Forest Policy and Economics 1 Ž2000.

41]52

Utilizing the analytic hierarchy process Ž AHP. in SWOT

analysis } a hybrid method and its application to a
forest-certification case q

Mikko Kurttila a,U , Mauno Pesonen a , Jyrki Kangas b, Miika Kajanus a

a
Finnish Forest Research Institute, Helsinki Research Center, P.O. Box 18, FIN-01301 Vantaa, Finland
b
Finnish Forest Research Institute, Kannus Research Station, P.O. Box 44, FIN-69101 Kannus, Finland

Received 22 February 1999; accepted 1 April 1999

Abstract

The present study examines a new hybrid method for improving the usability of SWOT ŽStrengths, Weaknesses,
Opportunities and Threats. analysis. A commonly used decision analysis method, the Analytic Hierarchy Process
ŽAHP., and its eigenvalue calculation framework are integrated with SWOT analysis. AHP’s connection to SWOT
yields analytically determined priorities for the factors included in SWOT analysis and makes them commensurable.
The aim in applying the hybrid method is to improve the quantitative information basis of strategic planning
processes. The hybrid method was tested in connection with a Finnish case study on forest certification. In the case
study, the results were presented in an illustrative way by utilizing the quantitative information achieved by the
hybrid method. The results indicated that certification could be a potential strategic alternative in our case study
farm. In addition, the needed pairwise comparisons were found useful, because they force the decision maker to
think over the weights of the factors and to analyze the situation more precisely and in more depth. Q 2000 Elsevier
Science B.V. All rights reserved.

Keywords: AHP; Decision analysis; External and internal environment; Forest certification; Strategic planning; SWOT

q
An earlier version of the paper was presented at the conference ‘1997 ACSMrASPRS ŽAmerican Congress on Surveying and
MappingrAmerican Society for Photogrammetry and Remote Sensing. Annual Convention and Exposition, April 7]10, 1997,
Seattle’ and published in the Conference’s Technical Papers.
U
Corresponding author. Tel.: q358-9-857-05-804; fax: q358-9-857-05-809.
E-mail address: mikko.kurttila@metla.fi ŽM. Kurttila .

1389-9341r00r$ - see front matter Q 2000 Elsevier Science B.V. All rights reserved.
PII: S 1 3 8 9 - 9 3 4 1 Ž 9 9 . 0 0 0 0 4 - 0
42 M. Kurttila et al. r Foresty Policy and Economics 1 (2000) 41]52
1. Introduction
Forestry and forest planning are influenced by
changes within internal and external operational
environments. In forest planning, most of the
concern has traditionally been placed on the in-
ternal environment assuming the external envi-
ronment to be stable. Recently, applications and
methods dealing with changes arising from the
external environment have been presented and
applied in forest planning. These methods in-
clude, for example, connecting the exogenous
timber-demand factor and lagged price adjust-
ment to a timber management planning model
¨
ŽMykkanen, 1995., participatory planning, which
means responding to the objectives of external
interest groups Že.g. Kangas et al., 1996a;
¨¨
Pykalainen et al., 1999., and including stochastic-
ity, arising, for example, from changes in timber
prices and the level of tree growth, with forest
planning by using risk and scenario techniques
Že.g. Pukkala and Kangas, 1996.. However, com-
mon strategic planning approaches are funda-
mentally based on adjusting to changes in the
external environment and there exists a wide
range of planning methods that are well-suited
for analyzing the interactions of both environ-
ments simultaneously. These methods are avail-
able and can be further developed to be used in
forest planning.
SWOT Žthe acronym standing for Strengths,
Weaknesses, Opportunities and Threats. analysis
is a commonly used tool for analyzing internal
and external environments in order to attain a
systematic approach and support for a decision
situation Že.g. Kotler, 1988; Wheelen and Hunger,
1995.. The internal and external factors most
important to the enterprise’s future are referred
to as strategic factors and they are summarized
within the SWOT analysis. The final goal of
strategic planning process, of which SWOT is an
early stage, is to develop and adopt a strategy
resulting in a good fit between internal and exter-
nal factors. SWOT can also be used when strategy
alternative emerges suddenly and the decision
context relevant to it has to be analyzed.
If used correctly, SWOT can provide a good
basis for successful strategy formulation. Never-
theless, it could be used more efficiently Že.g.
McDonald, 1993.. When using SWOT, the analy-
sis lacks the possibility of comprehensively ap-
praising the strategic decision-making situation;
merely pinpointing the number of factors in
strength, weakness, opportunity or threat groups
does not pinpoint the most significant group. In
addition, SWOT includes no means of analytically
determining the importance of factors or of as-
sessing the fit between SWOT factors and deci-
sion alternatives. The further utilization of SWOT
is, thus, mainly based on the qualitative analysis,
capabilities and expertise of the persons partici-
pating in the planning process. As planning
processes are often complicated by numerous cri-
teria and interdependencies, it may be that the
utilization of SWOT is insufficient. In their study,
Hill and Westbrook Ž1997. found that none of the
20 case companies prioritized individual SWOT
factors, one grouped factors further into subcate-
gories, and only three companies used SWOT
analysis as an input for a new mission statement.
In addition, the expression of individual factors
was of a very general nature and brief. Thus, it
can be concluded that the result of SWOT analy-
sis is too often only a superficial and imprecise
listing or an incomplete qualitative examination
of internal and external factors.
Applications for gaining extra value from
SWOT analysis in further strategic planning
processes have been presented. Weihrich Ž1982.
presented the TOWS matrix, which helps to syste-
matically identify relationships between threats,
opportunities, weaknesses and strengths, and of-
fers a structure for generating strategies on the
basis of these relationships. Proctor Ž1992. pre-
sented a computer package partly based on
Weihrich’s TOWS matrix. In Proctor’s Ž1992.
package, computer-aided creativity produces
words for decision makers to use in identifying
strengths, weaknesses, opportunities and threats.
In addition, Proctor’s Ž1992. method includes cre-
ative generation and systematic evaluation of
strategic alternatives. Flett Ž1989. introduced a
method of initiating and crystallizing conceptual
thinking. His method is a mix of Kipling’s five Ws
ŽWhat, When, Where, Who, Why., McCarthy’s
four Ps plus one additional P ŽProduct, Price,
 M. Kurttila et al. r Foresty Policy and Economics 1 (2000) 41]52
Place, Promotion and People. and SWOT analy-
sis and its rating. The method results in a broad-
in-scope and innovative strategic management
planning framework.
Some examples of weighting and subdividing
SWOT lists have been presented. Kotler Ž1988.
presented that external factors could be classified
according to their attractiveness and success
probability Žopportunities. and seriousness and
probability of occurrence Žthreats .. Internal fac-
tors could be rated by their performance and
importance. In addition, he subdivided SWOT by
business unit. Wheelen and Hunger Ž1995. sum-
marized the external and internal strategic factors
into EFAS ŽSynthesis of External Strategic Fac-
tors. and IFAS ŽSynthesis of Internal Strategic
Factors.. They showed how internal and external
factors can be weighted and rated to illustrate
how well management is responding to these spe-
cific factors Žrating. in light of their perceived
importance to the company Žweight.. Weighting
was carried out at scale from 0.0 Žnot important.
to 1.0 Žmost important. so that the sum of the
weights was 1.0 and rating at scale 1 Žpoor. to 5
Žoutstanding.. The product of these two was a
weighted score indicating how well the company
is responding to current and expected strategic
factors in its environment. In addition to EFAS
and IFAS, Wheelen and Hunger Ž1995. weighted
and rated SFAS ŽStrategic Factors Analysis Sum-
mary., which included the most important exter-
nal and internal strategic factors. In addition to
weighting and rating individual SWOT factors,
Hemmi Ž1995. suggested weighting four SWOT
groups and using these weights as additional mul-
tipliers for individual factors to assess their over-
all importance. However, none of these ap-
proaches presented a systematic technique for
determining importances.
The decision analysis tool employed in the pre-
sent study, the Analytic Hierarchy Process ŽAHP.,
is a mathematical method for analyzing complex
decision problems with multiple criteria. It was
originally developed by Saaty Ž1977, 1980.. Basi-
cally, AHP is a general theory of measurement
based on some mathematical and psychological
foundations. AHP can deal with qualitative at-
tributes as well as quantitative ones. It has been
43
found to be a useful decision-analysis technique
and it has been applied in cases dealing with
strategic planning, including marketing applica-
tions ŽWind and Saaty, 1980., design and evalua-
tion of business and corporate strategy ŽWind,
1987.. It has also been combined with the Delphi
technique when integrating interactive expert
knowledge in decision analysis ŽKangas et al.,
1996b.. AHP is a widely used method also in
forestry and forest management planning. A list
of applications from a variety of areas of decision
making is reported by Zahedi Ž1986., and applica-
tions concerning natural resource management
were recently reviewed by Mendoza Ž1997..
Forest certification has rapidly become a major
topic in the debate dealing with the issue of how
to improve the ways in which the world’s forests
can be sustainably managed. It has been devel-
oped alongside a growing trend for ecolabelling
of consumer products. It endeavors to link market
demands for forest products produced according
to high environmental and social standards with
producers, who can meet such demands ŽBass,
1997.. The decision to adopt certified forestry
concerns the entire chain of events from the
forest to the final user.
Forest certification may be defined as the ac-
tion of a third-party in demonstrating that forest
management and forest operations are in con-
formity with specific standards. These standards
embody ecological, economic and social aspects.
It can also be said that certification is a guarantee
that such forests have been sustainably managed.
Utilizing certification in marketing operations re-
quires a label Ž‘eco-label’., which indicates that
certified raw materials have been used in the
production of a certain product.
At the forest owner level, certification is a
strategic decision: Should a forest owner adopt
certified timber production with strict environ-
ment-friendly criteria instead of continuing with
conventional timber production? What are the
costs of obtaining a certificate and what are the
expected gains? How rapidly can or should the
change take place?
Clearly, forest certification is a possibility in
forestry mainly brought about by external envi-
ronmental factors. These factors, and the forest
44 M. Kurttila et al. r Foresty Policy and Economics 1 (2000) 41]52
owner’s capabilities to respond to them, must be
examined. The decision situation at hand is a
strategic planning situation in which SWOT and
AHP can both be used. SWOT provides the basic
frame within which to perform an analysis of the
decision situation and AHP assists in carrying out
SWOT more analytically. The possible advantages
of using AHP in SWOT analysis lie in the quanti-
tative examination of the SWOT factors and in-
clusion of preferences of the decision makerŽs. in
the planning situation. In addition, AHP and
SWOT are both widely used, basic methods, and
they are relatively easy to understand. Thus, they
both are well suited to be used also in practical
forest planning.
The present study deals with the development
of SWOT analysis connected to a decision situa-
tion of whether or not to adopt a certification
system. Its rationale and justification are based on
the importance of versatile environmental analy-
sis in strategy formulation and strategic decision-
making processes and in suggesting the potential
usability of the common strategic planning tools
in forest planning. Environmental analysis in-
cludes in-depth and critical examination of inter-
nal and external factors. It is not sufficient just to
collect the relevant factors. Moreover, managers
must view these factors from different stand-
points and identify the foremost internal factors,
which may be called critical success factors. The
comparison of a firm’s position relative to its
main competitors can be based on these factors.
In addition, external factors should be appraised
in relation to internal strengths and weaknesses.
Following these analyses, managers will have their
cornerstones, e.g. the factors on which future
success and strategies should be based.
The objective of this study is to look into SWOT
factors in greater detail and more systematically.
An application utilizing pairwise comparisons of
AHP technique in SWOT analysis is presented.
Also, a strategic decision-making situation of cer-
tificating a non-industrial private forest holding in
Finland is provided to illustrate the use of this
application. Finally, the suitability of the pre-
sented method and the possibilities for its further
application in different situations are discussed.
2. Outline for applying AHP in SWOT analysis
When applying AHP, a hierarchical decision
schema is constructed by decomposing the deci-
sion problem into its decisions elements. The
importance or preferences of the decision ele-
ments are compared in a pairwise manner with
regard to the element preceding them in the
hierarchy. Numerical techniques are used to de-
rive quantitative values from verbal comparisons.
The advantages of AHP include its ability to
make both qualitative and quantitative decision
attributes commensurable, and its flexibility with
regard to the setting of objectives ŽKangas, 1992..
Subjective preferences, expert knowledge and ob-
jective information can all be included in the one
and the same decision analysis. AHP is easy to
apply and understand, and thus, the reformula-
tion of the decision problem and repeating of
comparisons can be profitable and educational.
Basically, the results of an AHP analysis are
the overall Žglobal. priorities of decision alterna-
tives. The idea in utilizing AHP within a SWOT
framework is to systematically evaluate SWOT
factors and commensurate their intensities. AHPs
advantages, i.e. systematic approach to decision
problems and commensurateness, can be re-
garded to be valuable characteristics in SWOT
analysis. Additional value from a SWOT analysis
can be achieved by performing pairwise compar-
isons between SWOT factors and analyzing them
by means of the eigenvalue technique as applied
in AHP. This offers a good basis for examining
the present or anticipated situation, or a new
strategy alternative, more comprehensively. After
carrying out these comparisons, decision makers
will have new quantitative information about the
decision-making situation; for example, whether
there is a specific weakness requiring all the at-
tention, or if the company is expected to be faced
with future threats exceeding the company’s com-
bined opportunities.
Only the most important concepts of the AHP
theory are presented here. For more details on
the AHP theory, readers are referred to Saaty
Ž1977, 1980.. The following definitions need to be
made at this point; SWOT groups refer to four
 M. Kurttila et al. r Foresty Policy and Economics 1 (2000) 41]52
entities Ži.e. strengths, weaknesses, opportunities
and threats . and SWOT factors refer to the indi-
vidual factors underlying these groups. The
method introduced proceeds as follows:
2.1. Step 1. SWOT analysis is carried out
The relevant factors of the external and inter-
nal environment are identified and included in
SWOT analysis. When standard AHP is applied,
it is recommended that the number of factors
within a SWOT group should not exceed 10 be-
cause the number of pairwise comparisons needed
in the analysis increases rapidly ŽSaaty, 1980..
2.2. Step 2. Pairwise comparisons between SWOT
factors are carried out within e¨ ery SWOT group
When making the comparisons, the questions
at stake are: Ž1. which of the two factors com-
pared is a greater strength Žopportunity, weakness
or threat .; and Ž2. how much greater. With these
comparisons as the input, the relative local priori-
ties of the factors are computed using the eigen-
value method Ždescribed below.. These priorities
reflect the decision maker’s perception of the
relative importance of the factors.
2.3. Step 3. Pairwise comparisons are made between
the four SWOT groups
The factor with the highest local priority is
chosen from each group to represent the group.
These four factors are then compared and their
relative priorities are calculated as in Step 2.
These are the scaling factors of the four SWOT
groups and they are used to calculate the overall
Žglobal. priorities of the independent factors
within them. This is done by multiplying the fac-
tors’ local priorities Ždefined in Step 2. by the
value of the corresponding scaling factor of the
SWOT group. The global priorities of all the
factors sum up to one.
2.4. Step 4. The results are utilized in the strategy
formulation and e¨ aluation process
The contribution to the strategic planning
process comes in the form of numerical values for
45
the factors. New goals may be set, strategies de-
fined and such implementations planned as take
into close consideration the foremost factors.
The matrix of pairwise comparisons ŽEq. Ž1.. is
constructed in Step 2. In this matrix, the element
a i j s 1ra ji and thus, when i s j, a i j s 1. The value
of wi may vary from 1 to 9, and 1r1 indicates
equal importance while 9r1 indicates extreme or
absolute importance.
1 w 1rw 2 ... w 1rwn
w 2rw 1 1 ... w 2rwn
A s Ž ai j . s .. .. ..
. . ... .
wnrw 1 wnrw 2 ... 1
Ž1.
In the comparisons, some inconsistencies can be
expected and accepted. When A contains incon-
sistencies, the estimated priorities can be ob-
tained by using the matrix wEq. Ž1.x as the input
using the eigenvalue technique wEq. Ž2.x.
Ž A y l max I . q s 0, Ž2.
where l max is the largest eigenfactor of matrix A;
q is its correct eigenfactor; and I is the identity
matrix. The correct eigenfactor, q, constitutes the
estimation of relative priorities. It is the first
principal component of the matrix of pairwise
comparisons. If the matrix does not include any
inconsistencies, i.e. the judgments made by a de-
cision maker have been consistent, q is the exact
estimate of the priority vector. Each eigenfactor
is scaled to sum up to one to obtain the priorities.
Saaty Ž1977. has shown that l max of a recipro-
cal matrix A is always greater or equal to n
Žs number of rowss number of columns.. If the
pairwise comparisons do not include any inconsis-
tencies, l max s n. The more consistent the com-
parisons are, the closer the value of computed
l max is to n. Based on this property, a consistency
index, CI, has been constructed ŽEq. Ž3...
CI s Ž l max y n . r Ž n y 1 . Ž3.
CI estimates the level of consistency with respect
to a comparison matrix. Then, because CI is
dependent on n, a consistency ratio CR is calcu-
46 M. Kurttila et al. r Foresty Policy and Economics 1 (2000) 41]52
lated, which is independent of n ŽEq. Ž4... It
measures the coherence of the pairwise compar-
isons. To estimate CR, the average consistency
index of randomly generated comparisons, ACI,
has to be calculated. ACI varies functionally, ac-
cording to the size of the matrix Že.g. Saaty, 1980..
CRs 100 Ž CIrACI. Ž4.
As a rule of thumb, a CR value of 10% or less is
considered to be acceptable. Otherwise, all or
some of the comparisons must be repeated in
order to resolve the inconsistencies of the pair-
wise comparisons.
Thus, the results of the comparisons are quan-
titative values expressing the priorities of the
factors included in SWOT analysis. Thereby, per-
sons formulating strategies gain access to new
quantitative information about the environment
surrounding their firm to support their decision
making. They can concentrate on connecting the
most important and compatible opportunities and
strengths in the strategy-building process or see if
the firm is facing some critical threats or weak-
nesses that must be reacted to.
3. Forest certification — a Finnish case study
The introduction and testing of certification
and eco-labels are currently in progress in Fin-
nish forestry. According to preliminary plans,
forest certification can be carried out at the regio-
¨
nal or forest-holding level ŽMetsasertifioinnin
¨
standardityoryhma, ¨ 1997.. The associated criteria,
and also the official organization, of certification
are still under construction. The subjects of the
current discussion focusing on forest certification
concern the formulation of the criteria and the
feasibility of certification. Also, the certification
body or system is still an unknown quantity, the
one proposed in Finland being a national cer-
¨
tification program ŽMetsasertifioinnin standardi-
¨
tyoryhma,¨ 1997., which should also attain interna-
tional acceptance. The two major international
candidates are the Forest Stewardship Council
ŽFSC. and the ISO organization.
Certification causes some costs. Firstly, there
are the external expenses, i.e. the transaction
costs in obtaining and maintaining certification.
Secondly, there are the internal costs, i.e. the
opportunity or incremental costs to be paid by the
forest management unit in order to meet the
certification requirements and to augment the
social value and environmental content of the
forest. As compensation, there exist some bene-
fits, the magnitude of which are uncertain as yet.
These possible benefits include the market re-
sponse through increased returns from timber
sales, maintenance of market shares and auxiliary
benefits ŽLinddal, 1997..
Our case study farm, the Runni Organic
Farming Expertise Centre, is situated in eastern
Finland. The estate is 55 ha in size, of which 30
ha are forestland. The Runni Centre provides
educational and information services concerning
organic farming specializing in organic animal
husbandry and dairy production and forestry.
The Runni Centre is faced with a new strategic
possibility, which may be classified as an emerging
strategy, arising from consumer and wood-
processing industry demands. Should they make a
commitment to move to certified forestry or stay
in timber-production-oriented forestry? The
managing director of Runni Centre organized a
planning session, in the course of which a SWOT
analysis was performed and the key factors
concerning this new strategic option were col-
lected ŽFig. 1..
The background information comprised the es-
timated effects of one planned certification sys-
tem based on a results of a pilot study, where
preliminary Swedish ecolabelling criteria were ap-
plied to Finnish forestry in a sample of non-in-
dustrial private woodlots ŽKajanus and Kar-
jalainen, 1997.. The Runni Centre was among
those participating in this study. The main costs
of certification, from the timber production per-
spective, are caused by protected areas Žcovering
from 5 to 10% of the forest area of the estate .
and the retention of trees on cutting areas. At the
Runni Centre, it turned out to be, that the stum-
page earnings are slightly bigger when practicing
forestry in accordance with certification criteria
compared to timber-production oriented forestry.
This is caused by the fact that while in the latter
 M. Kurttila et al. r Foresty Policy and Economics 1 (2000) 41]52 47

Fig. 1. A result of SWOT analysis for the Runni Centre.

case one stand Žarea 1.5 ha. is clear-cut during
the planning period, in the former case the same
stand was protected. However, this woodlot could
compensate for the loss by adding cuttings aiming
at natural regeneration Žarea 2.8 ha. to the certi-
fication plan. It has to be noted that during the
following 10-year planning periods, it is not nec-
essarily possible to make similar compensations.
Some differences also arise due to silvicultural
practices that vary with cutting regimes ŽTable 1..
These results do not include the external costs
nor the potential benefits of certification; e.g.
there were no differences between fixed costs and
timber prices between the alternatives.
Following the construction of the SWOT
framework, the priorities of the factors included
in the SWOT analysis were estimated by pairwise
comparisons following the steps presented above.
The managing director and an expert on the
methodology involved made the comparisons

Table 1
The estimated effects of the planned forest certification criteria for the Runni Centre Žat 4% interest rate level.

Timber-production- Forestry according to

oriented forestry certification criteria
Žin FIM hay1 yeary1 . Žin FIM hay1 yeary1 .

Stumpage earnings 547 589

Costs of silviculture y30 y41

Effects of planned certification system

Net change in value of 10
standing timbera
Retained trees y9
Protected areas y104
Gross profit 517 445

Difference in gross profits y72

Žcost of adopting forest
certification.
a
The difference of value of standing timber between two alternatives in favor of certification alternative during a 10-year
planning period.
48 M. Kurttila et al. r Foresty Policy and Economics 1 (2000) 41]52

together, with the expert acting as a consultant
explaining the situation to the managing director,
who made the comparisons.
Positive factors predominated: four out of five
of the biggest global priorities represented
strengths or opportunities ŽTable 2.. Only one
weakness, small cutting incomes, belonged to the
top five group. In fact, revenues from timber
production are of minor importance to the Runni
Centre when compared to the educational func-
tions. This partly explains the low importance of
the threats and weaknesses. The whole situation
is easily observed by referring to Fig. 2. The
lengths of the lines in the different sectors point
out that the strengths and opportunities predomi-
nate and that at present there are no specific
threats or weaknesses that could ruin the new
strategy. The foremost factors can be easily picked
out to form the basis for the formulation of the
ecolabelling strategy.
The consistencies of the comparisons carried
out in Step 2 were good ŽTable 2.. The compar-
isons at this level did not cause any difficulties
and the decision maker was able to logically pri-

Table 2
Priorities and consistency ratios a of comparisons of the SWOT groups and factors carried out in a session by the Runni Centre
manager and an expert Žthe greatest weight with respect to each SWOT group is underlined. b

SWOT group Priority of SWOT factors Consistency Priority of Overall

the group ratio the factor priority of
within the the factor
group

Strengths 0.27 Small ‘eco costs’ from certification 0.059 0.016

Žfavorable forest structure .
Minor dependence on timber 2.3% 0.125 0.033
production
Capacity to adapt and evolve 0.408 0.109
certification system
Synergy with agriculture 0.408 0.109
and education units

Weaknesses 0.15 Monotonous forest from 0.094 0.015

biodiversity point of view
Small forest area 1.4% 0.168 0.026
for protection
Small cutting incomes 0.738 0.114

Opportunities 0.50 Price premium for certified 0.090 0.045

timber
Improvement in biodiversity 0.7% 0.143 0.071
and environment
Changes in consumers’ 0.767 0.380
preferences Žincrease in market
demand for certified timber.

Threats 0.08 Diminishing profitability 0.122 0.010

Diminishing cutting 0.5% 0.230 0.019
possibilities
Negative image if 0.648 0.054
certification system
is abandoned
a
The consistency ratio of the comparisons between four SWOT groups was 9.0%.
b
The overall priority of the factor is computed simply by multiplying the priority of the factor within the group by the priority of
the group
 M. Kurttila et al. r Foresty Policy and Economics 1 (2000) 41]52 49

Fig. 2. Graphical interpretation of the results of pairwise comparisons of SWOT groups and factors Žthe factors are arranged in
such a way that the factor possessing the highest global priority is the outermost point..

oritize the factors. However, the comparisons in
Step 3 proved to be more complicated, with the
consistency ratio being as high as 9.0%, which can
still be considered to be acceptable, but clearly
higher than the others.
The implemented analysis suggests that based
on factors that significantly describe the operatio-
nal environment, certification strategy could be
adopted. It points out the most important factors
in the operational environment of the enterprise,
which can be used in subsequent planning
processes and the development of whose should
be specially monitored. The most important func-
tion of the case was, however, to clarify the use of
the proposed method and to present the results
of SWOT analysis in an illustrative way. SWOT is
just one phase of the strategic planning process,
that should be thoroughly carried out before a
decision to adopt a specific strategy is made. In
addition, the information used in the calculations
was preliminary and the situation, e.g. the certifi-
cation criteria, may change.
4. Discussion
In this study, a common strategic planning tool,
SWOT, was used in a case study concerning certi-
50 M. Kurttila et al. r Foresty Policy and Economics 1 (2000) 41]52
fication of the forests of a private woodlot. Al-
though SWOT is in common use as a planning
tool, it has some weaknesses. The objective of this
study was to present an application where some
of these weaknesses can be avoided, and thereby
SWOT can be used more effectively. This was
done by linking SWOT with a decision analysis
method ŽAHP.. The result was a hybrid method,
which produces the quantitative values for the
SWOT factors.
Due to its simplicity, effectiveness and ability to
deal with qualitative as well as quantitative crite-
ria Žthis was also indicated by the results of this
study., AHP is well-suited to dealing with the
factors in SWOT analysis. One problem with
SWOT analysis is in the uncertainty related to
the future development and outcomes of different
factors. This may complicate comparisons. How-
ever, AHP analysis is capable of handling deci-
sion-making situations with some uncertainties
and inconsistencies.
The recommendation is that the number of
factors within the strengths, weaknesses, opportu-
nities or threats should be limited to 10, but this
probably induces the user to avoid overlapping
and carelessness when constructing SWOT lists.
On the other hand, the limitation is not so strict,
and the problem of having a large number of
comparisons can be avoided by at least two dif-
ferent techniques. Firstly, by grouping the vari-
ables and adding a new level to the comparison
hierarchy ŽSaaty, 1980.. If, for example, the num-
ber of opportunities is large, they can be grouped
into two or three subgroups. Opportunities, for
example, may be divided into ‘General Environ-
mental Opportunities’ and ‘Competitive Environ-
mental Opportunities’ ŽDess and Miller, 1993..
Secondly, new data recording and analysis tech-
niques offer possibilities to include more factors
in decision analysis. For example, Alho and Kan-
gas Ž1997. presented a regression version of AHP
formulated in Bayesian terms. Their version can
be developed and utilized so that not all compar-
isons need to be performed.
AHP provides quantitative priorities to be used
in decision support. It does not, however, include
statistical assessment of the uncertainty of the
results. The measure of the consistency of the
comparisons made, the consistency ratio, result-
ing from AHP calculations provides no direct
information about the uncertainty of the priori-
ties obtained. Other methods for analyzing uncer-
tainties in pairwise comparisons have been pre-
sented. Alho et al. Ž1996. suggested a variance
components modeling approach, where uncer-
tainty or variation of the judgments in the case of
multiple judges can be divided into three parts:
Ž1. interpersonal variation around the population
mean; Ž2. possible shared logical inconsistency of
the judgments among the judges; and Ž3. residual
uncertainty. Alho and Kangas Ž1997. extended
that formulation to a multilevel, multiple-objec-
tive choice problem by using regression technique
and the Bayesian approach. As a result, it was
possible to attach probability to the resulting pri-
orities. These techniques might also be used in
the approach based on the combined use of
SWOT and AHP.
Numerical results, the priorities of SWOT fac-
tors, are of use when formulating or choosing
strategy. It is useful to compare the external
possibilities in relation to the internal capabili-
ties, because all factors are, at the same, on the
numerical scale. For example, when it is observed
that one single weakness is bigger than all the
strengths, the strategy chosen could perhaps be
aimed at eliminating this weakness. Similarly,
choosing a new strategy should probably not be
based merely on the opportunities and omitting
the existing threats if they are of same magnitude.
In the case study illustrating the use of the
hybrid method, the results, based on preliminary
calculations, indicated that certification could be
adopted. Certification can be considered to be a
potential strategy alternative and it can be used
as a competitive advantage on our case farm. The
decision to adopt certification is not, however,
permanent. Forests, when compared to some
other factors of production, e.g. machinery, are
quite flexible, and it is not impossible to make a
reverse decision after some years should certifi-
cation prove to be as an unfavorable decision.
The results of our case study were presented in
an illustrative way, which is often needed to clar-
ify the interactions of numerous and contradic-
tory factors. In strategic planning, this is often
 M. Kurttila et al. r Foresty Policy and Economics 1 (2000) 41]52
implemented via matrixes or graphs. Well known
examples of these instruments are the Boston
Consulting Group’s Business Portfolio Matrix
Žbusiness growth rate and relative competition
position., General Electric’s approach Žmarket at-
tractiveness and competitive position., and An-
soff’s productrmarket expansion grid, and others
Že.g. Ansoff, 1965; Hofer and Schendel, 1978;
Dess and Miller, 1993..
The hybrid method presented here is suitable
for many kinds of strategic planning situations,
including forest planning situations. In the case
study, the situation investigated was one where a
new strategy option emerged. The method can
also be used in situations where strategic options
have not yet been created. After defining the
priorities of the SWOT factors, new strategies can
be constructed based partly on the information
resulting from comparisons. A connection with
Weihrich’s Ž1982. and Proctor’s Ž1992. applica-
tions utilizing priorities to find out the most im-
portant factors when creating new strategies ac-
cording to their suggestions is also possible.
In addition, it is possible to compare two or
more strategic options and find out which one
best matches the SWOT factors. This can be done
by adding strategy alternatives at the lowest level
of the comparison hierarchy and comparing them
with respect to each factor in the SWOT list. The
result is a quantitative value indicating the prior-
ity or preference of each strategy option.
One approach to dealing with the uncertainties
involved in the assessment of future development
might be the application of scenario modeling. In
this approach, each possible future scenario would
have its own SWOT analysis and AHP compar-
isons. Appraising the probabilities to scenarios
and weighting the SWOT factors with them could
yield a more comprehensive picture of the effects
of the various future outcomes. Weihrich Ž1982.,
too, proposed a dynamic SWOT analysis, where
changes in internal and external factors over time
are included by preparing TOWS matrixes at
different points of time.
According to the experiences of this study, the
results of the combined use of AHP and SWOT
analysis were promising. Making pairwise compar-
isons forces the decision maker to think over the
51
weights of the factors and to analyze the situation
more precisely and in more depth. The applicabil-
ity of the method in participatory planning will be
studied in future. Public participation could be
implemented by allowing all participants to per-
form their own SWOT analysis and pairwise com-
parisons, and then to proceed by summing up the
separate results after weighting the participants
by their individual importances. This would result
in new alternatives from the participants’ view-
points and probably include more creativity in the
planning process.
It is evident that a lot of managerial decision
making is based on intuition and subjective judg-
ments instead of the outcomes of formal plan-
ning. Expanding the presented formulation to
cover a wider range of decision makers and ex-
perts to introduce their ideas and estimates could
benefit the planning process. Interaction, learning
and consensus can all be achieved by, for exam-
ple, including the Delphi technique in the plan-
ning process Že.g. Kangas et al., 1996b..
The hybrid method of AHP and SWOT in-
creases and improves the information basis of
strategic planning processes. It provides an effec-
tive framework for learning in strategic decision
support in numerous situations. It can also be
used as a tool in communication and education in
decision making processes where multiple deci-
sion makers or judges are involved.
Acknowledgements
Authors wish to thank Jukka Peltoniemi, Lic.
¨ Sevola,
Sc. ŽEcon., Daniel Schmoldt, Ph.D., Yrjo
Lic. Sc. ŽFor) and an anonymous referee for their
comments on an earlier version of the present
manuscript.
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