Analysis of Product Viability and Competition, and Selection of Strategy in Tool Steel Industry: Ordinal Methods vs the Analytic Hierarchy Process

Hary Kintarso
PPM Graduate School of Management
Kirti Peniwati
PPM Graduate School of Management

Publication date: Aug, 2001

Journal: The 6th International Symposium on the Analytic Hierarchy Process

Publisher: Creative Decisions Foundation

Abstract: Literature in strategic management offers methodologies for conducting quantitative analysis for product viability, competition, as well as strategy formulation and selection. Most of the proposed methodologies use ordinal type of scale for measuring relative priority, which is scientifically unacceptable since it may not produce meaningful results. Cardinal scale (preferably ratio scale as used by AHP) is the valid measurement scale for multi-criteria analysis. Applying the two methods for strategic analysis in a tool steel industry, by the same decision makers, leads to different results. Market positions of the business under study as well as the expectation of the decision makers support the AHP outcomes.

Keywords: Product analysis, Competition analysis, Strategy selection, AHP, Ordinal method