Rational Decision Making Model

Stage 1
As Jeff Rommel started managing the affairs of the Nationwide Insurance in 2004, he straightaway faced the challenge of 119,000 claims having worth of $80 Million resulted from the worst ever hurricane in history of Florida. And it was a big challenge to entertain all the claims made by the customers.
Stage 2
To solve this challenge a comprehensive decision criteria was needed. Following factors could be the part of decision criteria:
• Customer Satisfaction
• Financial Health of the Company
• Goodwill of the Company
Stage 3
The weightage to be assigned to each of these options could be decided by the philosophy and the individual perception of the Rommel. The decision reached by the Rommel indicates that the financial health of the Company was the most crucial decision criteria factor in his perception.
Stage 4
In response to this challenge Rommel did not have a lot of alternative options. He either could have honoured all the claims or on the other hand pulled out cancelling the policies and make his way out of all the mess he was faced with.
Stage 5
If he could have entertained all the claims then it would have proven a disaster for the health of his Company leaving the Company itself in a trembling financial situation making difficult to survive later on. On the other hand if he could pulled back his Company out of the situation then it could have proved financially beneficial for the Company but it would have also brought loss of goodwill and negative publicity causing disaster to the customer satisfaction.
Stage 6
As we have discussed earlier that the financial health of the Company was the basic crucial factor in the perception of Rommel for the survival and well being of the Company so he pursued the decision making process under influence of his perception and decided to cancel 40,000 home owners’ policies instead of entertaining them, to which he called later on a “sound business decision” based on a sound rationale.

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