An integrative methodology based on the analytic hierarchy process to strategic decision making
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Date
2002-12
Authors
Al-Hemali Nafad, Abdeslam Omran
Journal Title
Journal ISSN
Volume Title
Publisher
Universiti Sains Malaysia
Abstract
Strategic decision making has emerged as one of the most active areas of current
research in management. It is an important and complex decision that faces managers in
today dynamic global business world, and despite the complexity and uncertainty
inherent in strategic decision-making, managers have to make such decisions. There is a
small body of literature on .how management science tools can be used to help managers
make their strategic decisions in a systematic manner. Most of these researches focus on
descriptive studies, which are directed at establishing theoretical structures and
frameworks. Although these studies have made good contributions in understanding
strategic choices and factors influencing them, few attempts have been made to
incorporate these findings with management science tools which can analytically
determine the optimal decision strategy.
Strategic decisions are complex, illstructured, and uncontrollable. They involve the
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consideration of multiple and conflicting objectives. These characteristics present a
major difficulty in developing a tool for evaluating strategic alternatives. The
moderating effect of environmental factors is another difficulty in making strategic
decisions. This thesis focuses on developing a methodology to make strategic decisions
more systematic in the light of the moderating influence of environmental factors. An integrative methodology is developed to facilitate strategic decision-making. The
proposed methodology addresses two .important aspects of .strategic decisions - the
multiple objective problems inherent in strategic decisions and the moderating effect of
the environmental factors. The proposed methodology is a combination of three
techniques. Scenario analysis is used to incorporate the effect of the environmental
factors by decomposing them into discrete scenarios. The analytic hierarchy process,
which is a multiple criteria decision support deals with illstructured decision problem
that account for multiple and conflicting objectives, is used to solve the multiple criteria
problem inherent in strategic decisions. And, Starr's Domain Criterion is used for the
selection of the optimal decision 9trategy, given the various scenarios. The proposed
methodology decomposes the strategic problem into clearly defined steps. Computer
softwares are provided to handle all the mathematical computation required.
For the purpose of evaluating the proposed methodology, the strategic choice of market
entry mode was chosen as a reference for the research problem. An experiment was
conducted on a sample of MBA students at the School of Management, University of
Science Malaysia. It has been demonstrated that the proposed methodology can be
effectively applied to the entry mode decision. There was relative consensus on the
gootiness of the methodology among the participants. The methodology, as perceived
by the participants, was found to be good in term of satisfaction of the decision making
process and the satisfaction with the outputs. It was shown that the goodness of the
methodology is not sensitive to the decision maker but more to the decision problem.
Description
Keywords
Strategic decision