Preliminary Criteria Reduction for the Application of Analytic Hierarchy Process Method

Remigiusz Gawlik

MPRA Paper from University Library of Munich, Germany

Abstract: The Analytic Hierarchy Process (AHP) is a method for multi – criteria decision making. It consists principally of three levels – Main Goal, Criteria and Alternatives. The Main Goal level can be extended into forces and actors influencing the decision making process, the Criteria level can be divided into criteria and sub – criteria, whereas the decision alternatives can be treated as action scenarios and prognostics of their effects. In turbulent environments of actual global economic reality the number of criteria that need to be taken into account when making strategic decisions can be broad. Theoretically the more determinants at the preparatory stage, the better decision making. In fact, multiplying the number of factors can obfuscate the main goal and result in inefficient final decision. For this reason some kind of rationalization of amount of criteria seems to be necessary. According to T. L. Saaty, the author of AHP method, the number of criteria and alternatives analyzed in decision making processes should not exceed 7 (+/- 2), which gives 9 criteria / alternatives maximum. The article attempts at finding a method for reducing the number of factors taken into account when performing data collection for future decision making. Geopolitical determinants of functioning of international corporations have been used as criteria. The author tries to emphasize the aspect of final decision quality, which should not be impoverished because of limitations of amount of analyzed criteria and strategic alternatives.

Keywords: Analytic Hierarchy Process; Decision Making; Strategic Planning; Geopolitics (search for similar items in EconPapers)
JEL-codes: C38 F59 M21 (search for similar items in EconPapers)
Date: 2008
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Citations: View citations in EconPapers (1)

Published in Evolution and Revolution in the Global Economy: Enhancing Innovation and Competitiveness Worldwide (2008): pp. 366-374

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