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Herbert SimonFor Simon management it equivalent to decision makingdescribes 3 stages in the overall process of making a decision1 Finding occasions calling for a decisionthe intelligency activity using the word in its military sense2 inventing developing and analyzing possible courses of actionthe design activity3 selecting a particular course of action from those availablethe choice activitygenerally speaking intelligence activity precedes design and design activity precedes choice but the sequence of stages can be much more complex than thisEach stage can in itself be a complex decisionmaking processthe design stage can call for new intelligence activitiesproblems at any stage can generate a series of subproblems which in turn have their intelligence design and choice stageson what basis do administrators make decisions The traditional theory of economists assumed complete rationality Their models was of economic man who deals with the real world in all its complexity He selects rationally determined best course of action from among all those available to him in order to maximize his returns But clearly this model is divorced from realityThe need for an administrative theory is precisely because there are practical limits to human rationality These limits to rationality are not static but depend upon the organizational environment in which the individuals decision takes place It then becomes the task of administration so to design this environment that the individual will approach rationality in decisions as closely as practicable as judged in terms of the organizations goalsin place of Economic man Simon proposes a model of
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