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Chapter 6 SPACE MATRIX

The document describes the SPACE matrix, a tool for strategic analysis. It involves plotting a company's internal and external strategic factors on a 2x2 matrix to evaluate its strategic position. The internal factors are financial position and competitive position, while the external factors are stability/environmental position and industry position. Numerical values are assigned to various variables for each factor, averaged, and plotted on the x and y axes. The intersection point indicates the company's strategic profile and recommended strategies. An example SPACE matrix analysis for a bank is provided.

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1K views14 pages

Chapter 6 SPACE MATRIX

The document describes the SPACE matrix, a tool for strategic analysis. It involves plotting a company's internal and external strategic factors on a 2x2 matrix to evaluate its strategic position. The internal factors are financial position and competitive position, while the external factors are stability/environmental position and industry position. Numerical values are assigned to various variables for each factor, averaged, and plotted on the x and y axes. The intersection point indicates the company's strategic profile and recommended strategies. An example SPACE matrix analysis for a bank is provided.

Uploaded by

gulfam ashraf
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPT, PDF, TXT or read online on Scribd
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Strategy-Formulation Analytical

Framework
SWOT Matrix

SPACE Matrix

Stage 2: BCG Matrix


The Matching Stage

IE Matrix

Grand Strategy Matrix

Ch 6 -1
SPACE Matrix
Strategic Position & Action Evaluation Matrix

Aggressive
Conservative
Defensive
Competitive

Ch 6 -2
SPACE Matrix

Two Internal Dimensions

Financial Position (FP)


Competitive Position (CP)

Ch 6 -3
SPACE Matrix

Two External Dimensions

Stability Position (SP) or it may be


defined as Environmental position (EP)

Industry Position (IP)

Ch 6 -4
SPACE Factors
Internal Strategic Position External Strategic Position

Financial Position (FP) Stability Position (SP)

Return on investment Technological changes


Leverage Rate of inflation
Liquidity Demand variability
Working capital Price range of competing products
Cash flow Barriers to entry
Inventory turnover Competitive pressure
Earnings per share Price elasticity of demand
Price earnings ratio Ease of exit from market
Risk involved in business

Ch 6 -5
SPACE Factors
Internal Strategic Position External Strategic Position

Competitive Position (CP) Industry Position (IP)


Market share Growth potential
Product quality Profit potential
Product life cycle Financial stability
Customer loyalty Technological know-how
Competition’s capacity utilization Resource utilization
Technological know-how Ease of entry into market
Control over suppliers & distributors Productivity, capacity utilization

Ch 6 -6
Steps to Developing a SPACE Matrix

1. Select a set of variables to define:


1. FP
2. CP
3. SP and
4. IP
2. Assign a numerical value:
1. From +1 to +6 to each FP & IP dimension
2. From -1 to -6 to each SP & CP dimension
3. Compute an average score for each FP, CP, SP, and
IP.
Ch 6 -7
Steps to Developing a SPACE Matrix

4. Plot the average score on the appropriate


axis.
5. Add the two scores on the x-axis and plot
the point.
6. Add the two scores on the y-axis and plot
the point.
7. Plot the intersection of the new (x,y) point.
8. Draw a directional vector from the origin
through the new intersection point.
Ch 6 -8
Ch 6 -9
SPACE Matrix

Ch 6 -10
SPACE Matrix
Example Strategy Profiles

Ch 6 -11
SPACE Matrix
A SPACE Matrix for a Bank

Ch 6 -12
SPACE Matrix
A SPACE Matrix for a Bank… cont.

Ch 6 -13
SPACE Matrix
A SPACE Matrix for a Bank…cont.

Conclusion

IP Average is +10.0 ÷ 3 = 3.33


CP Average is -9.0 ÷ 3 = -3.00
SP Average is -13.0 ÷ 3 = -4.33
FP Average is +9.0 ÷ 4 = 2.25

Directional Vector Coordinates:


x-axis: IP+CP = -3.00 + (+3.33) = +0.33
y-axis: SP+FP= -4.33 + (+2.25) = -2.08

The bank should pursue Competitive Strategies.


Ch 6 -14

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