Planning business improvement using analytic hierarchy process (AHP) and Design structure matrix (DSM)

Abstract

Many management system engineering ideas and theories have evolved to help businesses grow and achieve their goals. Applying these ideas and theories to a business system is a strategic planning issue and results in a bewildering array of strategic alternatives for business system improvement. Choosing the appropriate alternatives is a complex and difficult decision. The most appropriate strategic alternative must be executable. To be executable the strategic alternative must not only be technically feasible, but must also overcome social and cultural obstructions. This research presents a planning approach to select the most appropriate strategic alternative and to plan its implementation. The planning approach is built on a planning framework synthesized from previous research. This framework involves the following planning functions: 1. Determine business strategic alternatives 2. Acquire business knowledge 3. Shape business for strategic advantage 4. Implement plan - operational engagement The planning approach uses Analytic Hierarchy Process (AHP), Project Management Tools (PMT) and Design Structure Matrix (DSM) to implement these functions and plan business improvements. This research demonstrates that rational hierarchies appropriate for strategic alternatives analysis using AHP can be constructed. Business scenarios are used to show that AHP method prioritizes alternative strategies differently under different business circumstances. In addition, the data generated by the AHP can be aggregated into statements of work and input into DSM to generate a project plan to implement organizational design changes and achieve strategic intent.