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Research Article

SD/AHP Analysis for Optimal Resource Allocation

Kim, Jeonggwon

Published: January 1997 · Vol. 26, No. 2 · pp. 453-472
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Abstract

Corporate strategy involves setting the strategic direction of the firm and allocating available resources to achieve the goal of securing sustainable competitive advantage in a given environment; thus, optimal resource allocation is a critically important decision for securing sustainable competitive advantage. Portfolio analysis is an analytical tool used to determine the strategic direction and the scale of resource allocation for strategic business units within a firm. By comparing and analyzing the results of complementary portfolio analysis models, more rational resource allocation decisions can be made than when using only a single portfolio model. In this study, an empirical investigation was conducted by applying the complementary SD (System Dynamics) approach and AHP (Analytic Hierarchy Process) approach to a Korean electronics company, and comparing and analyzing their results to determine optimal resource allocation. The findings of the study revealed that SD/AHP analysis is a useful tool for determining optimal resource allocation in firms.