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SPACE Matrix in Strategic Management

The SPACE matrix is a strategic management tool used to analyze a company's internal strengths and weaknesses as well as external opportunities and threats to determine what type of strategy it should undertake. It evaluates four dimensions - competitive advantage, industry strength, environmental stability, and financial strength - to place the company into one of four quadrants suggesting an aggressive, conservative, defensive, or competitive strategy. The SPACE matrix is constructed by rating factors for each dimension and plotting the average scores on axes to identify the appropriate strategic posture.

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29 views3 pages

SPACE Matrix in Strategic Management

The SPACE matrix is a strategic management tool used to analyze a company's internal strengths and weaknesses as well as external opportunities and threats to determine what type of strategy it should undertake. It evaluates four dimensions - competitive advantage, industry strength, environmental stability, and financial strength - to place the company into one of four quadrants suggesting an aggressive, conservative, defensive, or competitive strategy. The SPACE matrix is constructed by rating factors for each dimension and plotting the average scores on axes to identify the appropriate strategic posture.

Uploaded by

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

3/7/2016

SPACEMatrixStrategicManagementMethod

SPACEMatrixStrategicManagementMethod
[Link]
typeofastrategyacompanyshouldundertake.
TheStrategicPosition&ACtionEvaluationmatrixorshortaSPACEmatrixisastrategic
managementtoolthatfocusesonstrategyformulationespeciallyasrelatedtothecompetitive
positionofanorganization.
TheSPACEmatrixcanbeusedasabasisforotheranalyses,suchastheSWOTanalysis,BCG
matrixmodel,industryanalysis,orassessingstrategicalternatives(IEmatrix).
WhatistheSPACEmatrixstrategicmanagementmethod?
ToexplainhowtheSPACEmatrixworks,[Link],let'stakealookat
whattheoutcomeofaSPACEmatrixanalysiscanbe,[Link]
matrixisbrokendowntofourquadrantswhereeachquadrantsuggestsadifferenttypeoranatureof
astrategy:
Aggressive
Conservative
Defensive
Competitive
ThisiswhatacompletedSPACEmatrixlookslike:

[Link]
[Link]
[Link]
productdevelopment,integrationwithothercompanies,acquisitionofcompetitors,andsoon.
Now,howdowegettothepossibleoutcomesshownintheSPACEmatrix?TheSPACEMatrix
analysisfunctionsupontwointernalandtwoexternalstrategicdimensionsinordertodeterminethe
[Link]

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3/7/2016

SPACEMatrixStrategicManagementMethod

organization'[Link].
Internalstrategicdimensions:Financialstrength(FS)
Competitiveadvantage(CA)Externalstrategicdimensions:Environmentalstability(ES)
Industrystrength(IS)
[Link]
[Link]
[Link],leverage,
turnover,liquidity,workingcapital,cashflow,[Link]
examplethespeedofinnovationbythecompany,marketnicheposition,customerloyalty,product
quality,marketshare,productlifecycle,andothers.
[Link]
tobusinessexternalstrategicdimensionareforexampleoveralleconomiccondition,GDPgrowth,
inflation,priceelasticity,technology,barrierstoentry,competitivepressures,industrygrowth
potential,[Link]'sFiveForces
model.
TheSPACEmatrixcalculatestheimportanceofeachofthesedimensionsandplacesthemona
CartesiangraphwithXandYcoordinates.
Thefollowingareafewmodeltechnicalassumptions:
Bydefinition,theCAandISvaluesintheSPACEmatrixareplottedontheXaxis.
CAvaluescanrangefrom1to6.
ISvaluescantake+1to+6.
TheFSandESdimensionsofthemodelareplottedontheYaxis.
ESvaluescanbebetween1and6.
FSvaluesrangefrom+1to+6.
HowdoIconstructaSPACEmatrix?
TheSPACEmatrixisconstructedbyplottingcalculatedvaluesforthecompetitiveadvantage(CA)
andindustrystrength(IS)[Link]
stability(ES)andfinancialstrength(FS)[Link]
followingsevensteps:
Step1:Chooseasetofvariablestobeusedtogaugethecompetitiveadvantage(CA),industry
strength(IS),environmentalstability(ES),andfinancialstrength(FS).
Step2:[Link]
advantage(CA)andenvironmentalstability(ES)usingratingscalefrom6(worst)to1(best).Rate
industrystrength(IS)andfinancialstrength(FS)usingratingscalefrom+1(worst)to+6(best).
Step3:Findtheaveragescoresforcompetitiveadvantage(CA),industrystrength(IS),
environmentalstability(ES),andfinancialstrength(FS).
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SPACEMatrixStrategicManagementMethod

Step4:Plotvaluesfromstep3foreachdimensionontheSPACEmatrixontheappropriateaxis.
Step5:Addtheaveragescoreforthecompetitiveadvantage(CA)andindustrystrength(IS)
[Link].
Step6:AddtheaveragescorefortheSPACEmatrixenvironmentalstability(ES)andfinancial
strength(FS)dimensionstofindyourfinalpointontheaxisY.
Step7:[Link]
[Link].
SPACEmatrixexample
ThefollowingtableshowswhatvalueswereusedtocreatetheSPACEmatrixdisplayedabove.

[Link]
[Link]
axisXandY.
WheredoIgonext?
[Link],whatifwehave23strategiesandneedtodecide
whichoneisthebestone?TheQuantitativeStrategicPlanningMatrix(QSPM)modelcanhelpto
answerthisquestion.
ShouldyouhaveanyquestionsabouttheSPACEmatrix,youmightwanttosubmitthematour
managementdiscussionforum.
.

[Link]

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