A two-stage study of grey system theory and DEA in strategic alliance: An application in Vietnamese Steel industry

Abstract

Throughout the years, Vietnam has experienced the higher economic growth. It leads more development in many various fields including steel industry. However, it necessary to have more strategic alliances among those steel companies for an incredible and sustainable growth. To have successful cooperation, it requires many special skills, efforts and considerations. This paper applies DEA model and Grey Theory to calculate the effectiveness and proposes a method to find out the most suitable strategic partners. Seventeen biggest companies in the Vietnam steel industry are chosen to research. The input factors (Net assets, operating cost, Cost of good sold) and the output factors (Net sales and net profits) are collected from realistic published financial reports of the Vietnam issued stock market in seven consecutive financial years (2011-2017). The Hoa Sen Group is considered as the target decision making unit (DMU). According to the empirical results, Pomina Steel corporation (DMU4) is the most feasible beneficial alliance partner for Hoa Sen Group. In addition, the proposed process in this paper is applied to not only the steel industry, but also to other manufacturing fields.