Strategic Assessment Model
SAM decomposes a strategic problem into clearly defined components
in which all alternatives, factors, weights, and probabilities
are depicted. Next, objective information and subjective judgements
of experts are integrated by utilising several methods of problem
structuring and information processing.
This decomposition and evaluation is not intended to replace
the Decision-makers, rather, it provides a systematic approach
to support, supplement, and ensure the internal consistency of
their judgements through a series of logically sound techniques.
SAM divides the decision making environment into three parts:
- Internal environment: the set of relevant factors
that form the profile of the internal operations of the organisation,
- Task environment: The set of relevant factors that
have direct transactions with the organisation. The influence
between these factors is reciprocal, and
- General environment: The set of relevant factors that
can exert considerable influence on the organisation. The organisation,
however, has little or no impact on such factors.
The process consists of eight steps and uses an algebraic
model together with a *software version ("Expert Choice")
of Saaty's Analytical Hierarchy process
(AHP) to calculate risk adjusted strategic values for each alternative.
The eight steps are:
- Generate strategic alternatives. (Brainstorming
etc.) Alternatives are the set of potential means by which the
stated objectives may be obtained. There must be at least two
mutually exclusive alternatives in the set to permit a choice
to be made.
- Identify the relevant (those which can be exploited by the
strategic alternatives) opportunities and threats and group them
into internal, task and general sets of environmental factors.
- Define environmental weights (using AHP)
- Calculate the initial weights associated with the opportunities
and threats.
- Develop subjective probabilities for each alternative.
- Calculate the overall importance weight for the opportunities
and threats.
- Measure the Decision-Maker's risk-aversion constant for the
opportunities and threats (using certainty equivalence rather
than gain or loss equivalence)
- Calculate the risk adjusted strategic value for each alternative.
References
- Tavana, M., Banerjee, S.; "Strategic Assessment Model
(SAM) - A Multiple Criteria Decision-Support System for Evaluation
of Strategic Alternatives". Decision Sciences, 1995, Vol.
26, No. 1, 119-143
- Forman, EH., Saaty, TL., Selly, MA. & Waldom, R. Expert
Choice. McLean, VA: Decision Support Software, 1990.
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