Performance Measurement

10 Mar Performance Measurement

There is not an agreed definition about what performance measurement is [1], [2]. Neely et al. [2] define it as “the process of quantifying the efficiency and effectiveness of action”. There are a number of frameworks for measuring the performance of an organization. Among them, the BSC is used in this work. In the proposed method, what it is evaluated is the achievement of the strategic objectives of the BSC, by using the scale proposed by Cheng et al. [3] that ranges from 0 to 1.

Kaplan and Norton [4] developed the BSC as a performance measurement system. It challenges the usual use of financial indicators to measure the performance of a company form a strategic point of view, by considering indicators in other perspectives. The BSC has evolved from a performance measurement system (PMS) to a strategic management system and has become very popular among practitioners [2], [5], [6], [7]. It considers fours perspectives, Finances, Clients, Internal Processes and Growth & Learning, defining strategic objectives for each of them, which are aligned with the mission and strategy of the company. The strategic objectives are also linked through causal relationships to create a “strategy map”, which is a way of representing the strategy of a company [8], [9], [10].

On the other hand, The Strengths-Weaknesses-Opportunities and Threats Analysis (SWOT) analysis is a tool for analyzing a company from an internal and external perspective, in order to generate strategies for the firm. It was popularized by Andrews [11], based on the ideas of Drucker [12], Selznick [13] and Chandler [14]. The SWOT matrix, derived from the SWOT analysis, presents a mechanism to facilitate the link between the strengths and weaknesses (internal factors) and the threats and opportunities of the market (external factors). The SWOT analysis allows managers to develop four types of strategies: SO (Strengths – Opportunities), ST (Strengths – Threats), WO (Weaknesses – Opportunities) and WT (Weaknesses – Threats). In this way, it provides a framework for identifying and formulating strategies.

Both BSC and SWOT analysis have been quantified using multi criteria decision-making methods (MCDM), such as the Analytic Hierarchy Process (ANP) and its extension, the Analytic Network Process (ANP), both developed by Saaty [15], [16], [17].

the SWOT analysis is a powerful tool for carried out an external and internal analysis from a strategic point of view, as well as for defining strategies. However, it does not provide a method to assign a rank or a priority to the factors/strategies identified. To overcome this limitation, authors, such as Kurtilla et al. [27}, Shrestha et al. [28], Kahraman et al. [29], Eslamipoor and Sepehriar [30], Mehmood et al. [31], Zare et al. [32] and Polat [33] used AHP to assign priorities to the various elements of the SWOT analysis. Some authors, such as Chang et al. [34], Yüksel and Dagdeviren [21], Azimi et al. [35], Sevkli et al. [36], Shahabi et al. [37], Arsić et al. [38] have used ANP to have to assign priorities to the factors or strategies associated to the SWOT analysis.

Reference

• [1] E. Pinheiro de Lima, S. Gouvea, J. Angelis, J. Munik, Performance measurement systems: A consensual analysis of their roles, International Journal of Production Economics, 146 (2) (2013) 524-542.
• [2] 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, 25 (12) (2005) 1264-1277.
• [3] C. H. Cheng, K. L. Yang, C. L. Hwang, Evaluating attack helicopters by AHP based on linguistic variable weight, European Journal of Operational Research, 116(2) (1999) 423-435.
• [4] R. S. Kaplan, D. P. Norton, The balanced scorecard: Measures that drive performance, Harvard Business Review, 70, (1992) 71–79.
• [5] S. S. Nudurupati, U. S. Bititci, V. Kumar, F.T.S., State of the art literature review on performance measurement, Computers & Industrial Engineering, 60 (2) (2010) 1-12.
• [6] Z. Hoque, 20 years of studies on the balanced scorecard: Trends, accomplishments, gaps and opportunities for future research, The British Accounting Review, 46 (1) (2014) 33-59
• [7] Y. H. Lin, C.C. Chen, C. F. Tsai, M. L. Tseng, Balanced scorecard performance evaluation in a closed-loop hierarchical model under uncertainty, Applied Soft Computing, 24, (2014) 1022-1032.
• [8] R. S. Kaplan, D. P. Norton Having trouble with your strategy? Then map it. Focus Your Organization on Strategy—with the Balanced Scorecard, Harvard Business Review, 78 (5) (2000) 167-176.
• [9] R. S. Kaplan, D. P. Norton, Strategy maps: Converting intangible assets into tangible outcome, Boston, MA: Harvard Business School Press. (2004).
• [10] L. C. Leung, K. C. Lam, D. Cao, Implementing the balanced scorecard using the analytic hierarchy process and the analytic network process, Journal of the Operational Research Society, 57(6) (2006) 682-691.
• [11] K. R. Andrews, The concept of corporate strategy. Homewood, IL: Dow Jones-Irwin. (1971).
• [12] P. Drucker, Concepts of the corporation, New York: The Jhon Day Company. (1946).
• [13] P. Sleznick, Leadership in administration: A sociological interpretation. Berkeley: Harper and Row. (1966).
• [14] A. Chandler, Strategy and Structure: Chapters in the History of the Industrial enterprise, Cambridge, Mass: MIT Press. (1962).
• [15] T. L. Saaty, How to make a decision: the analytic hierarchy process. Interfaces, (1994) 24(6) 19-43.
• [16] T. L. Saaty, Decision making with dependence and feedback: The analytic network process (Vol. 4922), Pittsburgh: RWS publications. (1996).
• [17] T. L. Saaty, Decision making—the analytic hierarchy and network processes (AHP/ANP), Journal of systems science and systems engineering, 13(1) (2004) 1-35.
• [21] İ., Yüksel, M. Dagdeviren, Using the analytic network process (ANP) in a SWOT analysis–A case study for a textile firm, Information Sciences, 177(16) (2007) 3364-3382.
• [27] M. Kurttila, M. Pesonen, J. Kangas, M. Kajanus, Utilizing the analytic hierarchy process (AHP) in SWOT analysis—a hybrid method and its application to a forest-certification case, Forest policy and economics, 1(1) (2000) 41-52.
• [29] C. Kahraman, N. C. Demirel, T. Demirel, Prioritization of e-Government strategies using a SWOT-AHP analysis: the case of Turkey. European Journal of Information Systems, 16(3) (2007) 284-298.
• [30] R. Eslamipoor, A. Sepehriar, Firm relocation as a potential solution for environment improvement using a SWOT-AHP hybrid method, Process Safety and Environmental Protection, 92 (3) (2014) 269-276 [31] F. Mehmood, M. Hassannezhad, T. Abbas, Analytical Investigation of Mobile NFC Adaption with SWOT-AHP Approach: A Case of Italian Telecom, Procedia Technology, 12 (2014) 535-541
• [32] Zare, K., Mehry-Tekmeh, J., and Karimi, S., A SWOT framework for analysing the electricity supply chain using an integrated AHP methodology combined with fuzzy-TOPSIS, International Strategic Management Review, 3 (2015) 66–80
• [33] Z. Polat, M. Alkan, H. Sürmeneli, Determining strategies for the cadastre 2034 vision using an AHP-Based SWOT analysis: A case study for the Turkish cadastral and land administration system, Land Use Policy, 67 (2017) 151-166
• [34] H. H., Chang, W. C. Huang, Application of a quantification SWOT analytical method, Mathematical and Computer Modelling, 43(1), (2006), 158-169.
• [35] R. Azimi, A. Yazdani-Chamzini, M. M. Fouladgar, E. K. Zavadskas, M. H. Basiri, Ranking the strategies of mining sector through ANP and TOPSIS in a SWOT framework, Journal of Business Economics and Management, 12(4) (2011) 670-689.
• [36] M. Sevkli, A. Oztekin, O. Uysal, G. Torlak, A. Turkyilmaz, D. Delen, Development of a fuzzy ANP based SWOT analysis for the airline industry in Turkey, Expert systems with Applications, 39(1) (2012) 14-24.
• [37] R. S. Shahabi, M. H. Basiri, M. R. Kahag, S. A. Zonouzi, An ANP–SWOT approach for interdependency analysis and prioritizing the Iran ׳ s steel scrap industry strategies, Resources Policy, 42 (2014) 18-26.