Application of Rationality in Strategic Decision Making and its Implementation at Branch level: A Case Study of Habib Bank Limited (HBL) Karachi

Abstract

Purpose of this study is to analyze the rationality in decision making (specifically Strategic Decisions), implementation, and branch level managers’ inputs in Strategic Decisions in Habib Bank Limited Karachi Pakistan. Researcher focuses on to study the factors that can affect the rationality of strategic decision making. Although managers’ have strong believe in rationality in decision making but evidences suggest that the managers’ decisions are affected by improper identification of problem, due to work burden of managers, they generally make decision based on imperfect information, affected by bounded rationality, and escalation of commitment. Though,  no clear evidences have been found about lobbying and satisficing as suggested by Herbert A. Simon’s Administrative model for decision making. Organization’s communication is affected by rigid formal hierarchy having many layers resultantly there is communication gap between top management and branch managers. Evidences also suggest that there is the problem of implementation of decisions as intended by top managers that may be the result of communication gap.

Key Words: Bounded rationality, Escalation of commitment, Rationality in decision making, Satisficing.