Space matrix
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Transcript of Space matrix
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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
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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
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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
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FINANCIAL STRENGTH
INDUSTRY STRENGTH
ENIVRONMENT STABILITY
COMPETITVE STRATEGY
Conservative
Aggressive
Defensive Competitive
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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
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DEFENSIVE QUADRANT
Focus on rectifying internal weakness and external threats
COMPETITIVE QUADRANT
Use Competitive strategies
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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
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Example Strategy Profiles
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Example Strategy Profiles
Copyright ©2013 Pearson Education, Inc. publishing as Prentice Hall
6-10
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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
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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