Mahalanobis-Taguchi System-based criteria selection for strategy formulation: a case in a training institution

Abstract

The increasing complexity of decision making in a severely dynamic competitive environment of the universe has urged the wise managers to have relevant strategic plans for their firms. Strategy is not formulated from one criterion but from multiple criteria in environmental scanning, and often, considering all of them is not possible. A list of criteria utilizing Delphi was selected by consultation with company experts. By reviewing the literature and strategy experts’ proposals, the list is then classified into five categories, namely, human resource, equipment, market, supply chain, and rules. Since all the criteria may not be necessary for the decision process, as they are eliminated in the early stage traditionally, it is important to identify the prime set of criteria, which is a subset of the original criteria and affects decision making. Utilizing these criteria, a Mahalanobis-Taguchi System-based tool was developed to facilitate the selection of a prime set of criteria, which is a subset of the original criteria for ensuring that only ineffective subcriteria are eliminated and the conditions are prepared for relevant strategy formulation. Mahalanobis distance was used for making a measurement scale to distinguish ineffective subcriteria from significant criteria in the environmental scanning stage. The principles of the Taguchi method were used for screening the important criteria in the system and generate the prime set of criteria for each category. One can use these criteria within each category instead of all criteria for the identification of a suitable institution in training. To validate the proposed approach, a case study has been conducted for 38 educational institutions in Iran. The results demonstrated the usefulness of the proposed approach.