Critical decision in crisis management: Rational strategies of decision making



Abstract. Turbulent environment can create crises that management has to soles in a limited time with critical decisions. Critical decisions are an attempt to apply efficient modes of cognition and action to enable the organization to cope with consequential environmental threats or take advantage of important opportunities in the presence of highly restricted time in turbulent markets and/or specific situations. Critical decisions involve a process of the organization’s leadership to think, consult, act, gain acceptance for optimal solutions to complex problems in the presence of highly restricted time in crisis given by scarce resources, uncertain factors, aversive environment, environmental difficulties, ambiguous circumstances, unclear and volatile situations, or a combination of these factors. This study presents the endogenous and exogenous types of crises for organizations and vital factors for critical decisions that can be categorized in responsitive, proactive and recovery critical decisions. After that, the study shows strategic operations and steps of critical decisions in a perspective of reductionism, and a rational structure based on tree diagram to systematize the process of decision making. The study here also suggests strategies for critical decisions in different environments based on theory of rational choice, such as max-min, max-max and min-max approaches, described with a vital example.  Final part of this study shows how a complex problem can be treated in different ways in a wider perspective of ecological rationality by approaches of resolution, solution and dissolution. The implications of strategic management are that the approach of dissolution of a complex problem requires design of a critical decision that may incorporate research and trial and error activities. Overall, then, this paper suggests one of the most effective way of solving systemic and complex problems by private and public organizations operating in, more and more, turbulent markets and volatile environments.

Keywords. Strategic management, Decision making, Critical decision, Crisis management, Competitive advantage, Strategies, Strategic change, Business Strategy, Operational excellence, Problem solving, Bounded rationality, Decision rule, Decision theory, Natural disasters, Risk management, Bounded rationality, Environmental threats, Ecological rationality, Theory of rational choice.

JEL. C44, D70, D81, D91, H12, M51, Q54.


Strategic management; Decision making; Critical decision; Crisis management; Competitive advantage; Strategies; Strategic change.

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