1. 1 Critical Success Factors and Organizational Performance Prepared by: Niemann, Lahlou, Zertani & Pflug Lecturer: Ihsan Yüksel

2. 2 Introduction In this project, critical success factors approach will be used in measurement of organizational performance. Performance: output/outcome at the end of a certain period of time of an activity. Outcome: extents the organization reached its objectives. Performance measurement: evaluation of all efforts made to achieve objectives.

3. 3 Method multi-criteria analysis techniques Technique for Order Performance by Similarity to Ideal Solution (TOPSIS) – determine ranking of the critical success factors. Analytical Hierarchy Process (AHP): – calculate the weights of critical success factors. Critical success factors refer: posses to be successful in the industry they work in.

4. 4 Step 1: Determining the factors that enable the organization to be successful in its sector. In this step, first the factors necessary for the organization to be successful in its sector have been determined.

5. 5 The factors considered for the example organization in the project are as follows: SF1: financing SF2: brand image SF3: effective advertising SF4: pricing SF5: customer satisfaction SF6: distribution skills SF7: managerial ability SF8: consumer loyalty SF9: low product cost

6. 6 Step 2: Ranking of success factors Criteria (main factors) which are considered to determine the “critical” of a success factor are as follows: Strategic character Create value Priority of factor In this step, firstly, the factors that attribute a success factor as “critical” have been determined.

7. 7 Comparative judgmentScale of relative importance ai and aj are equally important1 ai is moderately more important than aj3 ai is strongly more important than aj5 ai is very strongly more important than aj7 ai is extremely more important than aj9 Intermediate values between two adjacent judgments 2,4,6,8 Table 1: Scale of relative importance used in the pair-wise comparisons of AHP In this step secondly, weights of factors had been calculated by the AHP technique. In other words, relative importance has been calculated.

8. 8 Main FactorsSCCVPF Strategic character (SC)1,0004,0007,000 Create value (CV)0,25001,0003,000 Priority of factor (PF)0,1430,3331,000 Table 2: The pair-wise matrix of the main factors

9. 9 After forming the pair-wise comparison matrix, weights of factors have been calculated. In this project, weights vectors had been determined as follows: Main FactorsWeight Strategic character (SC)0,701437 Create value (CV)0,213238 Priority of factor (PF)0,085324 Table 3: Weight of Main Factors

10. 10 Calculate consistency of pair-wise comparison matrix Calculate of consistency ratio (CR) as follows

11. 11 Then consistency vector is formed as follows:

12. 12 n indicates number of factors. The avarage value ( ) of the elements in the consistency vector is: = 9,09807÷3 = 3,032576 The consistency index (CI) have been calculated using the following formula: λ max

13. 13 Depending on n number of factors, random index (RI) had been determined. Random index obtained from the Table 4. For this example RI is 0,58. Size of Matrix23456789 Random consistency 00,580,91,121,241,321,411,45 Table 4: Average random consistency (RI)

14. 14 Consistency ratio (CR) CR is smaller than 0.10 pair-wise comparison matrix is consistent.

15. 15 Ranking: After calculating weight of the main factors, ranking of the success factors have been determined using TOPSIS technique. The calculations have been made in Excel program.

16. 16 Each success factor has been evaluated a number between 1-10. And, each column (SC, CV, PF) have been summed (Table 5). FACTORS SC 0,701437 CV 0,213238 PF 0,085324 SF16 43 SF2 555 SF3 377 SF4 433 SF5 274 SF6 682 SF7 525 SF8 716 SF9 873 Total value 464438 Table 5: Factor Evaluation

17. 17 Normalized matrix FACTORSSCCVPF SF10,13040,09090,0789 SF20,10870,11360,1316 SF30,06520,15910,1842 SF40,08700,06820,0789 SF50,04350,15910,1053 SF60,13040,18180,0526 SF70,10870,04550,1316 SF80,15220,02270,1579 SF90,17390,15910,0789 Table 6: Normalized Matrix

18. 18 Normalized matrix and the vector of main factor weights have been multiplied. x

19. 19 Success FactorsImportanceRanking SF010,1037296 SF020,1161464 SF030,1278213 SF040,0783839 SF050,0993897 SF060,1289682 SF070,0922828 SF080,1082985 SF090,1449841 Table 7: Ranking of Success Factors with TOPSIS According ranking of success factors is as follows : First factor is SF09, second is SFO6 and third is SF03 etc.

20. 20 Step 3: Determining threshold value for determining critical success factors At this step, a threshold value had been determined so that critical success factors have been selected from above in Table 7. In this project threshold value was accepted 0.10 According to this value, these factors are: SF01 SF02 SF03 SF06 SF08 SF09

21. 21 Step 4: Making pair-wise comparisons of critical success factors and calculation of the weights of critical success factors. SF09SF06SF03SF02SF08SF01 SF09 1,000 2,0003,0004,0005,000 SF06 1,000 2,0004,0008,0007,000 SF03 0,500 1,000 3,0001,0004,000 SF02 0,3330,2500,333 1,000 2,0005,000 SF08 0,2500,1251,0000,500 1,000 7,000 SF01 0,2000,1430,2500,2000,143 1,000 Table 8: Pair-wise Comparison Matrix of the Critical Success Factors

22. 22 Calculated factor weights are as follows (Table 9). Weights SF09 0,26939 SF06 0,336427 SF03 0,154359 SF02 0,102796 SF08 0,102587 SF01 0,034442 Table 9: Weights of Critical Success Factors

23. 23 Step 5: Determining organizational performance At this step, performance of the organization has been calculated using critical success factors weights (Table 9) and evaluation scale (Table 10) that provide in the literature. Level of factorsValue Very Good (VG)1.0 Good (G)0.8 Medium (A)0.6 Negative (N)0.4 Very Negative (VN)0.2 Not Evaluation (NE)0.0 Table 10: Level of Factors

24. 24 Table 11: Determining Performance Level According to Critical Success Factors Critical success factors Factor weights Level of factorValuePerformance level SF1 Financing 0,034442Good0,80,027554 SF2 Brand image 0,102796Very good1,00,102796 SF3 Effective advertising 0,154359Good0,80,123487 SF6 Distribution skills 0,336427Medium0,60,201856 SF8 Consumer loyalty 0,102587Good0,80,08207 SF9 Low production cost 0,26939Very good1,00,26939 Total Performance Level0,807153

25. 25 There are five columns in Table 11. The first column: critical success factors; the second column: weight of critical success factors; the third column: evaluation level of each factor; the fourth column: numerical equivalent of the evaluation level and the fifth column: performance level of each critical success factor. calculation: factor weight and scale value had been multiplied.

26. 26 In the last row, general performance level had been determined, The sum of performance level of each factor in fifth column was yielded general performance, This value takes a value between 0 and 1, If the value of the general performance level is close to 1, it means that organizational performance is excellent

27. 27 If the general performance level value is close to 0, this means that organizational performance is very bad, Of course, the decision and evaluation of organization management are also important, In other words, whether the level is considered sufficient or insufficient depends on the organizational management.

28. 28 References Caralli,R.A., 2004, The Critical Success Factor Method: Establishing a Foundation for Enterprise Security Management Technical Report. Chow, T., Cao, D-C., 20007, A survey study of critical success factors in agile software projects, The Journal of Systems and Software. Dağdeviren et al., 2009, Weapon selection using the AHP and TOPSIS methods under fuzzy environment, Expert Systems with Applications, 36(4), 8143-8151. Daniel, D. R, 1961, Management Information Crisis, Harvard Business Review. Hussey, D., (1998), Strategic Management; 4.ed., Butterwood Heinemann. Hwang, C. L., & Yoon, K.,1981, Multiple attribute decision making: Methods and applications, A State of the Art Survey. New York: Springer-Verlag

29. 29 Leidecker, JK., Bruno, A.V., (1984), “Identifying and using critical success factors”, Long Range Planning, 17, 23-32. Ngai, E.W.T. Law, Wat, C.C.H. F.K.T. 200, Examining the critical success factors in the adoption of enterprise resource planning, Computers ın Industry, 59, 548-564 Park, K.S., Lee, J., 2009, A new method for estimating human error probabilities:AHP-SLIM, Reliability Engineering & System Safety, Rockart, J.F. 1986, A Primer on Critical Success Factors" published in The Rise of Managerial Computing: The Best of the Center for Information Systems Research, edited with Christine V. Bullen. (Homewood, IL: Dow Jones-Irwin), 1981, OR, McGraw- Hill School Education Group.. Saaty, T.L., 1980, The analytic hierarchy process. New York:McGraw-Hill Inc., Ülgen, H., Mirze, S. K., 2007, İşletmelerde Stratejik Yönetim, Literatür Yayınları, İstanbul.