In this paper we propose an ontology-based dynamic enterprise model to facilitate managerial control. The strategic planning process includes two parts: 1) strategy formulation, and 2) strategy implementation (e.g., Anthony 1965; Kaplan and Norton 2004; Anthony and Govindarajan 2004). Management control systems serve to implement enterprise strategies, and formal management control systems typically include strategic planning, budgeting, performance measurement, and performance evaluation processes (Anthony and Govindarajan 2004).
We focus on that portion of the management control process commonly termed capital investment analysis or capital budgeting, wherein managers must first assess complex business environments, changing competitive forces and uncertainties, and then make significant resource allocation decisions.
The strategy implementation process results in a set of resource allocation decisions expected to best implement the enterprise's strategy and deliver shareholder value (Anthony and Govindarajan 2004). Kaplan and Norton (1996) argue, however, that traditional management systems create barriers that limit managers ability to assess the cumulative impact of cross-functional or inter-related investment opportunities. For example, capital investment analysis techniques such as net present value (NPV) or internal rate of return (IRR) typically consider one or a few investments in isolation.
Others also argue that traditional capital investment analysis techniques fail to adequately consider risks and uncertainties, and a number of researchers therefore advocate the use of real options techniques to address sources of uncertainty (e.g., Accola 1994; Arya et al. 1998; Childs et al. 1998; Amram and Howe 2002). Yet, advanced quantitative techniques such as real options analyses remain limited in their ability to consider nonlinearities and incorporate qualitative factors (e.g., Drew 2006).
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An Ontology-Based Dynamic Enterprise Model for Managerial Planning and Control
