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Application of Combined SWOT and AHP: A Case Study for a Manufacturing Firm

Authors: Ali Gorener, Kerem Toker, Korkmaz, Ulucay

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Contents

Contents AHP- Analytic Hierarchy Process Applying AHP in SWOT analysis (Strengths, Weaknesses, Opportunities and Threats Analysis) Aim of this case sudy: Analysing SWOT subfactors of a manufacturing firm in Turkey Ranking the factors and subfactors

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HIERARCHICAL STRUCTURE

MODEL 1 GOAL: Ranking Factors and subfactors Factor 2 Factor 3 Factor 1 . . .

Subfactor 1 Subfactor 2 . . . Subfactor k Subfactor 1 Subfactor 2 . . . Subfactor m Subfactor 1 Subfactor 2 . . . Subfactor n

Prioritizing factors Prioritizing subfactors locally or globally

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HIERARCHICAL STRUCTURE

MODEL 2 (proposed 5 criteria and 3 alternatives)

GOAL: Ranking Alternatives Criterion 3 Criterion 2 Criterion 1 Criterion 4 Criterion 5 Alternative 2 Alternative 1 Alternative 3

Prioritizing criteria Prioritizing alternatives based on each criterion Ordering the preferences of alternatives

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HIERARCHICAL STRUCTURE

Model 2 Table of Weights Decisive Criterion C1 C2 C3 C4 C5 Alternatives w1 w2 w3 w4 w5 Weight A1 a11 a12 a13 a14 a15 p1 A2 a21 a22 a23 a24 a25 p2 A3 a31 a32 a33 a34 a35 p3

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Saaty Scale

Pairwise Comparison Scale- Saaty Scale

Importance Explanation 1 Two criteria contribute equally to the objective 3 Experience and judgment slightly favor one over another 5 Experience and judgment strongly favor one over another 7 Criterion is strongly favored and its dominance is demonstrated in practice 9 Importance of one over another affirmed on the highest possible order 2,4,6,8 Used to represent compromise between the priorities listed above Presenter: N.T.Kuong Application of Combined SWOT and AHP: A Case Study for a Manufacturing Firm 6 / 15

Decision Matrix

Pairwise Comparison Matrix A=      a11 a12 . . . a1n a21 a22 . . . a2n . . . an1 an2 . . . ann      aij: the importance of criterion Ai compared to criterion Aj in Saaty Scale aij = 1/aji or reciprocal

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Decision Matrix

Theoretical Weight Quotient Matrix

• f Criteria A1, . . . , An

A1 A2 . . . An A1 A2 . . . An     w1/w1 w1/w2 . . . w1/wn w2/w1 w2/w2 . . . w2/wn . . . wn/w1 wn/w2 . . . wn/wn    

• W

    w1 w2 . . . wn    

w

= n     w1 w2 . . . wn    

w

wi is the theoretical/absolute weight of criterion Ai in group (A1, A2, . . . , An)

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Decision Matrix

Theoretical matrix W and Pairwise comparison matrix A Matrix W is reciprocal and consistent, i.e. aij = 1/aji, aijajk = aik while matrix A may not be consistent W has rank 1 and its max eigenvalue equals n (λmax = n) The largest eigenvalue of A is greater or equal to n Consistency Index (CI) of A: CI = λmax − n n − 1 λmax is A’s largest eigenvalue Consistency Ratio (CR) of A: CR = CI RI RI is the Random Index

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Decision Matrix

Calculating weights of criteria Row Geometric Mean Prioritization Method wi =

n

• n
• j=n

aij

n

• i=1

n

• n
• j=n

aij Normalizing sums over rows with a large power w = Ake eTAke, e = (1, 1, . . . , 1)

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SWOT Analysis Presenter: N.T.Kuong Application of Combined SWOT and AHP: A Case Study for a Manufacturing Firm 11 / 15

SWOT Analysis Presenter: N.T.Kuong Application of Combined SWOT and AHP: A Case Study for a Manufacturing Firm 12 / 15

SWOT Analysis

Environment Scan Internal Analysis External Analysis Strengths S1 S2 S3 S4 S5 Weaknesses W1 W2 W3 W4 W5 W6 W7 Opportunities O1 O2 O3 Threats T1 T2 T3 T4 T5 T6 T7

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Overall Priority Scores of SWOT Factors

OVERALL PRIORITY SCORES OF SWOT FACTORS

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Overall Priority Scores of SWOT Factors

REFERENCES

[1] Ali Gorener, Kerem Toker, Korkmaz, Ulucay, Application of Combined SWOT and AHP: A Case Study for a Manufacturing Firm, Social and Behavioral Sciences 58 (2012) 1525-1534. [2] Thomas L. Saaty, How to make a decision: The Analytic Hierarchy Process, European Journal of Operational Research 48 (1990) 9-26.

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