SPACE MATRIX

SPACE Matrix is a Four-Quadrant framework which indicates whether aggressive, conservative, defensive, or competitive strategies are most appropriate for a given organization

1st Quadrant

2nd Quadrant

3rd Quadrant

4th Quadrant

Most important determinants of an organization’s overall strategic position

1st Quadrant

2nd Quadrant

3rd Quadrant

4th Quadrant

• Two Internal dimensions (financial position [FP] and competitive position [CP])

• Two External dimensions (stability position [SP] and industry position [IP])

Internal Dimension

External Dimension

1st Quadrant

2nd Quadrant

3rd Quadrant

4th Quadrant

Internal Dimension

External Dimension

• +ve Y-axis: Aggressive • -ve X-axis: Conservative • 3rd Quadrant: Defensive• 4th Quadrant: Competitive

FINANCIAL STRENGTH

INDUSTRY STRENGTH

ENIVRONMENT STABILITY

COMPETITVE STRATEGY

Conservative

Aggressive

Defensive Competitive

AGGRESSIVE QUADRANTExcellent position to use internal strength:

1. Take advantage of external opportunities2. Overcome Internal Weaknesses3. Avoid or minimize external threats

CONSERVATIVE QUADRANT

Firm should stay close to its core competences and not take risks

DEFENSIVE QUADRANT

Focus on rectifying internal weakness and external threats

COMPETITIVE QUADRANT

Use Competitive strategies

Factors that makes up the SPACE MatrixINTERNAL STRATEGIC POSITION EXTERNAL STRATEGIC POSITION

FINANCIAL POSITION

COMPETITIVE POSITION

STABILITY POSITION

INDUSTRY STRENGTH

Return on investment

Market Share Technological Changes

Profit Potential

Leverage Product Quality Rate of Inflation Financial Stability

Liquidity Product Life Cycle Demand Variability

Extent Leveraged

Working Capital Customer Loyalty Place range of competing products

Resource Utilization

Cash flow Capacity Utilization

Barriers to entry into the market

Ease of entry into market

Inventory Turnover

Technological Know-how

Competitive Pressure

Productivity, capacity utilization

Earnings per share

Control over suppliers and distributors

Ease of Exit from market

Price Earnings Ratio

Price Elasticity of demand

Example Strategy Profiles

Example Strategy Profiles

Copyright ©2013 Pearson Education, Inc. publishing as Prentice Hall

6-10

QUANTITATIVE STREGIC PLANNING MATRIX:

Is a tool that allows strategists to evaluative alternatives strategies objectively, based on key internal and external success factors

KEY FACTORS WEIGHT STRATEGY 1 STRATEGY 2 STRATEGY 3

Key External Factors:• Political,

legal and governmental

• Social, Cultural and demographic

• Technological

• Competitive

Key Internal Factors• Managemen

t • Marketing • Finance • HR • R&D

CONTIGENCY STRATEGIES

• A Back-up Plan• made on the basis of certain assumptions and

conditions

• Formulated in advance to take care of unknown events and unexpected challenges

• Eg,. Labour strikes, a downturn in the economy or an overnight change in government policy

• Identify the scenario• Come out with alternative strategies• Identify the alternatives