International Journal of Innovation, Management and Technology, Vol. 1, No.

3, August 2010
ISSN: 2010-0248

Ranking of Strategic Plans in Balanced

Scorecard by Using Electre Method
Javad Dodangh, Majid Mojahed and Vahid Nasehifar

1 assess a strategic operation and long-term view of the

Abstract—In a growing competitive business environment,
many organizations have taken by adoption the strategic
planning approach to an effort for business excellence.
Implementation of proper strategies plays a vital role for
organizations' success. Balanced scorecard is a suitable tool for
designing operational strategies. However, one of the balanced
scorecard problems is the selection in strategic plans'
performance. In this paper, was settled a model for selection of
strategic plans in Balanced Scorecard using Electre method. So
first using the consensus of organization's managers and
experts' opinions, measures of four perspectives and general
objectives are determined in BSC. And then using experts'
opinions and taking the relative importance of decision makers'
opinions into consideration, by using Electre 2 , the
performances of strategic plans are selected in BSC model. The
results are shown that the introduced method is more reliable
and acceptable and the experts were verified the model for
selecting of strategic plans in BSC in operation. The
introduced method was used in a study and extracted results
from it were analyzed from different points of view. In this
article Initiative is called strategic plans.
Index Terms—Balanced Scorecard, Initiatives, MCDM,
ELECTRE.
company and also to achieve operational strategies.
Miscellaneous kinds of tools are offered for this process,
Balanced Scorecard is a suitable tool for evaluating and
designing of operational strategies. This tool was introduced
by Kaplan and Norton in 1992, for the first time [1, 3, 4].BSC
is a conceptual frame work and its function is to translate
strategic objectives of a company into a set of operational
attributes. These indices are usually selected from four
financial, customer, internal processes and learning and
development perspectives [3, 5]. Many attributes were used
for the advancement of the company in the direction of its
perspective. Some other attributes are used for evaluation of
company development in accessing to long-term objectives.
Furthermore, BSC helps the managers to identify the lagging
and leading attributes in their company. The framework of
balances evaluation model is shown in the figure 1[3].
“To succeed
financially, how
should we appear to
Financial
Perspective Objective Measures Target Initiatives
our shareholders?”
“To satisfy our
shareholders and
customers, what
business processes
must we excel at?”

Internal
Customer
Process
Perspective Objective Measures Target Initiatives Objective Measures Target Initiatives
Perspective

Vision and
I. INTRODUCTION Strategy

Organizations have always found it hard to balance

“To achieve our
pressing operational concerns with long-term strategic vision, how should
we appear to our Learning
priorities. The tension is critical: World-class processes won't customers?” and
Growth
Objective Measures Target Initiatives

Perspective
lead to success without the right strategic direction, and the “To achieve our
best strategy in the world will get nowhere without strong vision, how will we
sustain our ability to
change and
operations to execute it [2]. Considering the importance of improve?”

strategic planning in organizations and creating the

competitive advantage in them and indeed, today the
organization is moving in a competitive, and complex
environment and there is a transaction among them. The
senior managers and all those seeking a comprehensive
picture of pa present situation of the company and a clear
understanding of pa present situation of the company and a
clear understanding of its future image needs some
information more than just Standards in financial operation to
1
Manuscript received April 1, 2010. This work was supported in part by
the Department of Industrial Engineering, Islamic Azad University, Qazvin
Branch, Qazvin, Iran.
Javad Dodangeh is with the Department of Industrial Engineering,
Islamic Azad University, Qazvin Branch, Qazvin, Iran.
(Corresponding author e-mail: jdodangeh@ gmail.com).
Majid Mojahed is with Telecommunication Company of North Khorasan.
Vahid Nasehifar is with the management and Accounting Faculty, Allame
Tabatabai University, Tehran.
2
- Elimination Et Choice Translating Reality
269
Figure 1.Balanced Scorecard model, Source:[1]
DECISION MAKING METHODS
People generally use one of two following methods for
making decision:
Trial & Error method
Modeling method
In a trial & error method decision maker face the reality, so
he chooses one of the alternatives and witness the results. If
decision errors are great and cause some problems, he
changes the decision and selects other alternatives.
In modeling method decision maker models the real
problem and specifies elements and their effect on each other
and gets through model analysis and prediction of a real
problem [6].
3. Multiple attribute decision making
Hwong & Yoon describe multiple decisions making as
follows: multiple decision making is applied to preferable
decisions (such as assessment, making priority and choice)
 International Journal of Innovation, Management and Technology, Vol. 1, No. 3, August 2010
ISSN: 2010-0248

between available classified alternatives by multiple attribute financial manager and production manager were selected and
(and usually opposite) [7]. their opinions of four BSC's perspectives and four strategic
Deciding group face the common factors, especially in objectives were taken for each perspective and the result
MADM: were as follows:[12]
Alternatives By using expert's opinion we form the framework from
Multiple attributes BSC model like TABLE I.
Dimensionless units So by using the consensus of expert's opinion, obtain the
Attributes weight importance of BSC's perspectives and objectives which are
Attributes quality related to each perspective. [13]
Relative importance of decision makers' opinions. Then by using the geometrical average the final weight, is
MADM methods are classified as to following groups: calculated (financial, customer, internal process and human
1) Compensatory methods: If a production has high resources) perspectives: [14]
expenditure but good quality, in this case high expenditure is
compensated by high quality [8]. These models are: TABLE I
ELECTRE, MDS, MRS, TOPSIS, SAW, LINEAR Financial
ASSIGNMENT and etc.
Objectives Measures Target Initiatives
2) Non compensatory methods: When the attributes are
separated e.g. for taking driving license tree non I1-Marketing
Income increasing 0.797 0.817
Research
compensative important factors are brought up. These are:
normal eye test, driving rule test and practical driving Profit increasing 0.133 0.153 I2- Marketing
examination, which one’s strength in one of the tests doesn’t Maximize of
0.004 0.004
I3- Inventory
compensate the others. [9] These models are: DOMINANCE, Investment Utilization Control
Cost decreasing 0.066 0.026 I4- ABC
LEXICOGRAPH, ELIMINATION, PERMUTATION and
Customer
etc. Increasing of I5-After sales
0.27 0.236
customer satisfaction Services
Increasing of Market I6- Marketing
0.027 0.024
II. METHODOLOGY share Research

Every MADM problem has some attributes that should be Customer Supporting 0.541 0.505 I7-CRM

recognize in problem by decision maker in due courses. All Increasing of added I8-Value
0.162 0.236
value for customers Engineering
MADM methods require information that should be gained
based on relative importance of the attribute. This TABLE I (CONTINUE OF TABLE I)
information usually has serial or main scale. Attribute
weights can be allocated to criteria directly by decision maker
Internal Processes
group or by scientific methods. These weights specify
relative importance of every attribute. Objectives Measures Target Initiatives
Usually groups are classified based on their different I9- Time & Motion
On time delivery 0.07 0.06
levels in social status, knowledge and work experience. So Study
every factors in special subject that cause increase or Product development
0.873 0.886 I10- QFD
decrease of idea weight should be considered. In this regard Products Quality 0.004 0.001 I11- ISO 9000
allocating different weight to person’s opinions regarding to Continues
0.052 0.054 I12- TQM
their knowledge and experience in relation with that subject improvement
seems necessary.[9, 10] Learning & Growth
This paper is designed to select and consider suitable four Increasing of
I13- increasing of
employees 0.209 0.244
criteria and sixteen alternatives respectively. The way personnel’s' salary
satisfaction
of data collection that is applied for this phase is Delphi
Increasing of
method. By using Comparison Matrix, the weights of criteria employees I14- personnel’s'
0.049 0.031
have been computed. After computing weights of criteria, productivity evaluation system
Consistency must be specified. If the Consistency is less than
Personnel’s I15- Reward
0.1, then we can apply ELECTRE method and rank Motivation
0.697 0.698
System
alternatives. Otherwise, revision of pair wise comparison
Increasing of
must be done. Ranking of strategic plans in balanced is 0.045 0.028 I16- MIS
informational skills
shown in following algorithm.[11]

STEPS OF ELECTRE METHOD:

III. CASE STUDY
A case study was conducted in electronic and computer Step 1: Calculate the normalized decision matrix.
research center of the university which is active in the field of
producing industrial high capacity monitoring systems. Four = ; i=1, 2… 16 ; j=1, 2… 4
experts consist of director manager, commercial manager,
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ISSN: 2010-0248

Importance Gap Cost Time For instance, we determined S1l, D1l, S16l, and D16l as a
0.26057207 0.63103729 sample.
I1 0.18430245 0.36148514
4 2
0.26336930 0.15775932
I2 0.25802342 0.210866332
6 3 J=1 J=2 J=3 J=4
0.25444603 0.23663898
I3 0.11058147 0.18074257 S1,2 - 1 1 - D1,2 1,4
4 4
0.07887966
I4 0.24574423 0.07372098 0.240990093 S1,3 1 1 - - D1,3 3,4
1
0.26333318 0.03155186
I5 0.14744196 0.18074257 S1,4 1 1 - - D1,4 3,4
6 5
0.26217607 0.31551864
I6 0.18430245 0.36148514 S1,5 - 1 - - D1,5 1,3,4
6 6
0.25596871 0.07887966
I7 0.07372098 0.150618808 S1,6 - 1 1 1 D1,6 1
4 1
0.25837051 0.06310372
I8 0.11058147 0.210866332 S1,7 1 1 - - D1,7 3,4
7 9
0.25255081 0.23663898
I9 0.14744196 0.271113855 S1,8 1 1 - - D1,8 3,4
2 4
I1 0.24447146 0.06310372
0.11058147 0.150618808 S1,9 1 1 - - D1,9 3,4
0 1 9
I1 0.24566678 0.06310372
0.11058147 0.18074257 S1,10 1 1 - - D1,10 3,4
1 9 9
I1 0.24289277 0.39439830
0.36860489 0.36148514 S1,11 1 1 - - D1,11 3,4
2 8 7
I1 0.24020818 0.06310372
0.73720978 0.18074257 S1,12 1 1 1 1 D1,12 0
3 4 9
I1 0.31551864
0.23998819 0.14744196 0.240990093 S1,13 1 1 1 - D1,13 4
4 6
I1 0.23511320 0.15775932
0.11058147 0.150618808 S1,14 1 1 - - D1,14 3,4
5 4 3
I1 0.23190520 0.23663898
0.22116293 0.36148514 S1,15 1 1 - - D1,15 3,4
6 3 4

S1,16 1 1 1 1 D1,16 0
Step 2: Calculate the weighted normalized decision matrix.
J=1 J=2 J=3 J=4
,
We assumed that “W” is a diagonal matrix which values of S16,1 - - - 1 D16,1 1,2,3
its main diameter are W= {0.001389, 0.497898, 0.409504, S16,2 - 1 1 - D16,2 1,4
0.091207} and the rest values are zero.
S16,3 - 1 - - D16,3 1,3,4
Importance Gap Cost Time
0.00036208 0.07547263 0.03297024 S16,4 - 1 - - D16,4 1,3,4
I1 0.314192473
1 8 3
0.00036596 0.10566169 0.01923264 S16,5 - 1 - - D16,5 1,3,4
I2 0.078548118
8 4 2
0.00035356 0.04528358 0.01648512 S16,6 - - - 1 D16,6 1,2,3
I3 0.117822177
8 3 2
0.00034147 0.03018905 0.02198016 S16,7 - 1 - - D16,7 1,3,4
I4 0.039274059
7 5 2
0.00036591 0.06037811 0.01648512 S16,8 - 1 - - D16,8 1,3,4
I5 0.015709624
8 1 2
0.07547263 0.03297024 S16,9 - 1 - - D16,9 1,3,4
I6 0.00036431 0.157096237
8 3
0.00035568 0.03018905 0.01373760 S16,10 - 1 - - D16,10 1,3,4
I7 0.039274059
4 5 1
0.00035902 0.04528358 0.01923264 S16,11 - 1 - - D16,11 1,3,4
I8 0.031419247
2 3 2
0.00035093 0.06037811 0.02472768 S16,12 - - 1 1 D16,12 1,2
I9 0.117822177
5 1 3
I1 0.00033970 0.04528358 0.01373760 S16,13 - 1 1 - D16,13 1,4
0.031419247
0 8 3 1 1,2,3,
I1 0.00034136 0.04528358 0.01648512 S16,14 - - - - D16,14
1 9
0.031419247
3 2 4
I1 0.00033751 0.15094527 0.03297024 S16,15 - 1 - - D16,15 1,3,4
0.196370296
2 4 7 3
I1 0.00033378 0.30189055 0.01648512 J=1 J=2 J=3 J=4
0.031419247
3 4 3 2
I1 0.00033347 0.06037811 0.02198016
0.157096237
4 8 1 2 Step 4: Calculate the concordance matrix.
I1 0.00032670 0.04528358 0.01373760
0.078548118
5 4 3 1 ,
I1 0.00032224 0.09056716 0.03297024
0.117822177
6 6 6 3 J1 J2 J3 J4 J5 J6 J7 J8
0.90 0.49 0.49 0.49 0.99 0.49 0.49
-
Step 3: Determine the concordance and discordance set. 7 9 9 8 9 9 9
0.09 0.00 0.59 0.49 0.09 0.49 0.59
-
= {J| } ; ( =1, 2, 3, 4, 16; ) , 3 1 0 9 3 9 0
When this condition is true then we put “1” in its place. 0.50
1
0.99
9
-
1.00
0
0.99
9
0.50
1
0.49
8
0.99
9
And also we will apply for discordance set as followed: 0.50 0.41 0.41
-
0.90 0.50 0.90 0.90
1 0 0 7 1 7 7
; ( =1, 2, 3, 4, 16; ) ,
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 International Journal of Innovation, Management and Technology, Vol. 1, No. 3, August 2010
ISSN: 2010-0248

0.50 0.50 0.09 0.09 0.50 0.00 0.09 1.00 0.30 0.02 0.05 0.01 0.02 0.05
- -
2 1 3 3 2 1 3 0 6 8 3 0 8 3
0.50 0.90 0.49 0.49 0.49 0.49 0.49 1.00 0.20 0.07 0.40 0.04 0.40 0.07 0.07
-
2 7 9 9 8 9 9 0 0 7 0 2 0 7 7
0.50 0.50 0.50 1.00 0.99 0.50 0.99 1.00 0.16 0.30 0.05 0.00 0.44 0.05 0.00
-
1 1 2 0 9 1 9 0 7 6 3 0 4 3 0
0.50 0.50 0.50 0.09 0.90 0.50 0.09 1.00 0.16 0.30 0.05 0.00 0.44 0.05 0.00
-
1 1 2 3 7 1 3 0 7 6 3 0 4 3 0
0.50 0.90 0.49 0.49 0.90 0.50 0.49 0.49 1.00 0.38 0.89 1.02 0.76 0.64 1.02 0.89
1 7 8 9 7 1 8 8 0 4 7 5 9 1 5 7
0.50 0.50 0.50 0.09 0.99 0.50 0.09 0.99 1.00 0.69 0.90 0.96 0.85 0.80 0.96 0.90
1 1 1 1 9 1 1 9 0 4 7 1 4 1 1 7
0.50 0.50 0.50 0.09 0.99 0.50 0.00 0.99 1.00 0.01 0.09 0.19 0.03 0.00 0.19 0.09
1 1 1 1 9 1 0 9 0 7 6 2 5 0 2 6
0.09 0.49 0.49 0.49 0.49 0.58 0.49 0.49 1.00 0.00 0.16 0.06 0.00 0.33 0.06 0.00
1 8 8 8 8 9 8 8 0 0 7 4 0 3 4 0
0.09 0.09 0.09 0.09 0.58 0.09 0.00 0.58 1.00 0.07 0.23 0.30 0.15 0.20 0.30 0.23
1 1 1 1 9 1 0 9 0 0 1 7 4 0 7 1
0.50 0.90 0.49 0.58 0.90 0.99 0.49 0.49
1 7 8 9 7 9 8 8
0.50 0.99 0.50 1.49 0.99 0.50 0.58 0.99
1 9 1 8 9 1 9 9
J9 J10 J11 J12 J13 J14 J15 J16
0.09 0.90 0.49 0.49 0.49 0.09 0.49 0.49
1 7 8 8 8 1 8 8 0.49 0.49 0.49 1.00 0.90 0.49 0.49 1.00
9 9 9 0 9 9 9 0
0.09 0.49 0.49 0.50 0.90 0.09 0.49 0.09
Step 5: Calculate the discordance matrix. 3 9 9 2 9 3 9 3
1.00 0.90 1.00 0.50 1.00 0.50 0.90 1.00
0 9 0 2 0 2 9 0
, 0.50 0.90 0.90 0.50 0.90 0.50 0.41 0.50
1 9 9 2 9 2 1 2
0.50 0.00 0.09 0.50 0.50 0.50 0.00 0.50
2 1 3 2 2 2 1 2
0.49 0.49 0.49 0.50 0.90 0.49 0.49 1.00
J9 J10 J11 J12 J13 J14 J15 J16
9 9 9 2 9 9 9 0
0.06 0.12 0.12 0.00 0.07 0.06 0.12 0.00 0.50 1.00 1.00 0.50 1.00 0.50 0.50 0.50
4 8 8 0 0 4 8 0 2 0 0 2 0 2 2 2
0.19 0.25 0.25 0.50 0.01 0.33 0.25 0.16 0.50 0.90 0.90 0.50 0.90 0.50 0.50 0.50
2 6 6 0 2 3 6 7 2 9 9 2 9 2 2 2
0.00 0.01 0.00 0.40 0.00 0.20 0.01 0.00 0.49 0.49 0.50 0.90 0.41 0.49 1.00
-
0 4 0 0 0 0 4 0 9 9 2 9 1 9 0
0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.50 0.99 0.50 1.00 0.50 0.50 0.50
-
0 0 0 0 0 0 0 0 1 9 2 0 2 2 2
0.34 0.05 0.05 0.60 0.05 0.47 0.21 0.34 0.50 0.90 0.50 1.00 0.50 0.41 0.50
-
2 3 3 5 3 4 1 2 1 9 2 0 2 1 2
0.09 0.19 0.19 0.25 1.44 0.09 0.19 0.00 0.49 0.49 0.49 0.90 0.49 0.49 0.59
-
6 2 2 0 1 6 2 0 8 8 8 9 9 9 0
0.28 0.00 0.00 0.57 0.00 0.42 0.14 0.28 0.09 0.49 0.58 0.09 0.09 0.00 0.09
-
6 0 0 1 0 9 3 6 1 8 9 1 3 1 3
0.30 0.01 0.01 0.58 0.01 0.44 0.16 0.30 0.99 0.49 0.49 0.50 0.90 0.49 1.00
-
6 9 0 3 0 4 7 6 9 8 8 1 7 9 0
0.07 0.07 0.40 0.04 0.20 0.07 0.00 0.50 0.99 0.99 0.50 0.99 0.50 0.50
- -
7 7 0 2 0 7 0 1 9 9 1 9 1 2
0.30 0.00 0.58 0.00 0.44 0.16 0.30 0.49 0.49 0.49 0.50 0.90 0.00 0.49
- -
6 0 3 0 4 7 6 8 8 8 1 7 0 8
0.30 0.01 0.58 0.00 0.44 0.16 0.30
-
6 0 3 0 4 7 6
0.76 0.89 0.89
-
0.14 0.76 0.89 0.51 Step 6: Determine the concordance dominance matrix
9 7 7 0 9 7 2 So we calculate matrix of I.
0.85 0.90 0.90 0.58 0.85 0.90 0.74
-
4 7 7 3 4 7 7 = ; (m=16, is dimension
0.00 0.09 0.09 0.25 0.03 0.09 0.00
0 6 6 0 5
-
6 0 of matrix),
0.16 0.00 0.00 0.50 0.00 0.33 0.16
-
7 0 0 0 0 3 7 ,
0.15 0.23 0.23 0.40 0.08 0.20 0.23
-
4 1 1 0 4 0 1 ,
Step 7: Determine the discordance dominance matrix
So we calculate matrix of G.
J1 J2 J3 J4 J5 J6 J7 J8
N = ,
0.05 0.12 0.19 0.07 0.00 0.19 0.12
-
8 8 2 0 0 2 8
1.00 0.25 0.32 0.19 0.33 0.32 0.25
-
0 6 0 2 3 0 6 ,
1.00 0.00 0.00 0.00 0.20 0.07 0.00
- Step 8: Determine the aggregate dominance matrix
0 0 0 0 0 7 0
0.00 0.00 0.00
-
0.00 0.00 0.00 0.00 We also compute matrix of H. “P is means personnel”
0 0 0 0 0 0 0
1.00 0.21 0.34 0.10 0.47 0.10 0.05
-
0 1 2 1 4 1 3
1.00 0.08 0.19 0.28 0.10 0.28 0.19
-
0 7 2 8 5 8 2
1.00 0.14 0.28 0.00 0.00 0.42 0.00
-
0 3 6 0 0 9 0

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A A A A A A A
A1 A2 A3 A4 A5 A6 A7 A8 A9 1 1 1 1 1 1 1
0 1 2 3 4 5 6
A1 0 1 0 0 0 1 0 0 0 0 0 1 1 0 0 1

A2 0 0 0 0 0 0 0 1 0 0 0 0 1 0 0 0

A3 0 1 0 1 1 0 0 1 1 1 1 0 1 0 1 1

A4 0 0 0 0 1 0 1 1 0 1 1 0 1 0 0 0

A5 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0

A6 0 1 0 0 0 0 0 0 0 0 0 0 0 0 0 1

A7 0 0 0 1 1 0 0 1 0 1 1 0 1 0 0 0

A8 0 0 0 0 1 0 0 0 0 1 1 0 1 0 0 0

A9 0 1 0 0 1 0 0 0 0 0 0 0 1 0 0 1

A10 0 0 0 0 1 0 0 1 0 0 1 0 1 0 0 0

A11 0 0 0 0 1 0 0 1 0 1 0 0 1 0 0 0

A12 0 0 0 0 0 0 0 0 0 0 0 0 1 0 0 0

A13 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0

A14 0 1 0 1 1 1 0 0 1 0 0 0 1 0 0 1

A15 0 1 0 1 1 0 1 1 0 1 1 0 1 0 0 0

A16 0 1 0 0 0 0 0 0 0 0 0 0 1 0 0 0

Step 9: Eliminate the less favorable alternative and rank relative importance of decision maker's opinions (people who
them. evaluate) is not considered, the presented model solves this
Finally in ELECTRE method, the bests are A1, A3, A14 problem by considering the relative importance of decision
(in equal level) and they were followed by A12, A15 (in maker's opinions and the produced result is more accepted.
equal level), A6, A7, A9 (in equal level), A4 and A16, A10, (Tables and calculations have been presented in detail in [15].
A11 (in equal level), A2, A8 (in equal level) and finally A5
and A13.
So the result is: ACKNOWLEDGMENT
We are grateful to Department of Industrial Engineering,
STRATEGIC RANK
Islamic Azad University, Qazvin Branch, Qazvin, Iran and
PLANS
I1 1 electronic and computer research center of the university for
I3 1 their kind cooperation and support to carry out this work.
I14 1
I12 2
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Algorithm of strategic plans priority model in BSC

Start

Modeling BSC by using data and

Information

Considering some Selecting suitable criteria for

Strategic plans
ranking of strategic plans

Using Delphi method for

collecting data collecting data

Computing weights of criteria

Revision of pair wise

comparison
Is Consistency
true?
N
o

Yes

Using ELECTRE method for

ranking of strategic plans

Determining strategic plans’

rank and selecting the best one

End

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