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Strategic Planning: Model Development for Strategic Decision for Technology Selection in the Petrochemical Industry

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Hierarchical Decision Modeling

Part of the book series: Innovation, Technology, and Knowledge Management ((ITKM))

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Abstract

An interactive decision-support model for technology selection in the petrochemical industry is presented. With the assistance of an expert panel, Analytical Hierarchy Process (AHP) is utilized to define the decision problem and to provide the justification for selecting the alternative that best matches organization’s requirements. A specific case study has been developed for the purpose of demonstrating and validating the model.

A prior revision of this chapter was included in the conference proceedings of Portland International Conference on Management of Engineering and Technology, 2003

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Author information

Authors and Affiliations

  1. Denla Rama V School, 8 Nakhonin Rd., Bangkruai Nontaburi, 11130, Thailand

    Toryos Pandejpong Ph.D.

Authors
  1. Toryos Pandejpong Ph.D.
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Corresponding author

Correspondence to Toryos Pandejpong Ph.D. .

Editor information

Editors and Affiliations

  1. Dept. of Engineering and Technology Mana, Portland State University, Portland, Oregon, USA

    Tugrul U. Daim

Appendices

Appendix 1: Definition of Systems

The project selection process is defined by the systems. Multiple perspective approach is used [1, 19–21]. There are 5 systems in which the company is operating. Each system represents several critical issues that affect the project selection process. The systems and the critical issues are listed below:

  1. 1.

    Strategic System represents the issues related to the company’s strategic direction, its culture, and long-term company’s commitments.

  2. 2.

    Technical System represents the issues related to the technical aspects of the technology in the company and those under consideration.

  3. 3.

    Internal System represents the issues related to the readiness of the company to implement the project. They are internal operational characteristic of the company including the company’s resources, feasibility of the project (excluding technical aspects), allocation plan, people, and scheduling.

  4. 4.

    Competitive System represents all the external factors that have impacts on the competition in the market including market conditions, competition, competitor(s), and the benefits and costs of entering the market.

  5. 5.

    External System represents the issues related to general economic trends, the government and its policy including regulations, trade agreements, and political conditions (Fig. 8.2).

    Fig. 8.2
    figure 2

    Technology selection system

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Appendix 2: Definition of Factors

2.1 Definition of Factors

The system is desegregated into the next lower hierarchy, factors. It is done to facilitate the decision-makers, to provide subjective judgment in the alternatives evaluation process. The decision space between system and alternative are divided by factors. Pairwise comparisons will be used to obtain the impacts between system and factor and also between alternative and factor. When the measurements are combined the impact relationship between alternative level and the system level are determined. The factors are produced by identifying all the important performance criteria affecting the company from the literature and in consultation with the Expert Panel. The following factors are the preliminary list that is obtained from the literature; they are used as the evaluation criteria for the alternatives.

Strategic System [22–24]

  1. Factor-1:

    Company’s technology competence includes the issues related to technological strength of the company to do what is needed.

  2. Factor-2:

    Current strategic issues of the Company includes the strategic issues that are important to the company and can be linked to the project selection process. It also includes the issues related to organizations and business enterprise with whom the company work, and with whom it has to compete (including alliance, competitor, and supplier).

  3. Factor-3:

    Potential for expansion is the issue related to the opportunity to expand the products’ capacity, and the opportunity to vertically integrate the supply or product chain.

  4. Factor-4:

    Company’s reputation is the opinion or image of the company as viewed by local community and public as a whole.

  5. Factor-5:

    Synergy with the current operations is the issue related to the additional strategic benefit that can be obtained from implementing the project along with the company current operations.

Technical System [25–27]

  1. Factor-6:

    The current life-cycle stage of the technologies and successor technology represents the current stage of technology and the opportunity to enhance the current technology both for products and process.

  2. Factor-7:

    Probability of technical success is the likelihood that the technology will be able to meet the company’s expectations. The issue covers every step from evaluating, acquiring, and implementing technology.

  3. Factor-8:

    Technology merits represents the issues related to the technical merits or production synergy that can be obtained from implementing the project along with the current process/technology

  4. Factor-9:

    Work place environment and safety represent the environmental and safety issues in the work place.

Internal System [28, 29]

  1. Factor-10:

    Resource compatibility concerns two main issues, which are the availability of the resources and ability to match them with the project requirements. It includes resource procurement and risk (ex. currency fluctuation), preparation, and allocation of both financial and human resources (skilled labor, research personnel, technical, legal, and commercial expert) in order to implement and operate the project (Adsorption and Internalization capability).

  2. Factor-11:

    Site Infrastructure includes the issues related to transportation of products and raw materials, location, and infrastructure of the production site and facilities.

  3. Factor-12:

    Alternative uses of scientific personnel and facilities when the project is terminated.

  4. Factor-13:

    Impacts of the project delay and ability to make correction are the likelihood that project will be delayed and the impact to the company from the delay of the project and the ability to resolve the problem.

  5. Factor-14:

    Financial risk is the issue related to financial risk from deciding to implement projects.

Competitive System [23, 24, 27]

  1. Factor-15:

    The competitiveness of the company represents how well the company can compete in the industry and the likelihood that the company’s product will be able to succeed in the market place.

  2. Factor-16:

    Cost and benefit of implementing each alternative include the issue related to the worthiness of the project, which include the cost of the alternative and the direct and indirect benefits that company will receive after selecting and implementing that project. Cost/Benefit ratio can be used to reflect the efficiency of the resource allocation process.

  3. Factor-17:

    Ease of market entry is the degree of difficulty for the company’s product to establish itself in the market.

  4. Factor-18:

    Potential benefit from the market expansion is the future benefits that could be acquired from the prospective of the market and expansion of the customer base.

External System [30]

  1. Factor-19:

    Ability to meet the current and potential future regulations represents the concerns and the capability to meet current and future regulation. The issue includes the ability to meet disposability/recyclability standard.

  2. Factor-20:

    The impact on environment includes the impacts of the project and the overall community for example noise, pollutants issues etc.

  3. Factor-21:

    Government policies and legal framework are all policies related to the project in particular, company, and the whole petrochemical industry in general. It also includes the incentive plans that are proposed or likely to be proposed by the government to encourage investment. Moreover, it includes the issues related to the adequacy of the legal framework for protection of intellectual property.

  4. Factor-22:

    Political and economical situation of the country includes the issues related to political and economical conditions of the local market.

  5. Factor-23:

    Global Trends include the issues related to the general trend of the industry worldwide.

Appendix 3: Model Results

The figure below represents the decision structure. The shadow boxes with thick borders represent perceived critical elements for the technology evaluation process by the expert panel.

figure a
Table 8.1 Relative contribution of the “Goals” to the “Mission Statement”
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Table 8.2 Results: relative contributions of the “Systems” to the “Mission Statement”
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Table 8.3 Results: relative contributions of the “Factors” to the “Mission Statement”
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Table 8.4 Results: relative contributions of the “Alternatives” to the “Mission Statement”
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Pandejpong, T. (2016). Strategic Planning: Model Development for Strategic Decision for Technology Selection in the Petrochemical Industry. In: Daim, T. (eds) Hierarchical Decision Modeling. Innovation, Technology, and Knowledge Management. Springer, Cham. https://doi.org/10.1007/978-3-319-18558-3_8

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