Satisficing is called second best as it is not the first choice. But satisficing is not bad as it still gives hope. Managers look into alternatives. Sometimes the alternate plans turn out to be better than the intended one. So instead of being negative on it, we can take up satisficing positively.

At times, managers need to compromise on the best idea looking into the various factors involved in the post actions of decision making. Decision making is a crucial aspect in business, and decision should be wisely taken keeping in mind all the aspects of the organisation and consequences.

Examples for Satisficing:

• Bargaining for the best price is important but over bargaining is not recommended. It is better to settle for a good price rather than losing the deal.
• Raw products are available at your place for cheaper price, but trying to get raw materials from a far off place just because the cost is a little lesser is stupidity. Satisficing is handy here.

Pros of Satisficing:

• Time saver.
• Avoidance of unwanted perfectionism.
• Works within the capacity and ability of the organisation.
• Satisficing gives more satisfaction than maximising.
• According to studies, satisficers has lesser regrets and anxiety.
• Budget work plan is formed. Unwanted expenses can be avoided.
• Satisficing helps in maximising profits.
• Satisfies shareholders.
• Confidence is maintained among investors in the management.

Maximisers always want the best. They never settle, which not a good thing is all the time. Investment, budget, capital of the organisation should all be taken into account. To get the best, if resources are not taken into account and vague decisions are made, the organisation has to undergo lot of complications later. Satisficers keep the best in mind, but go through alternates and choose what is best with the available resources. Hence, even if it is second best, the organisation need not undergo many complications in the future.

Reasons for Satisficing:

• Sacrificing short term profit, in order to concentrate on the long term profit.
• Limited resources.
• Diversified Entrepreneurship.
• Age and background of owners can also add up as a factor.
• Strategies and efforts for the betterment of the organisation.
• In order to deal with difficult situations.
• Risk management. To avoid fatal risks in advance.

Organisation must be maximises when it is capable of taking all risks and have enough resources and capitals to bring the plans into actions. Maximising should not bankrupt the organisation. If that is the case, an organisation should always choose satisficing and look into the alternates.