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Fuzzy SWOT analysis

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Journal of Intelligent & Fuzzy Systems 18 (2007) 99–108 99
IOS Press

Fuzzy SWOT analysis

S. Ghazinoory∗, A. Esmail Zadeh and A. Memariani
Department of Industrial Engineering, Bu-Ali Sina University, Hamedan, Iran

Abstract. The SWOT (which is sometimes called TOWS) matrix is one of the most important tools for strategic planning
specially in the stage of extracting strategies. While the use of SWOT is quite common and popular, it still continues to have
certain structural problems. The most important of which are the lack of considering uncertain and two sided factors, lack of
prioritization of the factors and strategies and too many extractable strategies. This paper attempts to solve some of the problems
by following the fuzzy approach to the internal and external factors (in the form of fuzzy membership functions). The presented
algorithm in this article prioritizes and extracts the most significant strategies based on the intensity of the effect.

Keywords: Fuzzy, SWOT, strategic planning

1. Introduction competency-based planning, however [2] could point

out the relation between SWOT and two above ap-
SWOT (an acronym standing for Strengths, Weak- proaches.
nesses, Opportunities and Threats) analysis is a com- Despite its wide applications, the SWOT method has
monly used tool for analyzing internal and external also a number of problems that 7 of them are mentioned
environments in order to attain a systematic approach by Hill & Westbrook [3], but most important ones are
and support for decision making. The SWOT approach as follows:
is based on the aggregation of the internal (strengths,
weaknesses) and external (opportunities, threats) fac- I- Usually only qualitative examination of envi-
tors for adopting strategies. In other words, the ex- ronmental factors is considered [1];
tracted strategies of SWOT matrix is comprised of four II- It considers no priority for various factors and
categories of factors combinations: strategies;
III- If the number of factors are more, the number
– Strengths and Opportunities (S-O); of adopted strategies will be increased exponen-
– Strengths and Threats (S-T); tially (for example if the number of each set of
– Weaknesses and Threats (W-T); factors of S, W, O, T is equal to 5, the result-
– Weaknesses and Opportunities (W-O). ing number of the combined strategies will be
Although the SWOT analysis date backs to 60’s [9], around 100 which would make the selection of
Weihrich’s article [17] that introduces SWOT matrix as the appropriate strategy very difficult);
a tool for situation analysis, may be the most important IV- It does not consider the vagueness of the factors.
references in this field that has provided some classic
In most situations, it is not possible to differenti-
ate the factors clearly either they are opportunities or
After that time, SWOT has been pointed in the
threats. For example, having no powerful competitor
most of references of strategic planning. Of course
in the market is an opportunity (for controlling the mar-
this analysis seems outdate in comparison with re-
ket), and at the same time it may be a threat too (be-
cent approaches such as resource-based planning and
cause it may lead the company to inaction and depres-
sion). As another example, governmental supports of
∗ Corresponding author. Tel./Fax: +98 2166903067; E-mail: the company may be both an opportunity (for utilizing
ghazinoory@basu.ac.ir. governmental facilities) and a threat (since it may cause

1064-1246/07/$17.00  2007 – IOS Press and the authors. All rights reserved
100 S. Ghazinoory et al. / Fuzzy SWOT analysis

many problems for the company whenever these sup- strategies and since the information in this respect is
ports are cut). As another example, economic flourish- not precise, therefore employing fuzzy sets is justified.
ing is both an opportunity (since it raises the demand In SWOT analysis some uncertainties can be encoun-
for the products of the company) and also a threat (since tered in the evaluation of the organization’s internal and
it would cause a rise in the prices of the raw materials external environment. It can be stated that it is impos-
and machineries needed for the company). 1 sible for the opportunities and threats arising from the
Therefore in such ambiguous cases the use of fuzzy external environment of the firm to be always definite
sets is justified to be applied. In fact a factor with certain in any condition. Consequently, it is also impossible to
membership value belongs to one of the categories. measure the numerical values precisely. Similarly, it is
Hence we recommend the use of fuzzy SWOT matrix. not always possible to measure or evaluate the strengths
For example economic flourishing is an opportunity and weaknesses which are the consequences of the as-
with 0.7 as membership value and it is a threat with sets and abilities of the firm exactly. There is a similar
membership value 0.3. case in the SWOT factors. For example, it is not easy
The purpose of this article is to use of this concept to measure the exact values for “political uncertainties”
for combination of internal and external factors so that, or “possible problems in the environment, both strate-
SWOT analysis can considers uncertainty of factors gic factors and threats for the organization. Besides,
and determines the priority of strategies.
in SWOT analysis, it is difficult to evaluate the factors
It seems this method helps to increase the effective-
in any case and at anytime in a binary based Aristotle
ness of SWOT methodology and extends its applica-
logic. For instance, it may not be realistic to represent
the image about the goods and services produced by
the firm in two points as sufficient (1)/ insufficient (0).
In real life, there may be different evaluations between
2. Application of the fuzzy theory in the strategic
these two. Therefore, it will not be possible to under-
stand the actual situation with an evaluation which does
not assume fuzziness.
Although up to now, efforts have been made to solve The application of fuzzy concept in interpretation
out the SWOT problems, the usual approach is the use of portfolio matrices has been recommended by [11]
of prioritization methods. In particular, the Analytic and [14]. In [11], the Industry Attractiveness-Business
Hierarchy Process (AHP) has been implemented for
Strength matrix is fuzzified using fuzzy weighted av-
this case [5–7]. Kurttila et al. [6] developed a hybrid
erage [14] employs a fuzzy rule-base to handle the
method in order to improve the usage of SWOT analy-
Growth-Share matrix. Despite these researches and be-
sis and to eliminate the deficiencies about measurement
cause of different structure of SWOT matrix, we be-
and evaluation [3,12] by a systematical approach. The
lieve that different approach should be applied for the
method, which is called A’WOT in [4,10], is in fact
SWOT matrix. However, the notion of fuzzy theory
obtained by connecting the Analytic Hierarchy Process
has been applied in strategic planning, but to our infor-
(AHP) with SWOT analysis. In the studies mentioned
above, similar to [6], only weights of the SWOT groups mation, it seems that there is a high scope for applica-
and factors are determined. In the hierarchical struc- tion of fuzzy sets in SWOT matrix. In today’s rapidly
tures based on the strategic factors, the strategies or the changing and highly uncertain environment, the strate-
alternatives did not take part. gic decisions have an extremely complex and fuzzy na-
Obviously in usual methods of multi criteria decision ture [1]. In usual approach of SWOT analysis, strate-
making such as AHP [15] and also fuzzy AHP [16], gists have tendency to consider importance of factors
the aim is to sort the strategies. On the other hand we and strategies as the most significant criterion to select
aim a methodology to form, evaluate and prioritize the the most appropriate strategies but it was not possible
to do it systematically up to now. In what follows, we
propose an integrated approach to consider the ambi-
1 Of course in some cases, one factor is listed in both opportunities
guity of internal and external factors as the inputs of
and threats. For example ‘internet’ for campus universities in [2], strategic planning process and to make an environment
but it is an exception because if we do this for most of factors, the
number of factors will extremely increase and previous problem will to prioritize the factors and strategies for selecting the
be intensified. most appropriate alternatives.
S. Ghazinoory et al. / Fuzzy SWOT analysis 101

-10 Weakness 0 Strength +10

Fig. 1. A scale representation.

3. The algorithm for fuzzifying the SWOT matrix y = triangle(x; xp , xm , xo )

 0, x  xp
In this section an algorithm is presented for rectifying 
(x − xp )/(xm − xp ), xp  x  xm
the shortcomings and problems of the SWOT matrix =

 (xo − x)/(xo − xm ), xm  x  x0
through the use of fuzzy sets. The steps taken for this 
0, xo  x
algorithm are as follows:
Where in this paper, x p , xm and xo are called pes-
simistic, probable and optimistic values respectively.
3.1. Scaling the factors
We can make a list of factors including strengths, weak-
nesses, opportunities and threats. The difference be-
For each internal factor a suitable membership func- tween this stage and the usual SWOT is that for this
tion is developed in the range −10 to 10. As each fac- case, 3 questions should be asked for each internal fac-
tor may exhibit two sided meaning, therefore the neg- tor from the decision maker:
ative part shows the weakness and the positive part of
the fuzzy membership function signifies the strength of – What value to be allocated in the range −10 to +10
the factor. Figure 1 for instance, illustrates such scal- for pessimistic (xp ), probable (xm ) and optimistic
ing with a Gaussian membership function. The same (xo ) situations for internal factor (−10 to 0 for
statement is true for external factors too. the intensity of the weakness and 0 to +10 for the
The reason of using membership function can be intensity of the strength)?
understood using Fig. 1. The same spread of −10 to 10 is also assumed for
In defined domain between the most intensive weak- the external factors by the same way of questions and a
ness (−10) and the most intensive strengths (+10), each triangular membership function would be obtained for
factor can specify the level of its belonging to each one each factor.
of domain points and the points that its major concen-
tration is on, using proper fuzzy membership function. 3.2. Aggregation of membership functions of internal
In defined domain between the most intensive weak- and external factors
ness (−10) and the most intensive strengths (+10), each
factor can specify the level of its belonging to each one To extract strategies on the basis of internal and ex-
of domain points and the points that its major concen- ternal factors, it is necessary to aggregate the member-
tration is on, using proper fuzzy membership function. ship functions of the factors. In this regard, we define
The type of membership function is optional but to a three dimensional surface based on the membership
simplify the computation of the area location in next functions of internal and external factors. This is ap-
stages, we suggest the triangular membership func- plicable using a suitable t-norm such as min operator.
tions. A “triangular membership functions” can be Each point of this surface in SWOT matrix is derived
specified by three parameters (x p , xm , xo ) as fol- from the intersection of membership functions of rela-
lows [13]: tive external and internal factors i.e.:
102 S. Ghazinoory et al. / Fuzzy SWOT analysis

Fig. 2. An aggregated graph of internal and external membership functions.

Fig. 3. Surface created by different α (α2 > α1 ).

µS (x, y) = min{µI (x), µE (y)} ship function for internal and external factors respec-
Where µS (x, y) is the membership function of fuzzy tively. A sample of such 3D surface is presented in
SWOT matrix and µI (x) and µE (y) are the member- Fig. 2.
S. Ghazinoory et al. / Fuzzy SWOT analysis 103

Internal factor axis (x)

-10 0 +10


70 % 10 %

External factor axis (y)

20 %


Fig. 4. Top view of resultant surface by α-cut.

Extraction of strategies necessitates the decrease in 3.3. Evaluation, prioritization and extracting
vagueness within membership functions [11]. To do strategies
this, we define a specific α-cut on the surface, pro-
duced from previous stage. The value of α depends The basis for evaluation of the areas resulting from
previous stages is their distance from the corners of
upon the level of uncertainty we are considering. In-
the matrix. Different criteria may be defined for this
creasing α, decrease the surface over the α-cut. Thus, distance. 1) Min of the Euclidean distance of each
we will be encountered with less uncertainty and vice corner point from the boundary of the area, 2) min of
versa. Usually the strategists prefer to choose α around the distance of each corner point from the center of
0.5. Because the value of α close to zero increases the gravity of area, 3) max of the percentage of area in each
amount of uncertainty to large extent so that deciding quadrant. Selection of each of these 3 criteria will not
on proper strategy creates a complex problem. On the leave an impression on the prioritizing, but introducing
other hand, tending α to 1 gives a less domain for in- them is necessary for better understanding the concept
of distance.
teraction. Figure 3 demonstrates the surface created by
In this paper, the areas which are near the corners
different α.
of matrix are preferred to extract the strategies. It is
Figure 4 illustrates the section of the surface (area) necessary to consider the criteria for evaluation and
created by α-cut corresponding Fig. 3 (α 1 ). Now by prioritization, but it is not sufficient since if the factors
projecting this surface onto the SWOT matrix further are not correlated, it will not make any sense to extract
evaluations can be made. the strategies.
104 S. Ghazinoory et al. / Fuzzy SWOT analysis

Table 1
Internal factors evaluation
Row Internal factors Value
a High influence of the share holders of the company in the government (−1, 2, 3)
b Profit of company has increased in last year (−1, 2, 3)
c New products have succeeded (−2, 1, 3)
d Market share has increased in Europe (−2, 1, 3)
e Company has received HACCP certificate (0, 2, 3)
f The possibility of gaining large amount of loans from the bank (−2, 1, 3)
g Low potentials of the experts and engineers (−5, −4, −1)
h Sale of one old product has decreased (−3, −2, 0)
i Cost of maintenance for old facilities and machines has increased (−5, −4, −3)
j Weakness in marketing (−2, −1, 0)
k Low present profit in proportion to standard level (−2, −1, 0)

Table 2
External factors evaluation
Row External factors Value
q Development of economical systems based on free market in south east Asia (−2, 0, 2)
r Demand has increased for products of company in foreign market (−1, 1, 2)
s High sensitivity for safeness of food stuffs in foreign market (−2, −1, 1)
t Duty free laws in some countries (−1, 0, 3)
u Prohibition against the imports of the foreign competitive products (−2, 1, 2)
v Rapid growth of the market in recent periods (0, 3, 4)
w Cost of production is increasing with more acceleration in proportion to income of company (−3, −2, 0)
x Low share of market comparing other companies (−2, −1, 1)
y Uncertainty of consumption market in south east Asia (−3, −1, 1)
z Disliking of some customers to consume ready foods in south east Asia (−2, −1, 0)

4. A case illustration Next we should define a specific value of α-cut (say

α = 0.2) as α become closer to 1, uncertainty decrease
4.1. Determining the membership functions for but flexibility of extracted strategies will also decrease
factors instead. By replacing Z with 0.2 in the equations of
each side of pyramid, the location of the area could be
In order to evaluate the applicability of the proposed calculated as shown in Fig. 6.
algorithm, we implemented it in a strategic planning The resultant area of aggregation of factors a and q
process for a food corporation in Iran. The corporation could be seen in Fig. 7.
is a successful organization in food industry in Middle
East. The company identifies important internal factors
by questioning its experts with their pessimistic (x p ), 4.3. Evaluation, prioritization and extracting
probable (xm ) and optimistic (xo ) values as Table 1. strategies
In addition, the company would identify its major ex-
ternal factors with pessimistic, probable and optimistic To assess the vicinity of areas to corners, we calculate
values as Table 2. the percentage of areas in each quadrant of SWOT
matrix which is presented in Table 3.
4.2. Aggregation of membership functions of internal As we can see in Table 3, beside other factors, the
and external factors achieved areas for the factors (g/v), (g/w), (g/z), (h/v),
(h/w), (h/z), (i/v), (i/w), (i/z), (j/v), (j/w), (j/z), (k/v),
Aggregation of membership functions of factors “a” (k/w), (k/z) are closer to the corners of matrix. There-
and “q” is based on the Fig. 5. Aggregation of the other fore these strategies are recommended:
internal and external factors will be done in the same
way. It means that 2 by 2 combinations will be done for – The resulting strategy from the factors g/v, g/w
all factors and extracted strategies will be prioritized and g/z may be “training the engineers to reduce
in the next stage. As we can see in Fig. 5, the result the cost of production and training the commercial
of aggregation of these two membership functions will experts for powerful marketing and advertising in
lead to the formation of a pyramid. south East Asia”.
S. Ghazinoory et al. / Fuzzy SWOT analysis 105

Fig. 5. Aggregation of membership functions of factors a and q.

Fig. 6. α-cut with α = 0.2.

– The resulting strategy from the factors h/v, h/w, It is noteworthy to mention that it is not necessary
and h/z may be “to remove the old products for re- for all 110 areas obtained to be meaningful regions for
ducing cost of production and opposing customer making strategy. That is, it is possible that some of
dissatisfaction”. the internal and external factors may have not relations
– The resulting strategy from the factors i/v, i/w, and therefore we fail to extract a strategy (for example
and i/z may be “replacement of old equipment factors k/v, k/w or k/z). In this way, the company may
to respond to the needs of the market and price continue to extract strategies from the next priorities as
reduction”. far as it pleases.
– The resulting strategy from the factors j/v, j/w, and In classical SWOT analysis for this case, there are
j/z may be “investment in marketing to improve 110 alternatives with equal chance to select and it is un-
the market share and customer satisfaction”. clear for strategist which factors should be selected for
106 S. Ghazinoory et al. / Fuzzy SWOT analysis

-10 Internal factor axis (x) +10


External factor axis (y)

Factors a and q

6.25% 43.75 %

43.75 %



Fig. 7. Resultant area of factors a and q.

extracting the most important strategies, while in pre- – Screening strategies and select important ones
sented method we know that we should begin with fac- from a large number;
tors which take priority over the others and confusion of – Vagueness of factors is considered using fuzzy the-
deciding in classical method is changed to systematic ory.
evaluation and selection of the factors and extraction
of strategies, moreover the ambiguity and uncertainty In spite of these advantages, this method has its lim-
of the factors (which described in Section 1) can be itations:
considered during the process of decision making.
– Fuzzification have different methods and tech-
niques [18] that selecting each of them will leave
5. Discussion
an impression on results and particularly, value
It was mentioned that although SWOT analysis is of α-cut can make difference in results and fuzzi-
widely used in strategic researches, but sill there are fication method and amount of α is depended n
limitations that in case of removing them, this analysis research and his/her experience.
will be more efficient and with higher validity. – Amount of necessary calculations is almost high
The method that was presented in this article can like most of other fuzzy techniques.
remove the limitations discussed in introduced to some – Selecting pair of factors that lead to meaningful
extent: strategies is difficult and need experience.
– Fuzzy theory can convert quantitative to member-
ship function in addition to qualitative factors and Totally, after studying weaknesses and strengths of
has recognized methods for this propose [14]; this method, we can call it a step forward in SWOT
– Prioritization of extracted strategies is possible; analysis.
S. Ghazinoory et al. / Fuzzy SWOT analysis 107

Table 3
Percentage of areas in each quadrant
Factors Percentage of Percentage Percentage Percentage Factors Percentage Percentage Percentage Percentage
of area in of area in of area in of area in of area in of area in of area in of area in
quadrant 1 quadrant 2 quadrant 3 quadrant 4 quadrant 1 quadrant 2 quadrant 3 quadrant 4
a and q 43.75 6.25 6.25 43.75 f and v 65 35 0 0
a and r 65.625 9.375 3.125 21.875 f and w 0 0 35 65
a and s 21.875 3.125 9.375 65.625 f and x 16.25 8.75 26.25 48.75
a and t 65.625 9.375 3.125 21.875 f and y 12.1875 0 28.4375 52.8125
a and u 49.21875 7.03125 5.46875 38.28125 f and z 0 0 35 65
a and v 87.5 12.5 0 0 g and q 0 50 50 0
a and w 0 0 12.5 87.5 g and r 0 75 25 0
a and x 21.875 3.125 9.375 65.625 g and s 0 25 75 0
a and y 16.40625 0 10.15625 71.09375 g and t 0 75 25 0
a and z 0 0 12.5 87.5 g and u 0 56.25 43.75 0
b and q 43.75 6.25 6.25 43.75 g and v 0 100 0 0
b and r 65.625 9.375 3.125 21.875 g and w 0 0 100 0
b and s 21.875 3.125 9.375 65.625 g and x 0 25 75 0
b and t 65.625 9.375 3.125 21.875 g and y 0 18.75 81.25 0
b and u 49.21875 7.03125 5.46875 38.28125 g and z 0 0 100 0
b and v 87.5 12.5 0 0 h and q 0 50 50 0
b and w 0 0 12.5 87.5 h and r 0 75 25 0
b and x 21.875 3.125 9.375 65.625 h and s 0 25 75 0
b and y 16.40625 0 10.15625 71.09375 h and t 0 75 25 0
b and z 0 0 12.5 87.5 h and u 0 56.25 43.75 0
c and q 32.5 17.5 17.5 32.5 h and v 0 100 0 0
c and r 48.75 26.25 8.75 16.25 h and w 0 0 100 0
c and s 16.25 8.75 26.25 48.75 h and x 0 25 75 0
c and t 48.75 26.25 8.75 16.25 h and y 0 18.75 81.25 0
c and u 36.5625 19.6875 15.3125 28.4375 h and z 0 0 100 0
c and v 65 35 0 0 i and q 0 50 50 0
c and w 0 0 35 65 i and r 0 75 25 0
c and x 16.25 8.75 26.25 48.75 i and s 0 25 75 0
c and y 12.1875 0 28.4375 52.8125 i and t 0 75 25 0
c and z 0 0 35 65 i and u 0 56.25 43.75 0
d and q 32.5 17.5 17.5 32.5 i and v 0 100 0 0
d and r 48.75 26.25 8.75 16.25 i and w 0 0 100 0
d and s 16.25 8.75 26.25 48.75 i and x 0 25 75 0
d and t 48.75 26.25 8.75 16.25 i and y 0 18.75 81.25 0
d and u 36.5625 19.6875 15.3125 28.4375 i and z 0 0 100 0
d and v 65 35 0 0 j and q 0 50 50 0
d and w 0 0 35 65 j and r 0 75 25 0
d and x 16.25 8.75 26.25 48.75 j and s 0 25 75 0
d and y 12.1875 0 28.4375 52.8125 j and t 0 75 25 0
d and z 0 0 35 65 j and u 0 56.25 43.75 0
e and q 35 15 15 35 j and v 0 100 0 0
e and r 52.5 22.5 7.5 17.5 j and w 0 0 100 0
e and s 17.5 7.5 22.5 52.5 j and x 0 25 75 0
e and t 52.5 22.5 7.5 17.5 j and y 0 18.75 81.25 0
e and u 39.3 16.8 13.1 30.6 j and z 0 0 100 0
e and v 70 30 0 0 k and q 0 50 50 0
e and w 0 0 30 70 k and r 0 75 25 0
e and x 17.5 7.5 22.5 52.5 k and s 0 25 75 0
e and y 13.1 5.6 24.3 56.8 k and t 0 75 25 0
e and z 0 0 30 70 k and u 0 56.25 43.75 0
f and q 32.5 17.5 17.5 32.5 k and v 0 100 0 0
f and r 48.75 26.25 8.75 16.25 k and w 0 0 100 0
f and s 16.25 8.75 26.25 48.75 k and x 0 25 75 0
f and t 48.75 26.25 8.75 16.25 k and y 0 18.75 81.25 0
f and u 36.5625 19.6875 15.3125 28.4375 k and z 0 0 100 0
108 S. Ghazinoory et al. / Fuzzy SWOT analysis

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