A COGNITIVEMAP KNOWLEDGE-BASEDSTRATEGICPLANNING SIMULATION

Kun Chang Lee

Department of Management Information Systems
Kyonggi University
YiUi-Dong 94-6,JangAn-Ku
Suwon 440-760, KOREA

ABSTRACT After literature survey about the

It is very difficult for strategic conventional knowledge-based SP
planning managers to fully understand systems 12, 11, 13, 151, we found two
complex chains of influence to which interesting facts:
the changing environments have on
(1) Most knowledge-based SP systems
some target goals. To resolve this
lack considering the time variant
kind of problem, this paper presents
property which seems essential for
a mechanism of integrating the use of
yielding more realistic solution.
cognitive map with a strategic
planning simulation, where a ( 2 ) The role of knowledge is, in

cognitive map ( C M ) helps decision most knowledge-based SP systems,

limited to providing a basis only for
makers understand the complex
reasoning and/or inference with
dynamics between a certain strategic
respect to some input facts.
goal and related environmental
factors. A detailed numerical example
The analysis that most
is presented to illustrate the
knowledge-based SP systems adopt is
performance of the proposed strategic
time-neutral, i.e., it is conducted
planning simulation mechanism.
for a fixed point in time, and the
variables are not allowed to
1. INTRODUCTION
fluctuate in value over time. This is
Strategic planning (SP) activity is due to the lack of simulation ability
usually related to the managerial to suggest a solution evolving with
activities of top management 151, time. However, such a time-variant
dealing with entrepreneurial work of property is very important in the SP
the organization 1201. Therefore, SP decision making because ( 1 ) business
decision problems are frequently environments frequently change with
ill-structured, which leads to time; (2) many SP cases require
various kinds of knowledge-based SP different types of decision making
systems 1151. with different points of time; (3)

249
0-8186-1060-3425/93 $03.000 1993 IEEE
competitor (rival)’ s strategic capabilities to:
activity might vary with time. (1) provide insight into the
Simulation can intrinsically spectrum of SP decision problem being
accommodate the time constraint in considered,
its problem-solving mechanism because ( 2 ) suggest a time-variant strategy
many discrete-event simulation as environments change,
techniques, most popular in use ( 3 ) include only relevant data in
today, require time variable to show the SP information systems.
the changes of system states over
time. If this simulation ability is The knowledge-based SP system
combined with the conventional proposed in this paper shows the
knowledge-based SP systems, it can characteristics of intelligent SP
suggest more realistic solutions than simulator. The reasons are as
the conventional knowledge-based SP f01lows:
systems.
(1) The knowledge for monitoring
Most knowledge-based SP systems use changes in the strategic environments
the knowledge only for reasoning can be extracted from CM.
according to the input facts, not for ( 2 ) A set of environmental factors
analyzing the surrounding that seem relevant to a strategic
environments. As is well known, a goal can be identified with the aid
wide variety of environmental factors of the CM knowledge.
surrounding the organization may have (3) The strategic simulation by
a great influence on the SP incorporating those environmental
performance. If knowledge can be factors identified above can be
extracted from environments and is designed and performed to assist in
used for monitoring the change of building effective SP decision under
environments, then the SP systems competitive situations.
will adapt to environments more
effectively, improving its Section 2 addresses six major tasks

performance. involved in the SP process which

should be considered in the process
In line with these needs, this paper of SP-related strategic simulation.
proposes a new version of Detailed description of cognitive map
knowledge-based SP system which, by is presented in section 3 with more
using a CM knowledge as a basis of emphasis on its implications in our
environmental analysis, has SP decision making process, followed

250
by section 4 in which an illustrative the formulation of a set of goals for
numerical example is introduced and the organization. Environmental
simulated by using the mechanism analysis includes identification of
proposed in this paper. Finally, environmental factors which seem
concluding remarks end this paper relevant to some target goals.
with some further research topics. Strategy formulation refers to the

sequence of steps taken among the

2. STRATEGIC PLANNING
time at which resources, the
Before proceeding further, it is operating environment, and a set of
necessary to define a strategy goals are preliminarily identified.
concept. A strategy is considered to Strategy evaluation is concerned with
be a conditional sequence of the suitability of strategy
internally consistent resource formulated above for present or
allocations which defines an future environments (situations).
organization’s relationship with its Strategy implementation is
environment over time [91. In essentially an administrative task
general, strategy level is divided and inherently behavioral in nature.
into four types: enterprise, Strategic control checks to see
corporate, business, and functional whether the strategy is being
strategies. Strategy concerned in implemented as planned and the
this paper is the business strategy results produced by the strategy are
dealing with the allocation of those intended. If deviation occurs,
resources to achieve a competition then feedback takes place and the SP
advantage over rivals. process recycles through tasks (1)
There are six major tasks that and ( 6 ) as indicated in Figure 1.
comprise the SP process 1201: (1) The sequence of six SP processes as
goal formulation, (2) environmental depicted in Figure 1 might then be
analysis, ( 3 ) strategy formulation, used as a good organizing framework
( 4 ) strategy evaluation, ( 5 ) strategy for simulating various types of
implementation, and (6) strategic strategies under changing SP
control. The interrelationships environments.
between these six tasks are portrayed
3. COGNITIVE MAP
in Figure 1.

Goal formulation is concerned with 3.1. Nature

A CM, introduced by Axelrod [ l l , has

25 1
 goal structure

1‘ 1’ T

Figure 1. Interrelationships between six major tasks

in strategic planning process (Adapted from 120, p.151)

been originally used for representing consecutively trigger more garbage,

knowledge in political and social more bacteria, and more diseases
sciences, representing the through a positive chain of influence
cause-effect relationships which are between related elements, thereby
perceived to exist among the elements finally overcoming the initial
of a given environment. The concern advantage of improvements in
of CM is to see whether the state of sanitation [161. From these
one element is perceived to have an descriptions about interpreting the
influence on the state of the other. CM operation, it can be easily
For instance, in Figure 2, if observed that positive causal links
sanitation facilities were improved, (denoted as ’+’ in C M ) should be
the incidence of disease would regarded as excitatory relationships
decrease. However, better sanitation while negative causal links (denoted
facilities, initially causing a as ’-’ in CM) as inhibitory
decrease in the number of diseases relationships between elements.
incidence, would indirectly lead to
an increase in the city’s population.
In turn, this growth might

252
 +' I-
# of people +
in a city t I migration
into city
modernization 2
amount of garbage
per area sanitation
facilities

# of diseases
per 1000 residents

per area

Figure 2. Cognitive map for public health study

+
A I

Figure 3 . Hypothetical cognitive map

How can a CM showing the determine whether or not data about a

characteristics above be used in our particular factor are relevant to a
SP simulation process ? To answer given SP decision. For illustration,
this question, we will address three consider Figure 3 , where causal links
kinds of possible usages of CM in SP between six factors are depicted.
decision making. As for the first Suppose that one is concerned with
kind of CM usage, irrelevant data can the state of F because it will affect
be defined as those data pertaining a SP decision to be made. Figure 3
to factors which have no effect on shows us that both A and D influence
the SP decision outcome. By analyzing F directly, and C has an indirect
the connectivity between factors influence on F through D. On the
depicted in CM, one can easily other hand, neither B nor E influence

253
F indirectly or directly. They (B and as a knowledge engineering tool for
E) are therefore "irrelevant" in extracting a causal knowledge from
light of outcome F. Determination environments. In line with this
like this is frequently difficult to perception, Kosko [121 has proposed a
make by direct inquiry or fuzzy cognitive map (FCM) in which a
observation, while it becomes quite measure of causation of one factor on
clear when using CM purposely. another lies between -1 and 1. The
FCM can be organized into a matrix
As for the second kind of CM usage, which is capable of not only evolving
one can address the question, "Does a
with time but also producing outputs
CM-based causal knowledge as a whole
(or consequence vectors) for some
work well as we expect ?'I To answer
specific inputs (or stimulus
this, let us assume that one finds
vectors), and therefore allowing
that the value of F is relatively
I' what- if analysis.
'I

high, while all the values of A and D

are relatively low. The CM suggests, 3 . 2 Development Procedures
however, that low A and low D would
lead to a low F. Thus one knows that A CM can be developed in line with
this is not the expected case. The the following three steps:
reason may be that other factors
(1) The first important step is to
unknown yet might be affecting F in
clarify the purpose for which the CM
this particular situation, those
is being built. If the purpose is not
which were not originally perceived
well defined, the search for relevant
to be relevant. Then our effort
factors is likely to lack direction
should be focused on finding such
factors affecting F so that the and the CM might easily grow to an

performance of a CM-based knowledge unmanageable size.

( 2 ) The next step is to identify the
may not degrade sharply under
relevant factors, those which may
turbulent SP situations.
influence a decision.
The third type of CM usage is very ( 3 ) The final step is to find causal
promising in the field of expert relationships among factors
systems. CM must be improved enough identified in step 2. The way of
to deal with uncertainty and determining them is either to derive
vagueness frequently observed in from decision maker's statements 11,
information about the decision 71 or to use questionnaires prepared
environments so that it may be used specifically for this purpose [161 or

254
to use a neural network-based Through strategic control stage,
learning [ 4 l . those results are feedbacked to
previous stages such as goal
3.3 Value in Strategic Planning
formulation, environmental analysis,
and strategy formulation. After
As discussed in section 2, six major
repeating these steps, SP decisions
tasks of SP process indicate that
building effective SP decision would become more timely, alert, and
relevant to the changes of
be much easier with viewing the
surrounding environments. In sum, CM
overall dynamics of SP decision
plays the role of providing a causal
problems through CM in which the
knowledge between relevant factors
causal relationships between various
and aiding the decision maker
kinds of factors are depicted. Since
construct effective SP decisions.
determining which factors should be
included in CM depends on the
4. COGNITIVE MAP KNOWLEDGE-BASED
subjective judgment of decision SIMULATION IN STRATEGIC PLANNING
maker, it is recommendable that
multiple experts are involved in 4.1 Knowledge-Based Simulation
building various CMs for a specific
SP decision problem. After CMs are Today, simulation is one of the most
completed, then they may be merged widely used techniques for management
into one meaningful and appropriate planning [241 because the aim of
CM for the particular SP decision business simulation is to help the
problem. The merging process is well manager analyze complex problems and
described in 1231. The CM can help make decisions in a more scientific,
view the causal structure of SP objective way. Corporate planning
decision problems as a whole which models [171 is a typical example of
leads to identify relevant factors business simulation methods.
that should be more thoroughly Meanwhile, as expert systems
analyzed later. Therefore, those techniques recently emerge as one of
factors identified can be most widely used decision making
incorporated into the SP-related methods in management,
strategic simulation mechanism as knowledge-based simulation technique
exogenous variables. The simulation is now receiving attention.
results are analyzed and used as a Simulation researchers have used
basis for making more efficient SP those knowledge-based simulation
decisions against uncertain future. techniques either to provide powerful

255
decision support functions [221 or to compared to that of conventional
act as intelligent front-ends to expert systems.
provide assistance with
experimentation and output analysis 4.3. Simulations in Strategic

[lo, 141 or to automate the entire P1anning

simulation life cycle [8, 191.
However, in the SP field which is one Our focus is to simulate various SP
of most important decision making alternatives based on the CM
areas in management, those studies knowledge. For systematic SP
aPP1Ying the knowledge-based simulation, we follow the sequence of
simulation technique are very few. six major tasks of SP shown in Figure
1. The objective of this strategic
4.2 Cognitive Map Knowledge-Based
Simulation simulation is to find appropriate set
of strategies to meet uncertainties
The CM provides a cause-effect
resulted from the changes of both
knowledge useful for viewing the
competitor’s strategy and surrounding
overall structure of concerned
business environments.
decision problems. Different from the
fact that conventional 4.4. Simulation Steps
knowledge-based simulation uses a
human expertise as a major source of Referring to six major SP tasks in
knowledge, the CM knowledge-based section 2, the CM knowledge-based
simulation has the following three strategic simulation is performed as
characteristics: in the following six steps:

( 1 ) The role of CM knowledge is to Step 1: Goal formulation

identify a factor that seem to be Step 2: Environmental analysis
relevant to a strategic goal being Step 3: Identification of those
pursued. environmental factors relatively
(2) Integration of human expertise relevant to strategic goal
with the CM knowledge can improve the Step 4: Strategy formulation

system’s performance as well as widen Step 5: Strategy evaluation &

applicability to various decision implementation
making problems. Step 6: Strategic control
(3) Since the CM knowledge can be Figure 4 depicts the schematic logic
represented as a matrix form, diagram of the CM knowledge-based
inference process is easy and fast strategic simulation steps.

256
 I CM Analysis I
I .............................................
1 Causal Knowledge 1- User %
:Interface/
.............................................

Identified

1'
Strategic Simulator

Mode 1 Parameter specification

Base Problem Formulation
Simulation Mechanism

.......................................................
User
,C&
/ \ .......................................................

n Strategy
Implementation

.......................................................
, C & [ Interface
User
/ \ .......................................................

Figure 4. Schematic logic flowchart of simulation steps

4 . 5 . A Numerical Example promising after an intensified

strategic analysis. Then the company
Suppose that a company has a plan to is certainly expected to compete with
enter a new market which proved very the currently market-leading company,

257
a competitor. To clearly understand Environments can be classified into
the experimental procedures, we three categories: uncontrollable,
follow the six simulation steps semi-controllable, and controllable.
mentioned in previous section. Environments such as economic
conditions regardless of domestic or
Step 1. Goal formulation
international, interest rates,
political stability, etc. are
We will use Deal’s dynamic
uncontrollable. Quality control
advertising model [61 as our major
activity, sales price, productivity,
strategic simulation model. The form
etc. are controllable because they
of its objective function is the sum
might become favorable or unfavorable
of two items: (1) profits
according to the efforts of the
accomplished during a fixed SP period
and (2) relative market share at company. Semi-controllable
environments possess two aspects of
terminal planning time which will be
both uncontrollable and controllable
described in the sequel. Accordingly,
the new-entering company is assumed environments. Examples are
competitiveness, brand image, etc.
to set a goal to maximize its profits
Competitiveness represents a general
during a certain SP period. To
competitive position of a firm in the
accomplish this goal, the company
target market, which may be
possesses a strategic goal (i.e.,
operationalized goal) which is to determined by complicated interacting
forces of various exogenous and/or
make its relative market share at the
endogenous factors described so far.
terminal planning time as large as
possible. A large relative market Environments facing the new-entering
company are assumed in this paper to
share will allow a strategically
stable position in the target market, encompass those three kinds above.

leading to high profits. Therefore, According to this definition of

the goal that the new-entering environments, those environmental

company pursues can be mathematically factors related to the strategic goal

stated in step 1 are listed as
described as a sum of (1) profits
gained during SP period and (2)
f01lows:
Uncontrollable factors:
relative market share at the terminal
Economic conditions
planning time. Competitor’s advertisements

Semi-controllable factors:
Step 2. Environmental analysis Competitiveness
Market demand

258
Controllable factors: shown in Figure 5, an initial version
Quality control of CM matrix can be built as in the
Sales price
Productivity following Table 1.

Competitiveness

Sales Price

IT L Quality

I +
AI
Productivity

Conhit ions
Ecodomic +- ll
I
+
Advertisements

Figure 5. A CM according to the goal: Market Share

Step3: Identification of those After considering expert’s opinion,

environmental factors relatively
the initial version of CM matrix can
relevant to strategic goal
be converted into a following fuzzy
To identify those factors relevant to CM (FCM) matrix in which causal
the goal, a CM should be built and values fall between -1 and 1.
then analyzed. Based on the From the first column in Table 2, we
statements in step 1, let us suppose can easily conclude that competitor’s
that strategic goal to be pursued is advertisements affect the market
a market share. An appropriate CM share of the new-entering company
showing the cause-effect most negatively. It is reasonable for
relationships between the strategic the new-entering company to formulate
goal and those seven environmental appropriate strategies considering
factors in step 2 is depicted in the the competitor’s advertisements
Figure 5. sufficiently. In addition, the FCM
matrix in Table 2 can be used
Based on the causal relationships usefully for clearly measuring the

259
Description of Notations:
I: Market Share +1: Positive cause-and-effect
11: Competitiveness 0: No cause-and-effect
111: Quality Control -1: Negative cause-and-effect
IV: Sales Price
V: Productivity
VI : Market Demand
VII: Economic Conditions
VIII: Competitor’s Advertisements

Table 1. Initial version of CM matrix

Table 2. Fuzzy version of CM matrix

composite effects resulting from Case I: Suppose that three factors

changes of multiple factors. For changed. Then stimulus input vector
example, let us consider two cases: may be obtained as follows:

260
Stimulus Input Changes of four factors
V: Productivity = + . 3 IV: Sales Price = -.l
VII: Economic Conditions = -.3 V: Productivity = + . 3
VIII: Competitor’s advertisements VII: Economic Conditions = - . 3
= +.5 VIII: Competitor’s Advertisements
= +.2

These information can be organized

=> Stimulus input vector:
into a stimulus input vector:
(O,O,O,-.1,.3,0,-.3,.2)
-. 3, .5).
(O,O,O,O, .3,0, Therefore
=> Consequence vector:
multiplying this stimulus input
x FCM matrix
(O,O,O,-.1,.3,0,-.3,.2)
vector with FCM matrix, we can obtain
= (-.15,.02,0,-.24,0,-.12,0,0)
a consequence vector as follows:

Composite effect of stimulus input

x FCM matrix =
(0,0,0,0,.3,0,-.3,.5)
vectors on the goal is -.15 which
(-.5,0,0,-.24,0,-.OS,O,O).
means that changes of those factors
may affect the market share
The consequence vector may be
negatively by .15.
interpreted such that changes in
those three factors including In addition to these two cases, if we
productivity, economic conditions, change the state of competitor’s
and competitor’s conditions affect advertisements into .7, then the
the market share negatively by .5, effect is directly affecting the
the sales price negatively by .24, market share by -.7 and indirectly
and the market demand negatively by increasing the market demand by .14.
.08. Therefore, we can conclude that In conclusion, we select the
changes of three factors may affect competitor’s advertisements as a most
the market share most unfavorably. relevant factor to the stated
strategic goal, incorporating into
Case 2: If four factors change one of variables of the following
including sales price, productivity, strategic simulation mechanism.
economic conditions, and competitor’s
Step 4: Strategy formulation
advertisements as follows, stimulus
input vector can be organized into
Since competitor’s advertisements is
(O,O,O,-.1,.3,0,-.3,.2). Then a
selected as a factor most relevant to
consequence vector may be obtained as
the strategic goal, advertising
f01lows
efforts are appropriate strategy for

26 1
the new-entering company. In derivative with respect to time t
specific, strategy concerned is to (that is, dx/dt), tf and to are
appropriately allocate advertising respectively terminal time and
expenditures among the planning initial time, U and v are
period considering the competitor's respectively piecewise continuous
advertising behavior. We found that vector functions called controls or
competitive advertising mode1 strategies, U ( . ) is an algebraic
formulated in differential games [61 terminal condition. @(.I is a
is most suitable for this type of performance index at terminal time tf
strategic simulation because two representing herein a relative market
simulation entities including the share at terminal planning time. A
new-entering company and the saddle point is defined as the pair
* *
competitor must be equally considered (U ,v 1 satisfying the relation
into the simulation dynamics. The
nature of differential games depends J(u*,v) 2 J(u * ,v* J(u,v*
on the system dynamics with which
each of two simulation entities would for arbitrary U E U, v E V. If this
* *
maximize its performance value. relation is satisfied, U and v are
Typical structure of the differential called optimal pure strategies and
* *
game problem can be briefly described J(u ,v 1 is called the value of the
as follows [31: Determine a saddle game or performance index.
point for
In fact, differential game is a
t
J = Q[x(tf),tfl + J f L(x,u,v,t)dt branch of optimal control theories
.I and its applications to a wide
O
variety of MS/OR problems such as
subject to the constraints finance, marketing, production, and
economics, etc. can be found in the

x = f(x,u,v,t),
book by Sethi and Thompson [211.

x(to) = x Before simulating our strategy

0'
U[X(tf),tf1 = 0, formulation with differential games,

and U E U(t), v E V(t). we should observe the following seven

assumptions:

where J is the performance index, x

and x are respectively the (vector) 1) The total size of industry
position or state of the game and its advertising does not influence the

262
potential market size. Total 7 ) The new-entering company tries
potential market size is therefore t o take advantage of the competitor’s
assumed to be a fixed amount of non-optimal play which can be
sales, M. observed as the negative deviations
2) The advertising media is assumed in the state values.
to be relatively continuous such as Based on these seven assumptions and
radio, television, and newspapers. strategic goal, following set of
3) Each of the market competitors strategic simulation equations may be
possesses a dynamic equation for its built based on Deal’s advertising
strategical behaviors (i.e., equation model [61:
x = f(x,u,v,t) 1 which is similar to where subscript 1 and 2 respectively
each other except state and control denote the new-entering company
variables. (pursuer) and the competitor
4) The sales effectiveness of (evader), both J2 are
J1 and
succeeding advertising expenditures performance index t o be optimized
diminishes as both company’s sales under the given situations, xi(t) is
increase. the sales amount of firm i at time t,

t
M p1 J1 = wlx1(tf)/[xl(tf) + x2(tf)l + J t [clxl(t)- u;(t)l dt
0

subject to
xl(t) = -alxl(t) + blul(t)[M - xl(t) - x2(t)l/M,
x2(t) = - a x (t) + b2u2(t)[M
2 2
- xl(t) - x2(t)l/M.

x1(to), x2( to) given, x (t) is the first derivative with

i
U (t), u2(t), Xl(t), x2(t)>0. respect to time, a >O is a decay
1 i
parameter, b >O is an advertising
i
5) Each of the company involved in effectiveness parameter, c >O is the
i
the game is assumed to have perfect net revenue coefficient, (t) is the U
i
knowledge of the model parameters. rate of advertising expenditures of
6) Information about the change in firm i at time t, wi(t) is the
competitor’s sales rate is available weighting factor for the performance
to the new-entering company. index, M is the total potential
market size.

263
In the performance index, U is Step 5: Strategy evaluation and
1
squared for analytical convenience to implementation
calculate the derivative of the
* *
optimal controls, U and v . It is Strategy evaluation is based on the
noteworthy that performance index of criterion: "Will the proposed
each company follows a goal hierarchy strategy be any good in the future
formulated in step 1. To solve this ?'I. For strategy evaluation, we
kind of differential game problems, obtained expected performance index
we used an adaptive algorithm to take J for each case after SP period,
1
advantage of the competitor's which is summarized in Table 4 .
non-optimal play [181. Let us suppose
Case ?erformance Index
that following sets of parameters
(after SP period)
shown in Table 1 are available to the
I 180.86
new-entering company. M is given I1 157.90
I11 164.08
500.0, xl(to) = 40.0 and x2(t0) =
IV 170.56
100.0, ul(t) = 1.00 and uz(t) = 1.00, v 152.77
and planning period is denoted as t E
VI 133.70
VI I 174.67
[0.0,5.01, being discretized into
integers for analytical simplicity. Table 4. Performance index J
1
After differential game-based
strategy simulation with these The values of performance index in
*
parameters, we obtained U for each Table 4 are obtained from summing two
1
case. terms: profits during SP periods and

-Case a a C C w w
1 2 bl bz 1 2 1 2
I .20 .25 1.10 1.10 .60 .80 15.0 8.00
I1 .25 .25 2.00 1.50 .50 .60 22.5 8.00
I11 .25 .25 2.00 1.50 .SO .60 25.0 5.00
IV .25 .25 1.10 1.10 .50 .60 25.0 8.00
V .20 .25 1.10 1.10 .50 .60 15.0 8.00
VI .15 .25 1.10 1.10 .50 .60 15.0 8.00
VI I .25 .40 1.10 1.10 .50 .60 15.0 8.00

Table 3 . Sets of parameters for strategy formulation

264
relative market share at the terminal
planning time. From the results shown Time Expected Sales Amount
in Table 4, we conclude that case I 1 84.70
will result in most promising 2 69.78
strategy in the future. Then the
* 3 57.34
following strategy (i.e.,ul) related 4 47.26
to case I is implemented for the 5 38.99
new-entering company.

Table 6. Expected sales amount

Planning Period I Strategy
.4118 However, in real situation, expected
.1581
.1912 sales amount shown in Table 6 cannot
.1581
be fully accomplished due to a
.0808
variety of unexpected changes in
c 1.0000
business environments. Then assume
*
Table 5. Proposed strategy u1 that deviations occur in the
for the new-entering company new-entering company’s sales amount
*
x 1 and also deviations are observed
*
Values shown in Table 5 represent the in the competitor’s sales amount x2,
*
normalized version of U and then which are represented in Table 7.
1’
detailed strategy implementation may
be accomplished such that if Planning Period X X
2
1
advertising budget is A, advertising 1 -1.0 -
expenditures to be invested at
planning
multiplying
period
A with
is obtained
corresponding
each
as I 2
3
4 I :::I 1;: I
-0.5 -1.5

normalized value. Table 7. Deviations observed in the

sales amount
Step 6 : Strategic Control
Deviations shown in Table 7 will
After strategy implementation, the cause recycling steps 4 and 5,
*
expected sales amount (xl) for the resulting both adjusted strategies
new-entering company is summarized in and sales amount for the new-entering
Table 6. company, which is summarized in Table
8.

265
II I 1i very difficult for decision makers to
Planning identify those factors relevant to
strategic goals being considered.
Future research topic which seems
.1604 69.70
I 3 I .1918 I 103.00 1 interesting is clarification of the
4 .1578 85.40
role of cognitive map knowledge in
5 .0805 69.70

are now developing a unified version

Table 8 . Adjusted strategy and
sales amount of cognitive map knowledge-based
strategic planning system.
Performance value adjusted after
considering deviations in the ACKNOWLEIGMENTS
competitor's sales amount is 238.72
which is greater than the original I would like to thank anonymous
vale 180.86. Also increase in sales reviewers for their invaluable
amount is observed because we use the comments which are greatly helpful to
adaptive algorithm to take advantage improve the quality of this paper.
of the competitor's non-optimal play.
In addition, terminal market share REFEREWCES
increased from 7.80 % to 13.95 %.
111 R. Axelrod, Structure of
Decision, Princeton University Press,
5 . CONCLUDING REMARKS
1976.

121 O . J . Borch and G. Hartvigsen,

We proposed a cognitive map
"Knowledge-based systems for
knowledge-based strategic simulation strategic market planning in small
firms", Decision Support Systems,
for building an effective strategic
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