Influence matrix
The influence matrix is a possibility for a simple - but nevertheless realistic - visual representation of complex relationships and can therefore serve as an important decision-making aid, especially in the area of "strategic controlling" of a company, in order to assess the possibilities of influencing and their effects on the overall system (company). The basic idea, which is also used in other areas, goes back to the “Vester paper computer” .
Classification of the influence matrix in the concept of "networked thinking"
During the analysis phase of the strategic planning process, the influence matrix is an element of the concept of “networked thinking” , which is differentiated by its holistic approach from the purely monocausal if-then hypotheses of “linear thinking”. Essential aspects of this approach are based on the work of the Swiss economists Peter Gomez and Gilbert Probst . This more complex approach becomes more necessary the more the complexity of the system to be considered increases. Characteristic of such a type of decision-making situation is, among other things, a particularly large number of influencing factors, which also have a high degree of mutual dependency, which is usually accompanied by feedback . A temporal variance or dynamic of the system behavior, which should also be taken into account, is also typical. Only a modeling that satisfies these characteristics enables a strategic planning adapted to the system (company) taking into account all relevant mechanisms of action.
The steps necessary to create the influence matrix
- Graphic modeling of the system to be described as a network with the influencing factors as nodes and the influences as directed and weighted edges.
- Tabular representation of the network graph and formation of the cumulative influencing strengths, influenceability according to the following scheme:
Scheme of the database for creating an influence matrix
Scheme of an influence matrix
- Restricting the ten most important influencing factors, you then get the graphic influence matrix in which an influencing factor was entered as an example.
Interpretation of the influence matrix
The influencing factors entered in the influence matrix can now be classified as follows based on their location :
- Active influencing factors
The influencing factors in the lower right quadrant have a strong influence on the other variables, but cannot be changed sufficiently.
- Passive influencing factors
The influencing factors located in the upper left quadrant, on the other hand, only have a small influence, but can easily be influenced themselves. So you are primarily passive.
- Critical influencing factors
The most strongly networked influencing factors are in the upper right quadrant. These are both active and passive and thus have a decisive effect on the system behavior, whereby they themselves are also subject to strong variability. Because of their importance, they must therefore be given special attention during strategic planning in the company.
- Sluggish influencing factors
The lower left quadrant shows a weak overall network, so that the influencing factors classified there neither actively nor passively have any noteworthy effects on the system behavior.
Creation of the influence matrix
In the following, the concept of the influence matrix is illustrated using the global rice market as an example. The companies operating in this market are confronted with a growing number of influencing factors and the resulting increasing complexity of the interrelationships that need to be analyzed as part of the company's strategic planning process. To create the influencing matrix for the global rice market, the causalities and strengths of the relationships between the various influencing factors must first be determined. The results of such a market analysis are then graphically displayed using the network described above with the influencing factors as nodes and the influences as directed and weighted edges. The consideration of the time dependencies and the representation of the network graph is deliberately omitted here for the purpose of simplification.
As described above, the next step is the tabular display of the network graph and the formation of the cumulative influencing strengths / influenceability according to the following scheme:
In the next step, the influence matrix for the global rice market is determined from this tabular representation:
Interpretation of selected influencing factors
In order to interpret the influence matrix, one influencing factor entered in the matrix should now be explained in more detail - as a representative for all four characteristic positions of the classification scheme presented above.
Rice price
The rice price is the most critical and most strongly interlinked influencing factor. For this reason, this influencing factor must be given special consideration in the strategic planning process of a company operating in the rice industry. As can be seen in the graph above, the price of rice is particularly influenced by the price of oil , the quantity and yield of the harvest, the level of stocks and the export policy of the countries that export rice . Analyzes of the rice crisis in 2008 primarily see export restrictions in travel- exporting countries - such as B. China, India, Indonesia and Vietnam - as the cause of the crisis. In order to protect the domestic market from price increases, these countries severely restricted their travel exports at the end of 2007 / beginning of 2008. At the same time, rice-importing states such as B. the Philippines, in anticipation of rising prices, to replenish their stocks through massive acquisitions. This resulted in a reduction in the supply and an increase in the demand for rice in the global market, as a result of which the rice price rose sharply. As a result of the high oil price and bad weather conditions, the farmers' production costs rose at the same time, which in turn had negative effects on the amount and yield of the harvest and thus on the rice supply.
The increasing use of biogenic fuels and the associated use of arable land for energy crops also affects the possibilities for growing rice and thus the price of rice. However, according to in-depth analyzes on this subject, the negative effect on rice cultivation is not as great as with other foods, e.g. B. cereals or wheat.
Oil price
The oil price can be characterized as an active influencing factor. It has a major impact on the global rice market, but it is not easy to influence itself. The oil price has a major impact on the price of rice, the use of biogenic fuels, the speculators active in the commodity markets and the price of wheat. In addition, the relationship between the price of oil and the farmers' production costs must be taken into account: when the price of oil rises, the fuel costs increase significantly, which in turn has an impact on the cultivation methods used by the farmers.
Wheat price
As a passive influencing factor, the wheat price has a comparatively small influence on the main determinants of the global rice market, but is strongly influenced by the other factors. The wheat price has a notable influence on the rice price, which is why the wheat price should be given greater attention in the strategic planning process of a company operating in the rice industry. The high wheat price in connection with weather-related crop failures was one of the reasons for the export restrictions imposed by India on rice in 2008, the aim of which was to secure the food supply in the domestic markets.
Farmers production costs
The farmers' production costs have a comparatively small influence on the other variables in the system and offer only a small possibility of influencing them. So you are a sluggish influencing factor. However, this factor must also be taken into account in a company's strategic planning process, since the farmers' production costs are an important determinant of the crop yield and the possible cultivation methods.
See also
Individual evidence
- ↑ H.-G. Baum, AG Coenenberg , T. Günther: Strategic Controlling. 2007, p. 40 ff.
- ↑ F. Vester: The Art of Networked Thinking. 1970.
- ↑ GJB Probst, P. Gomez: Networked Thinking - Holistic Leadership in Practice. 1991.
- ↑ a b c D. Headey, S. Fan: Anatomy of a crisis: the causes and consequences of surging food prices. In: Agricultural Economics. No. 39, 2008, pp. 375-391.
- ↑ a b B. Wright: Speculators, storage, and the Price of Rice. In: Agriculture and Resource Economics Update. No. 12, 2008, pp. 7-10.
- ↑ a b c d e P. C. Timmer: Reflections on food crises past. In: Food Policy. No. 35, 2010, pp. 1-11.