Introduction
Contradictions and questionable paradoxes tend to occur in the decision-making of the organizations. In the context of the presented case, it is vital to portray the fact that logical and rational decisions have a tendency to have an adverse effect on the processes while having a destructive nature within the company. Meanwhile, the changing the concepts and principles of decision-making can contribute to the overall alterations in the group dynamics while changing the vicious circles to the virtue ones.
The primary goal of this paper is to determine the level of an impact of the paradoxes and contradictions including winner’s curse, Icarus paradox, and the tragedy of commons on the overall decision-making in the organization. The groupthink and biases have dissimilar natures and have to be assessed to determine their influence on the functioning. In the end, the conclusion is drawn to summarize whether the article provides novel insights concerning decision-making within the firm.
Literature Review
Winner’s Curse
Firstly, Bazerman and Samuelson (1983) focus on the winner’s curse paradox while identifying the situations of its occurrence and portraying its potential influence on the critical thinking within the organization. Meanwhile, the authors imply that this paradox can be present at professional or personal levels, and theory reflects that the lack of information when making a bid, and the winner overpays for the traded asset (Bazerman & Samuelson, 1983). Meanwhile, the extended number of participants and uncertainty regarding the values of the asset are the primary drivers in the context of this situation (Bazerman & Samuelson, 1983). Based on the information provided above, it is apparent that the article offers new insights regarding the actions during the takeover associated with intensified competition while the understanding of this aspect contributes to the elimination of the occurrence of this situation.
Vicious Circles
Meanwhile, vicious circles is another paradox, which has to be considered in the context of the presented case. The overall concept implies that the solution to the initial problem might lead to the rise of the subsequent issue while determining the return to the original problem (Masuch, 1985). The reasoning for the development of this paradox is related to the organizational dynamics, action theory, the ability to determine the correlation of corporate decisions with the individual intentions, and the clustering (Masuch, 1985). Meanwhile, the presence of this aspects leads to the cultivation of the significant company’s drawbacks including stagnation, malfunction, and underperformance (Masuch, 1985). In this case, the reading reveals that a high attention has to be concentrated on the organizational dynamics, as it is vital to maintain compliance to avoid adverse concerning the organizational efficiency.
In turn, it is critical to determine the nature of the virtuous circles, as they have the opposite effect while implying that the solution leads to the subsequent positive results (Calugary, 2015). The utilization of this principle has a reflection on consequences of the managerial practice, as the sufficient training is correlated with the increase in the profit margins while causing the enhancement of the overall efficiency (Calugary, 2015). Meanwhile, the publication states that the vicious circles can be transformed into the vicious ones, as the overall actions during the decision-making process have a tendency to fluctuate (Calugary, 2015). In this case, this approach offers new insights regarding the potential transformation of the circle to turn their damaging initiative into positive consequences. It is apparent that the ability to spot the development of the vicious circle can contribute to the minimization of the negativities.
Tragedy of Commons
In turn, the tragedy of commons is regarded as another matter, which has an adverse impact on the decision-making. In this case, this theory is one of the social traps, which implies that each individual prioritizes his/her own rationale during his evaluation process (Platt, 1973). Meanwhile, each participant has a personal reasoning behind his/her actions (Platt, 1973). The diversified goals and the absence of the common goal lead to the development of the adverse effect on the overall functioning from the economic perspective (Platt, 1973). This approach determines the necessity for the advancement of the corporate culture while aiming at the satisfaction of the goals of the individuals and the simultaneous compliance with the firm’s mission.
Meanwhile, it is apparent that the tragedy of commons tends to be present in the business life on the regular basis due to the common nature of the problem. One of the instances is related to the presence of different perceptions regarding the distribution of the resources to cultivate the organizational growth and productivity (Marin & Bjoklund, 2015). This issue occurred in Norway and was related to the optimization of land tenure, and the dissimilarities and viewpoints caused the rise in the development of the misconceptions (Marin & Bjoklund, 2015). The publication revealed that the clash of interests and the inability to find a compromise is one of the causes of the development of the problem.
The Icarus Paradox
Lastly, the role of the Icarus paradox cannot be underestimated, as it has a tendency to bias the overall decision-making process. This principle implies that the matters that increase the level of success may have a destructive nature due to the underestimations of the decisions (Drummond, 2001). This aspect has a referral to the Icarus story, as the desire to fly and explore was fatal for the inventor (Drummond, 2001). Meanwhile, Drummond provides the example of Marks & Spenser while depicting that the leadership approach to pay attention to the details that led to failure due to the development of closed-door managerial style (Drummond, 2001). In this case, the reading provides a new understanding of the problem and highlights the vitality of external analysis and the necessity to depict the organizational issue from dissimilar angles. Despite the positive intentions and successful outcomes, these aspects might be viewed as a primary reason for failure due to the unjustified prioritization of these principles for the firm’s success.
Conclusion
In the end, it is apparent that different social and psychological consequences have a substantial influence on the overall decision-making due to the fluctuations in the critical thinking associated with these matters. In this case, the literature synthesis contributes to the understanding that the presented concepts have to define the flow of the overall functioning of the organization and its decision-making strategies. Meanwhile, the avoidance of the paradoxes and social biases mentioned above will have a beneficial influence on the risk assessment as the core principles related to the groupthink and inconsistencies will be prioritized while evaluating the issue. Lastly, the counter actions can be applied to minimize the development of these aspects in the context of the workplace-based problem.
The company remains one of the leaders in the crude oil industry while having operations in an extended variety of countries. Currently, it considers the expansion with the assistance of the acquisitions to enhance organizational efficiency. The first acquisition was overpriced while it was critical for the enlargement in GoM region. Meanwhile, the initial takeover received a higher degree of scrutiny and had a substantial influence on the subsequent acquisitions. In the context of the workplace-based scenario, it is vital to determine the impact of the biases and paradox on the decision-making in the organization regarding the selection of the expansion instruments. Consequently, the critical goal of this section is to determine the ability of social paradoxes and biases affect the overall decision-making process while evaluating the application of each principle in the context of the workplace-base problem.
In this case, the utilization and reflection of Winner’s curse paradox on the overall functioning of the organization are vital due to the necessity to understand the application of the theoretical concepts into practice. In the context of the workplace-based issue, the company’s decision making related to the first acquisition, as it was overpriced due to the inability to evaluate the pricing sufficiently. The presence of this matter identifies the occurrence of the winner’s paradox, but the company considers the possibility of implementing the overpriced takeover due to its ability to be regarded as the definer of the potential growth. In this case, the company has to increase the necessity of research to minimize the reoccurrence of this phenomenon.
Another common paradox is ‘operation successful: patient dead’, and it is critical to determine its values and concepts while referring to the actions in the crude oil industry. In this case, this matter might have a referral to the closed-door management, as, the inability to consider externalities might lead to the development of the negative consequences related to the decision-making. In the context of the presented situation, the company’s overreliance on its strengths while diminishing the vitality of the external factors was one of the reasons for the inability to maintain its profitability at the sufficient level. Simultaneously, it was one of the primary drivers for the necessity of takeovers for the maximization of profits and expansion of the geographical operations.
Lastly, the application of the vicious circles paradox has to be reflected in the context of the workplace-base problem, as the real-life portrayal is necessary to understand the concepts. The company’s sequential decisions related to the implementation of the takeovers might be discovered as the cause of the decrease in the company’s profitability and efficiency. The lack of the information about the acquired company might be viewed as a possible threat to the organizational profitability due to the inability to predict potential consequences. Nonetheless, the situation could be transformed into the virtuous circle with the assistance of the establishment of the team and the necessity to conduct a profound research to minimize the risks.
In the end, it is apparent that the paradoxes and biases presented in the theory have a critical influence on the functioning of the organization, as they have a tendency to affect the decision-making process associated with the expansion strategy. It could be said that overpriced takeovers and the inability to assess the risks lead to the misunderstandings of the current situation. Meanwhile, the presence of these issues leads to the development of the adverse consequences while causing the introduction of the vicious circle. In the end, it could be said that a combination of these factors plays a critical role in the prosperity of the organization, as they have a tendency to define the organizational functioning.
References
Bazerman, M., & Samuelson, W. (1983). I won the auction but don’t want the prize. Journal of Conflict Resolution, 27(4), 618-634.
Calugary, K. (2015). The virtuous circle and the vicious circle in managerial investment. Manager, 21, 34-43.
Drummond, H. (2001). The art of decision making: Mirrors of imagination, masks of fate. Chichester, UK: John Wiley & Sons.
Marin, A., & Bjoklund, I. (2015). A tragedy of errors? Institutional dynamics and land tenure in Finnmark, Norway. International Journal of the Commons, 9(1), 19-40.
Masuch, M. (1985). Vicious circles in organizations. Administrative Science Quarterly, 30(1), 14-33.
Platt, J. (1973). Social traps. American Psychologist, 28(8), 641-651.