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INTERDISCIPLINARY JOURNAL OF CONTEMPORARY RESEARCH IN BUSINESS
COPY RIGHT © 2013 Institute of Interdisciplinary Business Research
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USING ANALYTICAL NETWORK PROCESS (ANP) METHOD TO PRIORITIZE STRATEGIES RESULTED FROM SWOT MATRIX
CASE STUDY: NEDA SAMAK ASHENA COMPANY
Professor Mohammadreza Shojaei, Sanaz Abbaszade, Seyede Somayeh Aghaei Ershad Damavand University, Jandarmery st., North Felestin st., Enghelab st., Tehran, Iran
Corresponding author:
Sanaz Abbaszade
Address: Ershad Damavand University, Jandarmery st., North Felestin st., Enghelab st., Tehran, Iran
Abstract
SWOT matrix is one the common tools which managers use for decision making in various situations. Although
SWOT matrix provides a set of alternatives, one of its main constraints is inability to suggest the final solution. So,
it seems essential to apply other decision making techniques which enable managers to prioritize strategies
considering various decision making factors and those of SWOT matrix. Analytical Hierarchy Process (AHP) and
Analytical Network Process (ANP) are suitable methods to be used with SWOT matrix. Considering factors and
criteria dependent make ANP more appropriate to be used in the process of selecting the best solution than AHP.
Key words: Strategy, SWOT Matrix, IE Matrix, Analytical Network Process (ANP), Analytic hierarchy process
(AHP)
1. Introduction
Nowadays organizations face increased environmental complexities which require effective use of strategic planning
to define and implement strategies.
In addition to increasing global competition, importance of customer relationship management, and diversity of
customers and products, Iranian companies feels the necessity of strategic planning more than before due to
international sanctions. Since environmental analysis is an essential task in strategic planning, internal and external
factors influencing studied company in this research are considered carefully in order to be able to identify and
prioritize best strategies.
The company which is studied in this work is ‘Neda Samak Ashena Co.’. It's in medical equipments industry
focusing on exclusive import and distribution of acoustic and FM systems of Swiss company ‘Phonak’. Establishing
in 2002, Ashena Co. is a leading company in provision of hearing services in Iran. Having an entrepreneurship
approach in managing its business, increasing Phonak brand's market share in Iran from less than 1% in 2004 to 20-
25% in 2008, increasing sales more than to 32 times, and reaching the second market place for its acoustic product
in Iran, reflect acquiring an strategic approach in this company and are among the main reasons that we decided to
work on it in this research.
Also, with the aim of increasing the range of it hearing products, Ashena Co. has gotten representative of the
following brands in Iran: exclusive representative of autoplastic products of Dreve Co. (German company producing
laboratory acoustic and dental equipments), exclusive representative of ear, nose and throat units of MedStar which
is a South Korean company, and non-exclusive representative of battery products of PowerOne Co. (German
company producing acoustic batteries). Its great success in getting representation of internationally successful
brands, being customer-oriented, and providing customized sales and after sales services, are other reasons of
selecting Ashena Co. for this case study research.
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2. Research goals:
The main goal of this research is defining an appropriate strategy for Ashena Co. using IE matrix and AHP method.
So, after application of SWOT matrix, strategies are prioritized using ANP method.
3. Literature review
Strategy The strategy of the organization is a pattern for actions that done by employees’ in long-term (Ralph,
2007) is defined as an operational plan which is used to coordinate and organize activities resulting to achieving
organization's goal. In fact, strategic planning is not the main goal in itself but it's a set of concepts used to assist
managers in their decision makings. Strategic planning is worthwhile when it helps managers to think and act
strategically.
Analytical Network Process (ANP) The Analytical Network Process (ANP) is a general theory of relative
measurement used to drive composite priority ratio scales from individual ratio scales that represent relative
measurement of the influence of elements that interact with respect to control criteria (L. Saaty, Fundamentals of
Analytical Network Process, 1999). ANP is one of the multivariate decision making methods. It's useful when
decision makers should consider multiple factors and choices.
SWOT Matrix is one of the well-known techniques in strategic management which is used to adapt internal
strengths and weaknesses with external opportunities and threats. Strengths, Weaknesses, Opportunities and Threats
(SWOT) analysis is a commonly used tool which examines strengths and weaknesses (internal factors) of a
company or industry together with opportunities and threats (external factors) of the marketplace environment.
SWOT analysis provides the basic outline in which to perform analysis of decision situations (Görener, Toker, &
Uluçay, 2012).
IE Matrix The Internal-External (IE) matrix is another strategic management tool used to analyze working
conditions and strategic position of a business. The Internal External Matrix or short IE matrix is based on an
analysis of internal and external business factors which are combined into one suggestive model. The IE matrix is a
continuation of the EFE matrix and IFE matrix models (Maxi-pedia). In summarize way it can be defined as the
strategic management tool which is used to analyze the current position of the divisions and suggest the strategies
for the future for the better results (scribd).
4. Methodology:
This research is descriptive and falls in the category of case study. Data and information gathering was conducted
through R&D department, experts and managers in the company.
5. To Analyze:
i. Internal forces:
Main internal forces are:
1. Marketing
2. Finance
3. Accounting
4. Senior management
5. IT system
6. Production (operations)
ii. Internal Factors Evaluation (IFE):
Internal factors matrix can be drawn by strategically analyzing organization's internal factors. In this matrix, main
strengths and weaknesses of each organizational function are determined and analyzed. Also this matrix suggests
solutions to identify and analyze relationships between determined functions. In order to prepare this matrix, subject
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judgments are necessary, reminding the fact that scientific methods are not the only comprehensive and reliable
research approaches. In order to construct internal factors matrix, these steps should be followed:
1. Listing identified internal factors:
10 – 20 factors which include company's strengths and weaknesses should be identified. First strengths and then
weaknesses are listed.
2. Giving weight to the factors:
Weights start from 0 (no importance) to 1 (very important). Weight of each factor indicates relative importance of
that factor in success of the company in its industry. Regardless of high weights should be allocated to those
factors which have greatest impact on organization's performance. It should be mentioned that total sum of the all
weight must equate 1.
3. Ranking factors:
Rankings are from 1 to 4. Rank 1 indicates fundamental weakness, rank 2 indicates relative weakness, rank 3
indicates relative strength and rank 4 indicates fundamental strength of determined internal factors. Scores are
based on company's performance and weights are based on the industry.
4. Calculation of weight of each factor multiple in rank of that factor.
5. Calculation of total sum of company's scores in step 4.
iii. External forces:
In this research, external forces can be classified into 5 categories:
1. Economic forces
2. Social, cultural, ecological and environmental forces
3. Political, governmental and regulatory forces
4. Technological forces
5. Competitive forces
iv. External Factors Evaluation (EFE):
In order to construct external factor evaluation matrix, these 5 steps should be followed:
a. Listing identified external factors:
10 – 20 factors which provide opportunities or threaten company's activities should be identified.
First opportunities and then threats are listed.
b. Giving weight to the factors:
Weights start from 0 (no importance) to 1 (very important). Relative importance of each factor
depends on success of company in related industry. Usually factors which are related to
opportunities get higher weights (in compare with those related threatening factors), but if there is
any powerful threatening factor, it should be given high weight as well. Weights of the factors are
determined after reviewing successful and/or unsuccessful competitors, group discussions in
company and reaching consensus for weight of each factor. It should be mentioned that total sum
of the all weight must equate 1.
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c. Ranking factors:
Rankings are from 1 to 4 and allocate to each factor according to the effectiveness of company's
current strategies relative to each given factor. Rank 4 indicates good reaction, rank 3 indicates
above average reaction, rank 2 indicates below average reaction and rank 1 indicates weak
reaction. These rankings are determined according to the effectiveness of strategies of company
and considering weights of the factors in step 2.
d. Calculation of weight of each factor multiple in rank of that factor.
e. Calculation of total sum of company's scores in step 4.
v. Research phases
Identification of opportunities, threats, strengths and weaknesses (See table 1 Internal Factors Evaluation (IFE) and
table 2 External Factors Evaluation (EFE))
vi. Data analysis
Regardless of the number of the factors which are included in internal and external factors matrix, total sum of final
scores is between 1 and 4, and their average is 2.5. If final score of organization is below 2.5, it means that
organization has weakness regarding internal and external factors. If final score of organization is above 2.5, it
means that organization has strength regarding internal and external factors. (See Fig. 1 IE diagram)
By drawing IE diagram, Ashena Co. is position in aggressive strategy section. Following we will discuss various
solutions and provide some recommendations based on this finding. (See Table 3 SWOT Matrix)
vii. Prioritizing strategies using ANP:
1. Decision making hierarchy tree: (See Fig. 2 Decision making hierarchy tree) 2. Using Saaty’s 9 Fundamental scales for prioritization in ANP: (See Table 4
Saaty’s 9 Fundamental scales)
3. Criteria paired comparison matrix: ( See Table 5 Criteria paired comparison
Matrix)
Special vector is used in order to calculate the weights (W).
4. Paired comparison of interdependencies matrix: (See Table 6 to 11 criteria
paired comparison matrix considering their interdependencies and C1/2/3/4/5/6 as
control criterion)
5. Special vectors matrix for paired comparison of interdependencies of criteria:
(See Table 12 Special vectors matrix for paired comparison of interdependencies
of criteria)
6. Paired comparison of strategies' priority related to criteria: (See Table 13 to 18
paired comparison of strategies' priority related to C1/2/3/4/5/6 criterion
7. Special vectors' paired comparison matrix (Eij): (See Table 19 Special vectors'
paired comparison matrix)
8. Building weighted super matrix: (See Table 20 weighted super matrix and Table
21 WANP matrix)
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viii. Selecting the best strategy:
In order to choose the best strategy, the equation suggested by Lin et al is used (Zebardast, 2010):
In this equation:
Di: desirability of strategy index
Wj: relative importance of j according to the numbers in WANP matrix
Eij: score of strategy i from criteria j in Eij matrix
Finally, the alternative which gets the highest final score from equation (1) is selected as the best solution. (See
Table 22 Calculating desirability index (Di) of selected strategies and determining their ranks)
6. Results:
This paper reviews Analytical Network Process (ANP) and its application in mangers decision making about
choosing best strategies for their organizations. The reason for choosing ANP instead of AHP was that, since AHP
assumes independency of factors in hierarchical structure of decision making, it's not applicable in situations in
which there are dependency relationships between given factors. It's the case when analyzing internal and external
factors' impacts (Sehhat & Pirzadi, 2009). Moreover The ANP provides a solution for problems which cannot be
structured hierarchically (BÄuyÄukyazici & Sucu, 2003).
Findings indicate that following "increasing national and international advertisement with focus on quality
superiority" strategy is the best one for Neda Samak Ashena Co. in this period of time.
While having characteristics such as simplicity, flexibility, simultaneous consideration of qualitative and
quantitative criteria, ability to examine compatibility of judgments and rank the final alternatives, ANP overcomes
shortcomings -typical in other methods such as AHP- like lack of considering interdependencies of decision making
criteria and wrong assumption that relationships between criteria are one-way.
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References
BÄuyÄukyazici, M., & Sucu, M. (2003). THE ANALYTIC HIERARCHY AND ANALYTIC NETWORK
PROCESSES. Hacettepe Journal of Mathematics and Statistics , 32, 65-73.
Görener, A., Toker, K., & Uluçay, k. (2012). Application of Combined SWOT and AHP: A Case Study for a
Manufacturing Firm. Procedia , 58, 1525-1534.
Ralph, D. (2007). Strategic Management and Organisational Dynamics (5th ed.). Edinburgh: prentice hall.
Sehhat, S., & Pirzadi, E. (2009). Using ANP Technique for Analyzing SWOT. Industrial Management (2), 105-120.
Zebardast, E. (2010). Using ANP in Civic and Regional programming. Fine Art- Architecture and Urban (41), 79-
90.
Web References:
(n.d.). Retrieved from Maxi-pedia.[Online] Available: http://www.maxi-pedia.com/internal+external+IE+matrix
(n.d.). Retrieved from scribd. [Online] Available: http://www.scribd.com/doc/93355670/What-is-IE-Matrix
L. Saaty, T. (1999). Fundamentals of Analytical Network Process. [Online] Available from IOZ:
http://ergonomia.ioz.pwr.wroc.pl/download/AnpSaaty.pdf
L. Saaty, T. (n.d.). The Analytic Network Process. [Online] Available from from SID:
http://www.sid.ir/en/VEWSSID/J_pdf/115720080101.pdf
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Tables: Table 1 Internal Factors Evaluation (IFE)
score
Weight from
100
Weight
from 1
Weighted
score
Str
eng
ths
Differentiation, pace and quality of sales and after sales services 4 95 0.1 0.40
The way that customer is treated 4 80 0.08 0.34
Customer satisfaction 4 85 0.09 0.36
Senior manager's familiarity with up-to-date management and
marketing knowledge 3 60 0.06 0.19
Having defined, standard and regular work processes 3 55 0.06 0.17
Open system 4 75 0.08 0.31
Cost effectiveness of advertisement 3 55 0.06 0.17
Providing new product and being honest and transparent in
providing information to customers about products, diversity,
performance, and new products and services
3 55 0.06 0.17
Stability in management, senior managers and middle managers 3 50 0.05 0.16
Building a good image of company and its products in market 4 80 0.08 0.34
Wea
kn
esse
s
High product and service price 2 70 0.07 0.15
Low flexibility in giving discount to customers in after sales
services, lack of cash payment 2 55 0.06 0.12
Low flexibility and frequency of sales and pre-sales methods
and sales discounts 2 65 0.07 0.14
Dependency on import 1 75 0.08 0.08
Total 955 1.00 3.08
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Table 2 External Factors Evaluation (EFE)
score
Weight
from 100
Weight
from 1
Weighted
score
Op
po
rtun
itie
s
Competitors provide low quality products in domestic market 4 85 0.08 0.31
Access to parts of Middle East market 4 75 0.07 0.27
Information and communication infrastructure and facilities 4 80 0.07 0.29
Popularity of using 2 set acoustic and using acoustic in
younger ages 4 85 0.08 0.31
Market growth potential 3 70 0.06 0.19
Attending in internal and international seminars 3 70 0.06 0.19
Student's demand to cooperate with company while studying 3 60 0.05 0.16
Th
reat
s
Cultural malaise in using acoustic 2 70 0.06 0.13
Low rate of market growth and demand 2 60 0.05 0.11
Entry of new competitors to market 2 60 0.05 0.11
Instability in domestic regulations and exchange rate 2 65 0.06 0.12
Instability in international scale, sanctions 2 70 0.06 0.13
Acoustic is not covered by health insurance 1 85 0.08 0.08
Low price of competitors' products and services 1 85 0.08 0.08
Lack of effective research programs in the country about
audiology, acoustic and related technologies 1 85 0.08 0.08
Total 1105 1.00 2.54
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Table 3 SWOT Matrix
Strengths Weaknesses
S1: Differentiation, pace and quality of sales and after sales
services
S2: The way that customer is treated
S3: Customer satisfaction
S4: Senior manager's familiarity with up-to-date management
and marketing knowledge
S5: Having defined, standard and regular work processes
S6: Open system
S7: Cost effectiveness of advertisement
S8: Providing new product and being honest and transparent in
providing information to customers about products,
diversity, performance, and new products and services
S9: Stability in management, senior managers and middle
managers
S10: Building a good image of company and its products in
market
W1: High product and service
price
W2: Low flexibility in giving
discount to customers in
after sales services, lack of
cash payment
W3: Low flexibility and
frequency of sales and pre-
sales methods and sales
discounts
W4: Dependency on import
Op
po
rtun
itie
s
O1: Competitors provide low quality products in domestic market
O2: Access to parts of Middle East market
O3: Information and communication infrastructure and facilities
O4: Popularity of using 2 set acoustic and using acoustic in younger
ages
O5: Market growth potential
O6: Attending in internal and international seminars Student's demand
to cooperate with company while studying
O7: Student's demand to cooperate with company while studying
SO Strategies
Expanding company's presence in IRAN & Middle East
(O1,O2,S1,S2,S7,S8)
Increasing advertisements in national and international levels
with focus of quality superiority
(O1,O2,S1,S2,S7,S8)
WO Strategies
market penetration
(O1,O4,O5,W1)
Th
reat
s
T1: Cultural malaise in using acoustic
T2: Low rate of market growth and demand
T3: Entry of new competitors to market
T4: Instability in domestic regulations and exchange rate
T5: Instability in international scale, sanctions
T6: Acoustic is not covered by health insurance
T7: Low price of competitors' products and services
T8: Lack of effective research programs in the country about
audiology, acoustic and related technologies
ST Strategies
increasing advertisements with focus on superiority in diversity
and performance of products and services
(T3,T7,S7,S9)
creating strategic alliances with competitors
(T3,T7,S1,S4,S9,S11)
opening offices in other countries
(T2,T4,T5,S1,S2,S4,S8)
WT Strategies
production of raw material
(T3,T5,W1,W5)
investing in other segments of
medical equipments' industry
(T1,T2,T3,T6,T7,T8,W1,W2,W3)
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Table 4 Saaty’s 9 Fundamental scales (L. Saaty, The Analytic Network Process)
1 Equal importance
3 Moderate Importance of one over another
5 Strong or essential importance
7 Very strong or demonstrated importance
9 Extreme importance
2,4,6,8 Intermediate values
Use reciprocals for inverse comparisons
Table 5 Criteria paired comparison Matrix
Criteria C1 C2 C3 C4 C5 C6 W
C1 1.00 0.33 3.00 0.20 2.00 4.00 0.15
C2 3.00 1.00 3.00 2.00 2.00 5.00 0.29
C3 0.33 0.33 1.00 0.17 0.20 0.50 0.04
C4 5.00 0.50 6.00 1.00 0.33 7.00 0.25
C5 0.50 0.50 5.00 3.00 1.00 5.00 0.23
C6 0.25 0.20 2.00 0.14 0.20 1.00 0.04
Table 6 criteria paired comparison matrix considering their interdependencies and C1 as
control criterion
Criteria C2 C3 C4 C5 C6 W
C2 1.00 2.00 0.14 0.25 0.50 0.07
C3 0.50 1.00 0.11 0.20 0.25 0.04
C4 7.00 9.00 1.00 2.00 4.00 0.49
C5 4.00 5.00 0.50 1.00 2.00 0.26
C6 2.00 4.00 0.25 0.50 1.00 0.14
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Table 7 criteria paired comparison matrix considering their interdependencies and C2 as
control criterion
Criteria C1 C3 C4 C5 C6 W
C1 1.00 3.00 5.00 5.00 5.00 0.52
C3 0.33 1.00 1.50 1.90 1.10 0.16
C4 0.20 0.67 1.00 2.00 1.10 0.12
C5 0.20 0.53 0.50 1.00 0.50 0.08
C6 0.20 0.91 0.91 2.00 1.00 0.13
Table 8 criteria paired comparison matrix considering their interdependencies and C3 as
control criterion
Criteria C1 C2 C4 C5 C6 W
C1 1.00 0.39 0.20 0.90 2.00 0.10
C2 2.56 1.00 0.90 4.00 3.00 0.29
C4 5.00 1.11 1.00 7.00 6.00 0.45
C5 1.11 0.25 0.14 1.00 0.97 0.08
C6 0.50 0.33 0.17 1.03 1.00 0.07
Table 9 criteria paired comparison matrix considering their interdependencies and C4 as
control criterion
Criteria C1 C2 C3 C5 C6 W
C1 1.00 2.50 2.00 6.00 7.00 0.43
C2 0.40 1.00 1.50 4.00 5.00 0.24
C3 0.50 0.67 1.00 4.00 5.00 0.21
C5 0.17 0.25 0.25 1.00 1.50 0.06
C6 0.14 0.20 0.20 0.67 1.00 0.05
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Table 10 criteria paired comparison matrix considering their interdependencies and C5 as
control criterion
Criteria C1 C2 C3 C4 C6 W
C1 1.00 1.50 5.00 4.00 9.00 0.43
C2 0.67 1.00 3.00 4.00 9.00 0.33
C3 0.20 0.33 1.00 1.50 4.00 0.12
C4 0.25 0.25 0.67 1.00 2.00 0.08
C6 0.11 0.11 0.25 0.50 1.00 0.04
Table 11 criteria paired comparison matrix considering their interdependencies and C6 as
control criterion
Criteria C1 C2 C3 C4 C5 W
C1 1.00 2.50 3.50 5.00 8.00 0.47
C2 0.40 1.00 2.00 3.00 7.00 0.25
C3 0.29 0.50 1.00 1.00 4.00 0.13
C4 0.20 0.33 1.00 1.00 3.00 0.10
C5 0.13 0.14 0.25 0.33 1.00 0.04
Table 12 Special vectors matrix for paired comparison of interdependencies of criteria
W C1 C2 C3 C4 C5 C6
C1 0.00 0.52 0.10 0.43 0.43 0.47
C2 0.07 0.00 0.29 0.24 0.33 0.25
C3 0.04 0.16 0.00 0.21 0.12 0.13
C4 0.49 0.12 0.45 0.00 0.08 0.10
C5 0.26 0.08 0.08 0.06 0.00 0.04
C6 0.14 0.13 0.07 0.05 0.04 0.00
Table 13 Paired comparison of strategies' priority related to C1 criterion
Strategies A1 A2 W
A2 1.00 0.20 0.17
A1 5.00 1.00 0.83
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Table 14 Paired comparison of strategies' priority related to C2 criterion
Strategies A1 A2 W
A2 1.00 9.00 0.90
A1 0.11 1.00 0.10
Table 15 Paired comparison of strategies' priority related to C3 criterion
Strategies A1 A2 W
A2 1.00 0.11 0.10
A1 9.00 1.00 0.90
Table 16 Paired comparison of strategies' priority related to C4 criterion
Strategies A1 A2 W
A2 1.00 3.00 0.75
A1 0.33 1.00 0.25
Table 17 Paired comparison of strategies' priority related to C5 criterion
Strategies A1 A2 W
A2 1.00 0.13 0.11
A1 8.00 1.00 0.89
Table 18 Paired comparison of strategies' priority related to C6 criterion
Strategies A1 A2 W
A2 1.00 8.00 0.89
A1 0.13 1.00 0.11
Table 19 Special vectors' paired comparison matrix
W A1 A2
C1 0.17 0.83
C2 0.90 0.10
C3 0.10 0.90
C4 0.75 0.25
C5 0.11 0.89
C6 0.89 0.11
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Table 20 weighted super matrix
Alternative Criteria
C1 C2 C3 C4 C5 C6
Alternative 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Criteria
C1 0.15 0.00 0.52 0.10 0.43 0.43 0.47
C2 0.32 0.07 0.00 0.29 0.24 0.33 0.25
C3 0.03 0.04 0.16 0.00 0.21 0.12 0.13
C4 0.22 0.49 0.12 0.45 0.00 0.08 0.10
C5 0.23 0.26 0.08 0.08 0.06 0.00 0.04
C6 0.05 0.14 0.13 0.07 0.05 0.04 0.00
Table 21 WANP matrix
Criteria WANP
C1 0.29
C2 0.17
C3 0.11
C4 0.23
C5 0.11
C6 0.09
Table 22 Calculating desirability index (Di) of selected strategies and determining their ranks
Criteria Wj
Eij Wj Eij
A1 A2 A1 A2
C1 0.29 0.17 0.83 0.05 0.24
C2 0.17 0.90 0.10 0.15 0.02
C3 0.11 0.10 0.90 0.01 0.10
C4 0.23 0.75 0.25 0.17 0.06
C5 0.11 0.11 0.89 0.01 0.10
C6 0.09 0.89 0.11 0.08 0.01
0.46 0.52
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Figures:
Opportunities
4
3.26
conservative strategy conservative strategy
4
2.5
defensive strategy competitive strategy
1
Threats 1 2.5 3.08
Weaknesses
Strengths
Fig. 1 IE Diagram
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Fig. 2 Decision making hierarchy tree
Choosing best strategy
Expanding company's presence in
IRAN & Middle East
(A1)
Access to
parts of
Middle
East
market
(C6)
Cost
effectiveness of
advertisement
(C3)
Differentiati
on, pace and
quality of
sales and
after sales
services
(C1)
Competitors
provide low
quality
products in
domestic
market
(C5)
Providing new product and being
honest and transparent in providing
information to customers about
products, diversity, performance, and
new products and services
(C4)
The way
that
customer
is treated
(C2)
Increasing advertisements in national and international
levels with focus of quality superiority
(A2)