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SPACE Analysis - Strategic Position and Action Evaluation

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21 views20 pages

SPACE Analysis - Strategic Position and Action Evaluation

Uploaded by

marilynrapado13
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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SPACE Analysis – Strategic Position

and Action Evaluation Matrix


BY: M AR ILYN D . RAPAD O
SPACE Matrix
- it is an excellent tool for assessing the
wisdom and common of a certain strategic
strategy.
- it was developed by academic expertise in
strategy, Alan Rowe, Richard Mason, Karl Dickel,
Richard Mann, and Robert Mockler.
- this is highly helpful tool for creating and
Dimensions of the SPACE
Matrix
 Internal
Dimension;
1.Financial Position
2.Competitive Position
 External
Dimension;
Financial Position
- refer to the amount of money and assets that the
firm possesses.
Factors that should be taken into account;
1. Income/Return on Investment
2. Leverage
3. Liquidity
4. Capital needed in comparison
5. Money/Cash flow
6. Simple exit to market
7. Inventory movement
8. Risk that the firm faces
9. Using scale economies and experience
depending on the position for
competitive advantage and
industry attractiveness,
according to a high financial
strength supported by
reasonable environmental
stability.
A weak performance without
notable environment stability
suggests the need for either
a competitive approach or
defensive strategy.
Competitive Position
- talks about how good your product or services and
how your position in the industry can affect you.
Factors should be taken into account;
1. Sales Volume/Market Share
2. Product Quality/Product Excellence
3. Lifecycle of Product
4. Lifecycle of a Product Replacement
5. Customer Adherence
6. Utilization of Capacity by Competitors
7. Technological Expertise/Technical know-how
8. Vertical merging/Integration
9. Rapidity of New Product Launches
approach is indicated by a high
grade on the industry
attractiveness/competitive
advantages axis. A low grade
means that a conservative or
defensive strategy should be
used.
Stability Position
-these are external factors that may affect
the industry.
Factors should be taken into account;
1.Technological developments
2.The inflation rates
3.Demand elasticity
4.Price points of similar goods
5.Obstacles to entering the industry
6.Rivalry/Competitive pressure
7.Demand elasticity at a price
A high score supported by enough
financial stability shows that either
aggressive or cautious strategy is
suitable. A weak performance without
noteworthy financial strength suggests
the need for either a competitive plan
or defensive approach.
Industry Position
- it has to do with everything that affects the
industry
Factors should be taken into account;
1.Possibility of growth
2.Earning potential
3.Monetary security
4.Technological expertise
5.Use of resources
6.Strength in capital
7.Ease of entering the industry
8.Productivity and capacity use
9.The negotiating position of manufacturers
approach is indicated by a high
grade on the industry
attractiveness/competitive
advantage axis. A low grade
means that a conservative or
defensive strategy should be
used.
The SPACE Matrix

Aggressive
Conservative * Backward, forward, horizontal integration
* Market penetration * Market penetration
* Market development * Market development
* Product development * Product development
* Related diversification * Diversification (related or unrelated)

Competitive
Defensive
* Backward, forward, horizontal integration
* Retrenchment
* Market penetration
* Divestiture
* Market development
* Liquidation
* Product development
Four Types of Strategies in
the SPACE Matrix
• Aggressive Strategy

• Competitive Strategy

• Conservative Strategy

• Defensive Strategy
Aggressive Strategy
- this occurs when all the dimensions are positive.
An organization is in a great chance to take advantage
of external opportunities, address internal deficiencies,
and feed against external dangers by using its internal
strength.
Competitive Strategy
- it indicates a competitor’s tactics. Market
penetration, market development, horizontal
Conservative Strategy
- t h i s i m p l i e s a v o i d i n g e x c e s s i v e r i s k - t a k i n g a n d a d h e r i n g t o t h e fi r m ’ s c o r e c o m p e t e n c e . M a r k e t p e n e t r a t i o n , m a r k e t e x p a n s i o n , p r o d u c t d e v e l o p m e n t , a n d a s s o c i a t e d d i v e r s i fi c a t i o n a r e a m o n g t h e m o s t p o p u l a r c o n s e r v a t i v e b u s i n e s s s t r a t e g i e s .
Defensive Strategy
- t h i s o c c u r s w h e n a l l t h e d i m e n s i o n s a r e n e g a t i v e . T h i s s u g g e s t s t h a t t h e fi r m s h o u l d f o c u s o n i m p r o v i n g i n t e r n a l w e a k n e s s a n d a v o i d e x t e r n a l t h r e a t s . R e d u c t i o n , d i v e s t m e n t , l i q u i d a t i o n , a n d a s s o c i a t e d d i v e r s i fi c a t i o n a r e e x a m p l e s o f d e f e n s i v e t a c t i c s .
T h e f ol l owi n g are t he st e ps ne c e s sary to c re ate a S PA C E M atri x:
1 . To de fi ne fi na nc i a l pos i t i on ( F P ) , c om pe t i t i v e pos i t i on ( C P ) , s t a bi l i t y pos i t i on ( SP ) . a nd i ndus t ry pos i t i on ( I P ) , c h oos e a s e t of pa ra me t e rs / v a ri a bl e s .
2 . G i v e e a c h of t he e l e me nt s t ha t ma ke up t he fi na nc i a l s i t ua t i on a n d i nd us t ri a l pos i t i on d i me ns i ons a numbe r be t we e n + 1 ( wors t ) a nd + 7 ( b e s t ) .
stability position and competitive position
dimensions a numerical value between -1 (best) and
-7 (worst). Compare your results to those of your
rivals on the FP and CP axis. Make comparisons to
different industries using the IP and SP axes.
4. By adding the values assigned to the variables in
each dimension, and then dividing by the total
number of variables in that dimension, you may
determine the average score for FP, IP, SP, and CP.
5. Plot the SPACE Matrix's
corresponding axis with the average
scores for FP, IP, SP, and CP. Plot the
resulting point on X after adding the
two scores along the x-axis. Plot the
resulting point on Y after adding the
two scores on the y-axis. Display the
additional xy point's intersection.
SPACE Matrix's origin that passes
through the newly created
intersection point. This vector
displays the preferred organizational
strategy types: aggressive,
competitive, defensive, or
conservative

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