A Hybrid Fuzzy Approach for Industry Competition Analysis

Abstract

We offer a hybrid approach to strategic diagnostics of the industry competition based on the application of M. Porter’s model of five forces, tools of logical-linguistic modelling, and fuzzy-set theory. Two complementary calculation schemes were developed to assess the level of competition in the industry. The first of them is based on fuzzy multicriteria analysis using the Fuzzy SAW method, the second is based on the construction of a logical-linguistic model with fuzzy expert knowledge bases and the use of fuzzy inference using the Mamdani algorithm. Fuzzy numbers in triangular form with triangular membership functions are used to represent the linguistic assessments of experts, and the CoA (Center of Area) method is used to defuzzify the obtained values. The study proposes to implement the model in the form of a framework in Excel. The model consists of units for entering information received from experts in the form of linguistic assessments of the factors importance of each of five forces of M. Porter’s model and forces themselves and linguistic assessments of the influence level of each of these factors, transformation unit of these estimates into fuzzy numbers, written in a triangular form with the corresponding membership functions, aggregation blocks of fuzzy estimates, a unit for determining the weighting of the factors of each of the 5 forces and the importance of each of these forces, a unit for calculating fuzzy values of the influence level of each of the 5 forces of the M. Porter’s model and the general level of competition in the industry, unit for the implementation of fuzzy inference according to the Mamdani algorithm, defuzzification unit of these values. The framework allows simulation, depending on the modification of the list of certain factors of the external environment and the correction of experts’ considerations. Fuzzy bar diagrams and a fuzzy pentagon are constructed, which reflect the level of competition in the industry for each of M. Porter’s model, and allow calculating the fuzzy value of the integral level based on a weighted assessment of the impact of each of these forces with the subsequent defuzzification of this value.