Application of AHP in the Design of a Strategy Map

Luis E. Quezada, Pedro I. Palominos, Miguel A. Gonzalez

Department of Industrial Engineering, University of Santiago of Chile, Santiago, Chile.
School of Industry, Andres Bello University, Santiago, Chile.

DOI: 10.4236/ib.2013.53B028                

Abstract

This paper presents an application of the Analytic Hierarchy Process (AHP) to support the creation of a strategy map. A strategy map is a representation of the cause-effect relationships between strategic objectives of a Balanced Scorecard (BSC). The method proposed establishes the relationships that are important within the strategy map. The case of seven companies is presented, where the method is applied and the results are compared with the actual maps defined by the companies. The comparison is made to determine in which extend the proposed method is useful for establishing the causal relationships in a strategy map.

Keywords

Analytic Hierarchy Process; Strategy Map; Balanced Scorecard

Conflicts of Interest

The authors declare no conflicts of interest.

References

[1]	A. Neely, “The Evolution of Performance Measurement Research: Developments in the Last Decade and a Research Agenda for the Next,” International Journal on of Operations & Production Management, Vol. 25, No. 12, 2005, pp. 1264-1277. doi:10.1108/01443570510633648
[2]	C. F. Gomes, M. M. Yasin and J. V. Lisboa, “Literature Review of Manufacturing Performance Measures and Measurement in an Organizational Context: A Framework and Direction for Future Research,” Journal of Technology Management, Vol. 15, No. 6, 2004, pp. 511-530. doi:10.1108/17410380410547906
[3]	R. S. Kaplan and D. P. Norton, “The Balanced Scorecard - measures that Drive Performance,” Harvard Business Review, Jan.-Feb 1992, pp. 71-79.
[4]	R. S. Kaplan and D. P. Norton, “The Balanced Scorecard,” Harvard Business School Press, Boston, MA, USA, 1996.
[5]	R. Kaplan and D. Norton, “Linking the Balanced Scorecard to strategy,” California Management Review, Vol. 39, No. 1, 1996. doi:10.2307/41165876
[6]	R. Y. Kaplan and D. Norton, “Transforming the Balanced Scorecard from performance measurement to strategic management: Part I. American Accounting Association,” Vol. 15. No. 1, 2001.
[7]	R. Y. Kaplan and D. Norton, “Transforming the Balanced Scorecard from Performance Measurement to Strategic Management: Part II,” American Accounting Association, Vol. 15. No. 2, 2001.
[8]	M. Kunc, “Using Systems Thinking to Enhance Strategy Maps,” Management Decision, Vol. 46, No. 5, pp. 2008, pp. 761-778. doi:10.1108/00251740810873752
[9]	R. Kaplan and D. Norton, Strategy Maps, Harvard Business School Press, 2004.
[10]	L. Quezada, F. Cordova, P. Palominos, K. Godoy and J. Ross, “Method for Identifying Strategic Objectives in Strategy Maps,” International Journal of Production Economics, 2009, pp. 122-500.
[11]	T. L. Saaty, “Fundamentals of Decision Making and Priority Theory with the Analytical Hierarchy Process,” RWS Publications, Pittsburgh, PA, 1994.
[12]	R. Saaty, “Decision Making in Complex Environment,” RWS Publications, Pittsburgh, PA, 2002.
[13]	E. Cheng and H. Li, “Analytic Hierarchy Process, An Approach to Determine Measures for Business Performance,” Measuring Business Excellence, Vol. 5, No 3, 2001, pp. 30-36. doi:10.1108/EUM0000000005864
[14]	U. Bititci, Suwignjo and A. S. Carrie, “Strategy Management through Quantitative Modelling of Performance Measurement Systems,” International Journal of Production Economics, Vol. 69, 2001, pp. 15-22. doi:10.1016/S0925-5273(99)00113-9
[15]	H. Lee, W. Kwak and I. Han, “Developing a Business Performance Evaluation System: An Analytic Hierarchical Model,” The Engineering Economist, Vol. 15, 2005, pp. 108-127.
[16]	J. Sarkis, “Quantitative Models for Performance Measurement Systems-alternate Considerations,” International. Journal of Production Economics, Vol. 86, 2003, pp. 81-90. doi:10.1016/S0925-5273(03)00055-0
[17]	G. T. Temur, E. Emeksizoghlu and S. Gozlu, “A Study of Performance Measuremet of a Plastic Packaging Organization′s System by AHP Modelling,” PICMET 2007 Proceedings, 5-7 August, Portland, Oregon, USA, 2007.
[18]	M. Yurdakul, “Measuring Long Term Performance of a Manufacturing Firm Using the Analytic Network Process (ANP) Approach,” International Journal of Production Research, Vol. 41, No. 11, 2003, pp. 2501-2529.
[19]	M. Yurdakul and Y. T. Ic, “Development of a Performance Measurement Model for Manufacturing Companies Using the AHP and TOPSIS Approaches,” International Journal of Production Research, Vol. 23, No. 21, 2005, pp. 4609-4641
[20]	T. L. Saaty, “Decision Making with Dependence and Feedback: The Analytic Network Process,” 2nd Edition. RWS Publications, Pittsburgh, PA, 2001.
[21]	H. Huang, M. Lai and L. Lin, “Developing Strategic Measurement and Improvement for the Biopharmaceutical Firm: Using the BSC Hierarchy,” Expert Systems and Applications, Vol. 38, No. 5, 2011, pp. 4875-4881.
[22]	M. Tseng, “Implementation and Performance Evaluation Using the Fuzzy Network Balanced Scorecard,” Computers & Education, Vol. 55, 2010, pp. 188-201.
[23]	I. Yuksel and M. Dagdeviren, “Using the Fuzzy Analytic Network Process (ANP) for Balanced Scorecard (BSC): A Case Study for a Manufacturing Firm,” Expert System with Applications, Vol. 37, 2010, pp. 1270-1278.
[24]	L. Quezada and D. Quintero, “Quantitative Model for the Design of a Strategy Map,” Proceedings of the 21th International Conference on Production Research, Stuttgart, Germany, 31 July- 4 August, 2011.