AHP e Análise SWOT

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.Forest Policy and Economics 1 2000 41 52

.Utilizing the analytic hierarchy process AHP in SWOTanalysis a hybrid method and its application to a

forest-certication case

Mikko Kurttila a,U , Mauno Pesonen a, Jyrki Kangas b, Miika Kajanus a

a Finnish Forest Research Institute, Helsinki Research Center, P.O. Box 18, FIN-01301 Vantaa, Finlandb Finnish Forest Research Institute, Kannus Research Station, P.O. Box 44, FIN-69101 Kannus, Finland

Received 22 February 1999; accepted 1 April 1999

Abstract

The present study examines a new hybrid method for improving the usability of SWOT Strengths, Weaknesses,.Opportunities and Threats analysis. A commonly used decision analysis method, the Analytic Hierarchy Process

. AHP , and its eigenvalue calculation framework are integrated with SWOT analysis. AHPs connection to SWOT yields analytically determined priorities for the factors included in SWOT analysis and makes them commensurable.The aim in applying the hybrid method is to improve the quantitative information basis of strategic planningprocesses. The hybrid method was tested in connection with a Finnish case study on forest certication. In the casestudy, the results were presented in an illustrative way by utilizing the quantitative information achieved by thehybrid method. The results indicated that certication could be a potential strategic alternative in our case studyfarm. In addition, the needed pairwise comparisons were found useful, because they force the decision maker tothink over the weights of the factors and to analyze the situation more precisely and in more depth. 2000 ElsevierScience B.V. All rights reserved.

Keywords: AHP; Decision analysis; External and internal environment; Forest certication; Strategic planning; SWOT

An earlier version of the paper was presented at the conference 1997 ACSM r ASPRS American Congress on Surveying and.Mapping r American Society for Photogrammetry and Remote Sensing Annual Convention and Exposition, April 7 10, 1997,

Seattle and published in the Conferences Technical Papers.U Corresponding author. Tel.: q 358-9-857-05-804; fax: q 358-9-857-05-809.

. E-mail address: mikko.kurttila@metla. M. Kurttila

1389-9341r 00r $ - see front matter 2000 Elsevier Science B.V. All rights reserved. .PII: S 1 3 8 9 - 9 3 4 1 9 9 0 0 0 0 4 - 0


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( ) M. Kurttila et al. r Foresty Policy and Economics 1 2000 41 5242

1. Introduction

Forestry and forest planning are inuenced by

changes within internal and external operationalenvironments. In forest planning, most of theconcern has traditionally been placed on the in-ternal environment assuming the external envi-ronment to be stable. Recently, applications andmethods dealing with changes arising from theexternal environment have been presented andapplied in forest planning. These methods in-clude, for example, connecting the exogenoustimber-demand factor and lagged price adjust-ment to a timber management planning model .Mykkanen, 1995 , participatory planning, whichmeans responding to the objectives of external

interest groups e.g. Kangas et al., 1996a;.Pykalainen et al., 1999 , and including stochastic-

ity, arising, for example, from changes in timberprices and the level of tree growth, with forestplanning by using risk and scenario techniques .e.g. Pukkala and Kangas, 1996 . However, com-mon strategic planning approaches are funda-mentally based on adjusting to changes in theexternal environment and there exists a widerange of planning methods that are well-suitedfor analyzing the interactions of both environ-ments simultaneously. These methods are avail-able and can be further developed to be used inforest planning.

SWOT the acronym standing for Strengths,.Weaknesses, Opportunities and Threats analysis

is a commonly used tool for analyzing internaland external environments in order to attain asystematic approach and support for a decision

situation e.g. Kotler, 1988; Wheelen and Hunger,.1995 . The internal and external factors most

important to the enterprises future are referredto as strategic factors and they are summarized within the SWOT analysis. The nal goal of strategic planning process, of which SWOT is anearly stage, is to develop and adopt a strategyresulting in a good t between internal and exter-nal factors. SWOT can also be used when strategyalternative emerges suddenly and the decisioncontext relevant to it has to be analyzed.

If used correctly, SWOT can provide a goodbasis for successful strategy formulation. Never-

theless, it could be used more efciently e.g..McDonald, 1993 . When using SWOT, the analy-

sis lacks the possibility of comprehensively ap-

praising the strategic decision-making situation;merely pinpointing the number of factors instrength, weakness, opportunity or threat groupsdoes not pinpoint the most signicant group. Inaddition, SWOT includes no means of analyticallydetermining the importance of factors or of as-sessing the t between SWOT factors and deci-sion alternatives. The further utilization of SWOTis, thus, mainly based on the qualitative analysis,capabilities and expertise of the persons partici-pating in the planning process. As planning

processes are often complicated by numerous cri-teria and interdependencies, it may be that theutilization of SWOT is insufcient. In their study,

.Hill and Westbrook 1997 found that none of the20 case companies prioritized individual SWOTfactors, one grouped factors further into subcate-gories, and only three companies used SWOTanalysis as an input for a new mission statement.In addition, the expression of individual factors was of a very general nature and brief. Thus, itcan be concluded that the result of SWOT analy-sis is too often only a supercial and impreciselisting or an incomplete qualitative examinationof internal and external factors.

Applications for gaining extra value fromSWOT analysis in further strategic planning

.processes have been presented. Weihrich 1982presented the TOWS matrix, which helps to syste-matically identify relationships between threats,opportunities, weaknesses and strengths, and of-fers a structure for generating strategies on the

.basis of these relationships. Proctor 1992 pre-sented a computer package partly based on

.Weihrichs TOWS matrix. In Proctors 1992package, computer-aided creativity produces words for decision makers to use in identifyingstrengths, weaknesses, opportunities and threats.

.In addition, Proctors 1992 method includes cre-ative generation and systematic evaluation of

.strategic alternatives. Flett 1989 introduced amethod of initiating and crystallizing conceptualthinking. His method is a mix of Kiplings ve Ws .What, When, Where, Who, Why , McCarthys

four Ps plus one additional P Product, Price,


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( ) M. Kurttila et al. r Foresty Policy and Economics 1 2000 41 52 43

.Place, Promotion and People and SWOT analy-sis and its rating. The method results in a broad-in-scope and innovative strategic management

planning framework.Some examples of weighting and subdividing

.SWOT lists have been presented. Kotler 1988presented that external factors could be classiedaccording to their attractiveness and success

.probability opportunities and seriousness and .probability of occurrence threats . Internal fac-

tors could be rated by their performance andimportance. In addition, he subdivided SWOT by

.business unit. Wheelen and Hunger 1995 sum-marized the external and internal strategic factors

into EFAS Synthesis of External Strategic Fac-. tors and IFAS Synthesis of Internal Strategic

.Factors . They showed how internal and externalfactors can be weighted and rated to illustratehow well management is responding to these spe-

.cic factors rating in light of their perceived .importance to the company weight . Weighting

. was carried out at scale from 0.0 not important .to 1.0 most important so that the sum of the

. weights was 1.0 and rating at scale 1 poor to 5 .outstanding . The product of these two was a weighted score indicating how well the companyis responding to current and expected strategicfactors in its environment. In addition to EFAS

.and IFAS, Wheelen and Hunger 1995 weightedand rated SFAS Strategic Factors Analysis Sum-

.mary , which included the most important exter-nal and internal strategic factors. In addition to weighting and rating individual SWOT factors,

.Hemmi 1995 suggested weighting four SWOTgroups and using these weights as additional mul-tipliers for individual factors to assess their over-all importance. However, none of these ap-

proaches presented a systematic technique fordetermining importances.

The decision analysis tool employed in the pre- .sent study, the Analytic Hierarchy Process AHP ,

is a mathematical method for analyzing complexdecision problems with multiple criteria. It was

.originally developed by Saaty 1977, 1980 . Basi-cally, AHP is a general theory of measurementbased on some mathematical and psychologicalfoundations. AHP can deal with qualitative at-tributes as well as quantitative ones. It has been

found to be a useful decision-analysis techniqueand it has been applied in cases dealing withstrategic planning, including marketing applica-

.tions Wind and Saaty, 1980 , design and evalua-tion of business and corporate strategy Wind,

.1987 . It has also been combined with the Delphitechnique when integrating interactive expert

knowledge in decision analysis Kangas et al.,.1996b . AHP is a widely used method also in

forestry and forest management planning. A listof applications from a variety of areas of decision

.making is reported by Zahedi 1986 , and applica-tions concerning natural resource management

. were recently reviewed by Mendoza 1997 .

Forest certication has rapidly become a majortopic in the debate dealing with the issue of howto improve the ways in which the worlds forestscan be sustainably managed. It has been devel-oped alongside a growing trend for ecolabellingof consumer products. It endeavors to link marketdemands for forest products produced accordingto high environmental and social standards with

producers, who can meet such demands Bass,.1997 . The decision to adopt certied forestry

concerns the entire chain of events from theforest to the nal user.

Forest certication may be dened as the ac-tion of a third-party in demonstrating that forestmanagement and forest operations are in con-formity with specic standards. These standardsembody ecological, economic and social aspects.It can also be said that certication is a guaranteethat such forests have been sustainably managed.Utilizing certication in marketing operations re-

.quires a label eco-label , which indicates thatcertied raw materials have been used in theproduction of a certain product.

At the forest owner level, certication is astrategic decision: Should a forest owner adoptcertied timber production with strict environ-ment-friendly criteria instead of continuing withconventional timber production? What are thecosts of obtaining a certicate and what are theexpected gains? How rapidly can or should thechange take place?

Clearly, forest certication is a possibility inforestry mainly brought about by external envi-ronmental factors. These factors, and the forest


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owners capabilities to respond to them, must beexamined. The decision situation at hand is astrategic planning situation in which SWOT and AHP can both be used. SWOT provides the basicframe within which to perform an analysis of thedecision situation and AHP assists in carrying outSWOT more analytically. The possible advantagesof using AHP in SWOT analysis lie in the quanti-tative examination of the SWOT factors and in-

.clusion of preferences of the decision maker s inthe planning situation. In addition, AHP andSWOT are both widely used, basic methods, andthey are relatively easy to understand. Thus, theyboth are well suited to be used also in practical

forest planning.The present study deals with the development

of SWOT analysis connected to a decision situa-tion of whether or not to adopt a certicationsystem. Its rationale and justication are based onthe importance of versatile environmental analy-sis in strategy formulation and strategic decision-making processes and in suggesting the potentialusability of the common strategic planning toolsin forest planning. Environmental analysis in-cludes in-depth and critical examination of inter-

nal and external factors. It is not sufcient just tocollect the relevant factors. Moreover, managersmust view these factors from different stand-points and identify the foremost internal factors, which may be called critical success factors. Thecomparison of a rms position relative to itsmain competitors can be based on these factors.In addition, external factors should be appraisedin relation to internal strengths and weaknesses.Following these analyses, managers will have theircornerstones, e.g. the factors on which future

success and strategies should be based.The objective of this study is to look into SWOTfactors in greater detail and more systematically. An application utilizing pairwise comparisons of AHP technique in SWOT analysis is presented. Also, a strategic decision-making situation of cer-ticating a non-industrial private forest holding inFinland is provided to illustrate the use of thisapplication. Finally, the suitability of the pre-sented method and the possibilities for its furtherapplication in different situations are discussed.

2. Outline for applying AHP in SWOT analysis

When applying AHP, a hierarchical decisionschema is constructed by decomposing the deci-sion problem into its decisions elements. Theimportance or preferences of the decision ele-ments are compared in a pairwise manner withregard to the element preceding them in thehierarchy. Numerical techniques are used to de-rive quantitative values from verbal comparisons.

The advantages of AHP include its ability tomake both qualitative and quantitative decisionattributes commensurable, and its exibility with

.regard to the setting of objectives Kangas, 1992 .Subjective preferences, expert knowledge and objective information can all be included in the oneand the same decision analysis. AHP is easy toapply and understand, and thus, the reformula-tion of the decision problem and repeating of comparisons can be protable and educational.

Basically, the results of an AHP analysis are .the overall global priorities of decision alterna-

tives. The idea in utilizing AHP within a SWOTframework is to systematically evaluate SWOTfactors and commensurate their intensities. AHPsadvantages, i.e. systematic approach to decisionproblems and commensurateness, can be re-garded to be valuable characteristics in SWOTanalysis. Additional value from a SWOT analysiscan be achieved by performing pairwise compar-isons between SWOT factors and analyzing themby means of the eigenvalue technique as appliedin AHP. This offers a good basis for examiningthe present or anticipated situation, or a newstrategy alternative, more comprehensively. Aftercarrying out these comparisons, decision makers

will have new quantitative information about thedecision-making situation; for example, whetherthere is a specic weakness requiring all the at-tention, or if the company is expected to be faced with future threats exceeding the companys com-bined opportunities.

Only the most important concepts of the AHPtheory are presented here. For more details onthe AHP theory, readers are referred to Saaty .1977, 1980 . The following denitions need to bemade at this point; SWOT groups refer to four


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entities i.e. strengths, weaknesses, opportunities.and threats and SWOT factors refer to the indi-

vidual factors underlying these groups. The

method introduced proceeds as follows:

2.1. Step 1. SWOT analysis is carried out

The relevant factors of the external and inter-nal environment are identied and included inSWOT analysis. When standard AHP is applied,it is recommended that the number of factors within a SWOT group should not exceed 10 be-cause the number of pairwise comparisons needed

.in the analysis increases rapidly Saaty, 1980 .

2.2. Step 2. Pairwise comparisons between SWOT factors are carried out within e ery SWOT group

When making the comparisons, the questions .at stake are: 1 which of the two factors com-

pared is a greater strength opportunity, weakness. .or threat ; and 2 how much greater. With these

comparisons as the input, the relative local priori-ties of the factors are computed using the eigen-

. value method described below . These prioritiesreect the decision makers perception of the

relative importance of the factors. 2.3. Step 3. Pairwise comparisons are made betweenthe four SWOT groups

The factor with the highest local priority ischosen from each group to represent the group.These four factors are then compared and theirrelative priorities are calculated as in Step 2.These are the scaling factors of the four SWOTgroups and they are used to calculate the overall .global priorities of the independent factors within them. This is done by multiplying the fac-

.tors local priorities dened in Step 2 by the value of the corresponding scaling factor of theSWOT group. The global priorities of all thefactors sum up to one.

2.4. Step 4. The results are utilized in the strategy formulation and e aluation process

The contribution to the strategic planningprocess comes in the form of numerical values for

the factors. New goals may be set, strategies de-ned and such implementations planned as takeinto close consideration the foremost factors.

..The matrix of pairwise comparisons Eq. 1 isconstructed in Step 2. In this matrix, the element a s 1r a and thus, when i s j, a s 1. The valuei j ji i jof w may vary from 1 to 9, and 1 r 1 indicatesiequal importance while 9 r 1 indicates extreme orabsolute importance.

1 w r w . . . w r w1 2 1 n w r w 1 . . . w r w2 1 2 n

. A s a s . . .i j . . . . . .. . . w r w w r w . . . 1 n 1 n 2

.1

In the comparisons, some inconsistencies can beexpected and accepted. When A contains incon-sistencies, the estimated priorities can be ob-

w .xtained by using the matrix Eq. 1 as the inputw .xusing the eigenvalue technique Eq. 2 .

. . A y I q s 0, 2max

where is the largest eigenfactor of matrix A;maxq is its correct eigenfactor; and I is the identitymatrix. The correct eigenfactor, q , constitutes theestimation of relative priorities. It is the rstprincipal component of the matrix of pairwisecomparisons. If the matrix does not include anyinconsistencies, i.e. the judgments made by a de-cision maker have been consistent, q is the exactestimate of the priority vector. Each eigenfactoris scaled to sum up to one to obtain the priorities.

.Saaty 1977 has shown that of a recipro-maxcal matrix A is always greater or equal to n .s number of rows s number of columns . If thepairwise comparisons do not include any inconsis-tencies, s n. The more consistent the com-maxparisons are, the closer the value of computed

is to n. Based on this property, a consistencymax ..index, CI, has been constructed Eq. 3 .

. . .CI s y n r n y 1 3max

CI estimates the level of consistency with respectto a comparison matrix. Then, because CI isdependent on n, a consistency ratio CR is calcu-


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..lated, which is independent of n Eq. 4 . Itmeasures the coherence of the pairwise compar-isons. To estimate CR, the average consistency

index of randomly generated comparisons, ACI,has to be calculated. ACI varies functionally, ac-

.cording to the size of the matrix e.g. Saaty, 1980 .

. .CR s 100 CIr ACI 4

As a rule of thumb, a CR value of 10% or less isconsidered to be acceptable. Otherwise, all orsome of the comparisons must be repeated inorder to resolve the inconsistencies of the pairwise comparisons.

Thus, the results of the comparisons are quan-titative values expressing the priorities of thefactors included in SWOT analysis. Thereby, per-sons formulating strategies gain access to newquantitative information about the environmentsurrounding their rm to support their decisionmaking. They can concentrate on connecting themost important and compatible opportunities andstrengths in the strategy-building process or see if the rm is facing some critical threats or weak-nesses that must be reacted to.

3. Forest certication a Finnish case study

The introduction and testing of certicationand eco-labels are currently in progress in Fin-nish forestry. According to preliminary plans,forest certication can be carried out at the regio-

nal or forest-holding level Metsasertioinnin.standardityoryhma, 1997 . The associated criteria,

and also the ofcial organization, of certicationare still under construction. The subjects of the

current discussion focusing on forest certicationconcern the formulation of the criteria and thefeasibility of certication. Also, the certicationbody or system is still an unknown quantity, theone proposed in Finland being a national cer-

tication program Metsasertioinnin standardi-.tyoryhma, 1997 , which should also attain interna-

tional acceptance. The two major internationalcandidates are the Forest Stewardship Council .FSC and the ISO organization.

Certication causes some costs. Firstly, there

are the external expenses, i.e. the transactioncosts in obtaining and maintaining certication.Secondly, there are the internal costs, i.e. the

opportunity or incremental costs to be paid by theforest management unit in order to meet thecertication requirements and to augment thesocial value and environmental content of theforest. As compensation, there exist some bene-ts, the magnitude of which are uncertain as yet.These possible benets include the market re-sponse through increased returns from timbersales, maintenance of market shares and auxiliary

.benets Linddal, 1997 .Our case study farm, the Runni Organic

Farming Expertise Centre, is situated in easternFinland. The estate is 55 ha in size, of which 30ha are forestland. The Runni Centre provideseducational and information services concerningorganic farming specializing in organic animalhusbandry and dairy production and forestry.

The Runni Centre is faced with a new strategicpossibility, which may be classied as an emergingstrategy, arising from consumer and wood-processing industry demands. Should they make acommitment to move to certied forestry or stayin timber-production-oriented forestry? Themanaging director of Runni Centre organized aplanning session, in the course of which a SWOTanalysis was performed and the key factorsconcerning this new strategic option were col-

.lected Fig. 1 .The background information comprised the es-

timated effects of one planned certication sys-tem based on a results of a pilot study, wherepreliminary Swedish ecolabelling criteria were ap-plied to Finnish forestry in a sample of non-in-

dustrial private woodlots Kajanus and Kar-. jalainen, 1997 . The Runni Centre was among

those participating in this study. The main costsof certication, from the timber production per-

spective, are caused by protected areas covering.from 5 to 10% of the forest area of the estate

and the retention of trees on cutting areas. At theRunni Centre, it turned out to be, that the stum-page earnings are slightly bigger when practicingforestry in accordance with certication criteriacompared to timber-production oriented forestry.This is caused by the fact that while in the latter


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Fig. 1. A result of SWOT analysis for the Runni Centre.

.case one stand area 1.5 ha is clear-cut duringthe planning period, in the former case the samestand was protected. However, this woodlot couldcompensate for the loss by adding cuttings aiming

.at natural regeneration area 2.8 ha to the certi-cation plan. It has to be noted that during thefollowing 10-year planning periods, it is not nec-essarily possible to make similar compensations.Some differences also arise due to silvicultural

.practices that vary with cutting regimes Table 1 .

These results do not include the external costsnor the potential benets of certication; e.g.there were no differences between xed costs andtimber prices between the alternatives.

Following the construction of the SWOTframework, the priorities of the factors includedin the SWOT analysis were estimated by pairwisecomparisons following the steps presented above.The managing director and an expert on themethodology involved made the comparisons

Table 1 .The estimated effects of the planned forest certication criteria for the Runni Centre at 4% interest rate level

Timber-production- Forestry according tooriented forestry certication criteria

y 1 y 1 y 1 y 1 . .in FIM ha year in FIM ha year

Stumpage earnings 547 589Costs of silviculture y 30 y 41

Effects of planned certication systemNet change in value of 10

astanding timberRetained trees y 9Protected areas y 104Gross prot 517 445

Difference in gross prots y 72cost of adopting forest

.certicationa The difference of value of standing timber between two alternatives in favor of certication alternative during a 10-year

planning period.


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together, with the expert acting as a consultantexplaining the situation to the managing director, who made the comparisons.

Positive factors predominated: four out of veof the biggest global priorities represented

.strengths or opportunities Table 2 . Only one weakness, small cutting incomes, belonged to thetop ve group. In fact, revenues from timberproduction are of minor importance to the RunniCentre when compared to the educational func-tions. This partly explains the low importance of the threats and weaknesses. The whole situation

is easily observed by referring to Fig. 2. Thelengths of the lines in the different sectors pointout that the strengths and opportunities predomi-

nate and that at present there are no specicthreats or weaknesses that could ruin the newstrategy. The foremost factors can be easily pickedout to form the basis for the formulation of theecolabelling strategy.

The consistencies of the comparisons carried .out in Step 2 were good Table 2 . The compar-

isons at this level did not cause any difcultiesand the decision maker was able to logically pri-

Table 2a

Priorities and consistency ratios of comparisons of the SWOT groups and factors carried out in a session by the Runni Centreb .manager and an expert the greatest weight with respect to each SWOT group is underlined

SWOT group Priority of SWOT factors Consistency Priority of Overallthe group ratio the factor priority of

within the the factorgroup

Strengths 0.27 Small eco costs from certication 0.059 0.016 .favorable forest structureMinor dependence on timber 2.3% 0.125 0.033productionCapacity to adapt and evolve 0.408 0.109certication system

Synergy with agriculture 0.408 0.109and education units

Weaknesses 0.15 Monotonous forest from 0.094 0.015biodiversity point of viewSmall forest area 1.4% 0.168 0.026for protectionSmall cutting incomes 0.738 0.114

Opportunities 0.50 Price premium for certied 0.090 0.045timberImprovement in biodiversity 0.7% 0.143 0.071and environment

Changes in consumers 0.767 0.380preferences increase in market.demand for certied timber

Threats 0.08 Diminishing protability 0.122 0.010Diminishing cutting 0.5% 0.230 0.019possibilitiesNegative image if 0.648 0.054certication systemis abandoned

a The consistency ratio of the comparisons between four SWOT groups was 9.0%.b The overall priority of the factor is computed simply by multiplying the priority of the factor within the group by the priority of

the group


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Fig. 2. Graphical interpretation of the results of pairwise comparisons of SWOT groups and factors the factors are arranged in.such a way that the factor possessing the highest global priority is the outermost point .

oritize the factors. However, the comparisons inStep 3 proved to be more complicated, with theconsistency ratio being as high as 9.0%, which can

still be considered to be acceptable, but clearlyhigher than the others.

The implemented analysis suggests that basedon factors that signicantly describe the operatio-nal environment, certication strategy could beadopted. It points out the most important factorsin the operational environment of the enterprise, which can be used in subsequent planningprocesses and the development of whose shouldbe specially monitored. The most important func-tion of the case was, however, to clarify the use of

the proposed method and to present the resultsof SWOT analysis in an illustrative way. SWOT is just one phase of the strategic planning process,

that should be thoroughly carried out before adecision to adopt a specic strategy is made. Inaddition, the information used in the calculations was preliminary and the situation, e.g. the certi-cation criteria, may change.

4. Discussion

In this study, a common strategic planning tool,SWOT, was used in a case study concerning certi-


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cation of the forests of a private woodlot. Al-though SWOT is in common use as a planningtool, it has some weaknesses. The objective of this

study was to present an application where someof these weaknesses can be avoided, and therebySWOT can be used more effectively. This wasdone by linking SWOT with a decision analysis

.method AHP . The result was a hybrid method, which produces the quantitative values for theSWOT factors.

Due to its simplicity, effectiveness and ability todeal with qualitative as well as quantitative crite-

ria this was also indicated by the results of this.study , AHP is well-suited to dealing with the

factors in SWOT analysis. One problem withSWOT analysis is in the uncertainty related tothe future development and outcomes of differentfactors. This may complicate comparisons. How-ever, AHP analysis is capable of handling deci-sion-making situations with some uncertaintiesand inconsistencies.

The recommendation is that the number of factors within the strengths, weaknesses, opportu-nities or threats should be limited to 10, but thisprobably induces the user to avoid overlappingand carelessness when constructing SWOT lists.On the other hand, the limitation is not so strict,and the problem of having a large number of comparisons can be avoided by at least two dif-ferent techniques. Firstly, by grouping the vari-ables and adding a new level to the comparison

.hierarchy Saaty, 1980 . If, for example, the num-ber of opportunities is large, they can be groupedinto two or three subgroups. Opportunities, forexample, may be divided into General Environ-mental Opportunities and Competitive Environ-

.mental Opportunities Dess and Miller, 1993 .

Secondly, new data recording and analysis tech-niques offer possibilities to include more factorsin decision analysis. For example, Alho and Kan-

.gas 1997 presented a regression version of AHPformulated in Bayesian terms. Their version canbe developed and utilized so that not all compar-isons need to be performed.

AHP provides quantitative priorities to be usedin decision support. It does not, however, includestatistical assessment of the uncertainty of theresults. The measure of the consistency of the

comparisons made, the consistency ratio, result-ing from AHP calculations provides no directinformation about the uncertainty of the priori-

ties obtained. Other methods for analyzing uncer-tainties in pairwise comparisons have been pre-

.sented. Alho et al. 1996 suggested a variancecomponents modeling approach, where uncer-tainty or variation of the judgments in the case of multiple judges can be divided into three parts: .1 interpersonal variation around the population

.mean; 2 possible shared logical inconsistency of .the judgments among the judges; and 3 residual

.uncertainty. Alho and Kangas 1997 extendedthat formulation to a multilevel, multiple-objec-

tive choice problem by using regression techniqueand the Bayesian approach. As a result, it waspossible to attach probability to the resulting pri-orities. These techniques might also be used inthe approach based on the combined use of SWOT and AHP.

Numerical results, the priorities of SWOT fac-tors, are of use when formulating or choosingstrategy. It is useful to compare the externalpossibilities in relation to the internal capabili-ties, because all factors are, at the same, on thenumerical scale. For example, when it is observedthat one single weakness is bigger than all thestrengths, the strategy chosen could perhaps beaimed at eliminating this weakness. Similarly,choosing a new strategy should probably not bebased merely on the opportunities and omittingthe existing threats if they are of same magnitude.

In the case study illustrating the use of thehybrid method, the results, based on preliminarycalculations, indicated that certication could beadopted. Certication can be considered to be apotential strategy alternative and it can be used

as a competitive advantage on our case farm. Thedecision to adopt certication is not, however,permanent. Forests, when compared to someother factors of production, e.g. machinery, arequite exible, and it is not impossible to make areverse decision after some years should certi-cation prove to be as an unfavorable decision.

The results of our case study were presented inan illustrative way, which is often needed to clar-ify the interactions of numerous and contradic-tory factors. In strategic planning, this is often


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implemented via matrixes or graphs. Well knownexamples of these instruments are the BostonConsulting Groups Business Portfolio Matrixbusiness growth rate and relative competition

. position , General Electrics approach market at-.tractiveness and competitive position , and An-

soffs product r market expansion grid, and otherse.g. Ansoff, 1965; Hofer and Schendel, 1978;

.Dess and Miller, 1993 .The hybrid method presented here is suitable

for many kinds of strategic planning situations,including forest planning situations. In the casestudy, the situation investigated was one where anew strategy option emerged. The method can

also be used in situations where strategic optionshave not yet been created. After dening thepriorities of the SWOT factors, new strategies canbe constructed based partly on the informationresulting from comparisons. A connection with

. .Weihrichs 1982 and Proctors 1992 applica-tions utilizing priorities to nd out the most im-portant factors when creating new strategies ac-cording to their suggestions is also possible.

In addition, it is possible to compare two ormore strategic options and nd out which onebest matches the SWOT factors. This can be doneby adding strategy alternatives at the lowest levelof the comparison hierarchy and comparing them with respect to each factor in the SWOT list. Theresult is a quantitative value indicating the prior-ity or preference of each strategy option.

One approach to dealing with the uncertaintiesinvolved in the assessment of future developmentmight be the application of scenario modeling. Inthis approach, each possible future scenario wouldhave its own SWOT analysis and AHP compar-isons. Appraising the probabilities to scenarios

and weighting the SWOT factors with them could yield a more comprehensive picture of the effects

.of the various future outcomes. Weihrich 1982 ,too, proposed a dynamic SWOT analysis, wherechanges in internal and external factors over timeare included by preparing TOWS matrixes atdifferent points of time.

According to the experiences of this study, theresults of the combined use of AHP and SWOTanalysis were promising. Making pairwise compar-isons forces the decision maker to think over the

weights of the factors and to analyze the situationmore precisely and in more depth. The applicabil-ity of the method in participatory planning will be

studied in future. Public participation could beimplemented by allowing all participants to per-form their own SWOT analysis and pairwise com-parisons, and then to proceed by summing up theseparate results after weighting the participantsby their individual importances. This would resultin new alternatives from the participants view-points and probably include more creativity in theplanning process.

It is evident that a lot of managerial decisionmaking is based on intuition and subjective judg-

ments instead of the outcomes of formal plan-ning. Expanding the presented formulation tocover a wider range of decision makers and ex-perts to introduce their ideas and estimates couldbenet the planning process. Interaction, learningand consensus can all be achieved by, for exam-ple, including the Delphi technique in the plan-

.ning process e.g. Kangas et al., 1996b .The hybrid method of AHP and SWOT in-

creases and improves the information basis of strategic planning processes. It provides an effec-tive framework for learning in strategic decisionsupport in numerous situations. It can also beused as a tool in communication and education indecision making processes where multiple deci-sion makers or judges are involved.

Acknowledgements

Authors wish to thank Jukka Peltoniemi, Lic. .Sc. Econ , Daniel Schmoldt, Ph.D., Yrjo Sevola,

)Lic. Sc. For and an anonymous referee for their

comments on an earlier version of the presentmanuscript.

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AHP e Análise SWOT