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Space matrix

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Strategy Management

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Space matrix

  1. 1. 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
  2. 2. 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
  3. 3. 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
  5. 5. AGGRESSIVE QUADRANT Excellent position to use internal strength: 1. Take advantage of external opportunities 2. Overcome Internal Weaknesses 3. Avoid or minimize external threats CONSERVATIVE QUADRANT Firm should stay close to its core competences and not take risks
  6. 6. DEFENSIVE QUADRANT Focus on rectifying internal weakness and external threats COMPETITIVE QUADRANT Use Competitive strategies
  7. 7. Factors that makes up the SPACE Matrix INTERNAL 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
  8. 8. Example Strategy Profiles
  9. 9. Example Strategy Profiles Copyright ©2013 Pearson Education, Inc. publishing as Prentice Hall6-10
  10. 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 • Management • Marketing • Finance • HR • R&D
  11. 11. 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