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Abstract:
This article presents a case study on the use of multi-criteria decision analysis tools to improve the alignment of strategy and capital allocation decisions. A questionnaire was used to test for consistency of priorities regarding capital allocation decisions among managers. There was a significant divergence of opinion regarding ranking of attributes used for comparison of investment alternatives. This suggested that the strategy at the strategic business unit (SBU) was not resulting in a consistent vision of priorities regarding investment decisions. Additionally, a case study of four investment alternatives was presented to managers at the SBU. A comparison was made between the decisions made using non-structured decision-making methods characteristic of those employed at the SBU and those using traditional scorecard, payback, rank sum, and rank reciprocal multi-criteria decision analysis (MCDA) techniques.