A NEURAL EXPERT SYSTEM WITH GOAL SEEKING FUNCTIONS FOR STRATEGIC PLANNING (2003)

ABSTRACT This paper presents a neural expert system approach to designing an intelligent strategic planning system. The main recipe of the proposed neural expert system is an inference mechanism capable of performing backwards. Four strategic planning portfolio models are considered: BCG matrix, Growth/Gain matrix, GE matrix, and Product/Market Evolution Portfolio matrix. The proposed neural expert system could provide goal-seeking functions, which prove to be very useful for unstructured decision-making problems, specifically in strategic planning. Goal seeking functions are realized through the backward inference mechanism, enabling the neural expert system to show the appropriate inputs (or conditions) to guarantee the desired level of outputs. To implement our idea, we developed a prototype system, named StratPlanner, which runs on Windows 2000. Using Korean automobile industry data, we performed experiments under competitively designed situations. Results support our supposition that the neural expert systems approach is useful for performing competitive analyses. Further research topics associated with the current research are also discussed. INTRODUCTION Recently, a number of researchers in Operations Research/Management Science (OR/MS) have attempted to build intelligent expert systems for solving a wide variety of problems including production scheduling, finance, personnel, marketing, accounting, etc. (Waterman, 1990). Common motivation underlying this research is to intelligently assist decision-makers who have to solve poor structure problems. The strategic planning problem is one of many highly ill structured OR/MS problems. In today's business environment, organizations must define a plan for strategic problem solving. In broad terms, strategy is an articulation of the kinds of products the organization will produce, the basis on which its products will compete with those of its competitors, and the types of resources and capabilities the firm must have or develop to implement the strategy successfully (Oliver, 2001). Strategy, in effect, is the managerial action plan for achieving organizational objectives; it is mirrored in the pattern of moves and approaches devised by management to achieve desired performance. Strategy is therefore the how of pursuing the organization's mission and reaching target objectives (Thompson and Strickland III, 1990). Today's managers must think strategically about their company's position and the impact of changing conditions. Organizations must monitor external situations very closely, to determine when the current strategy needs to be changed. They must understand the structure and dynamics of the industry in an effort to make any necessary organizational adjustments (Oliver, 2001). The advantages of successful strategic thinking and conscious strategic planning activities include: (1) providing better guidance to the entire organization on the crucial point of what it is we are trying to achieve, (2) increasing management's awareness to change, new opportunities, and threatening developments, (3) providing managers with a greatly needed rationale for steering resources into strategy-supportive, results-producing areas, (4) helping unify the numerous strategy-related decisions by managers across the organization, and (5) creating a more pro-active management posture to counteract the tendency of decisions to be reactive and defensive. The decisive advantage of being pro-active versus re-active is the enhancement of long-term performance. Business history shows that high-performing enterprises often initiate and lead, not just react and defend. They see strategy as a tool for securing a sustainable, competitive advantage, and for pushing performance to superior levels. Computer-based strategic planning systems play an increasingly relevant role in assisting both the diagnosis of strategic problems likely to threaten the organization's performance, and the suggestion of strategic alternatives to solve those problems. …