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SPACE Matrix

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SPACE Matrix

The Strategic Position and ACtion Evaluation (SPACE) matrix focuses on strategy formulation especially as related to the competitive position of an organization.

The SPACE matrix is based on 4 areas of analysis:

Financial Strength (FS)

Competitive Advantage (CA)

Environmental Stability (ES)

Industry Strength (IS)

Internal strategic dimension

External strategic dimension

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SPACE Matrix

There are four (4) quadrants where each quadrant suggests a different type or a nature of a strategy:

Aggressive

Conservation

Defensive

Competitive

There are 7 steps to develop a SPACE matrix.

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Step to develop SPACE Matrix

1. Select a set of variables to define FS, CA, ES, & IS2. Assign a numerical value:

1. From +1 to +6 to each FS & IS dimension2. From -6 to -1 to each ES & CA dimension

3. Compute an average score for each FS, CA, ES, & IS4. Plot the average score on the appropriate axis.5. Add the average scores of CA and IS on the x-axis and plot the

point. 6. Add the average scores of ES and FS on the y-axis and plot the

point. 7. Draw a directional vector from the origin through the new

intersection point.

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Sample of SPACE Matrix

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A completed SPACE matrix look like…

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BCG Matrix

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BOSTON CONSULTING GROUP (BCG)

High Low

Relative position (Market Share)

Low

High

Bu

sin

ess

gro

wth

rat

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The Boston Consulting Group (BCG), founded in

1963, was a pioneering consulting that introduced

influential concepts such as the ‘experience

curve’ and the ‘growth-share matrix’

The key purpose of portfolio models was to assist a company in achieving a balanced portfolio of

business

Helped companies answer that question by providing them a way to analyze product lines in search of

growth opportunities

Imbalance, for example, could be caused either by excessive cash generation with too few growth

opportunities or by insufficient cash generation to fund the growth requirements

This consisted of businesses whose profitability, growth and cash flow characteristics would

complement each other

WHY BCG ??

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• Leaders in the business

• Require heavy investment to maintain market share

• Consume large amounts of cash and generates large amount of cash

• Generate more cash than required

• Keep profits high• invest to maintain

current level• Foundation of a

company

• Will absorb great amount of cash if market share remain low

• Potential to become cash cow or star but also dog

• Investment remain constantly high

• Avoid and minimize the number of dogs in a company

• Beware of expensive ‘turn around plans’

•Do not have potential to bring in much cash

High growth, Low market share

High growth, High market share

Low growth,High market share

Low growth,low market share

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BCG Matrix NESTLE

• High in research and development (R&D) cost

• coffee market is still growing

• Market share is still growing

• Brand name has been embedded into customer’s heart

• concept of packaging is not welcomed

• Weak in market, difficult to make profit

• remained strong brand leader in the market.

• Rise of competitors and start lose the grip in the market.

Nescafe Chocolate

Maggi Noodle, Milo Mineral Water

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Value Chain

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Value Chain Analysis

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Primary activities

• Inbound Logistics - involve relationships withsuppliers and include all the activities requiredto receive, store, and disseminate inputs.

• Operations - are all the activities required totransform inputs into outputs (products andservices).

• Outbound Logistics - include all the activitiesrequired to collect, store, and distribute theoutput.

• Marketing and Sales - activities inform buyersabout products and services, induce buyers topurchase them, and facilitate their purchase.

• Service - includes all the activities required tokeep the product or service working effectivelyfor the buyer after it is sold and delivered.

Secondary activities

• Procurement - is the acquisition of inputs, orresources, for the firm.

• Human Resource management - consists ofall activities involved in recruiting, hiring,training, developing, compensating and (ifnecessary) dismissing or laying off personnel.

• Technological Development - pertains to theequipment, hardware, software, proceduresand technical knowledge brought to bear inthe firm's transformation of inputs intooutputs.

• Infrastructure - serves the company's needsand ties its various parts together, it consistsof functions or departments such asaccounting, legal, finance, planning, publicaffairs, government relations, qualityassurance and general management.

Why Value Chain Analysis;• Understand the key activities within an industry or company• Determine whether there is any backward or forward integration in an industry• Map key players at each stage of an industry’s value chain• Map the customer’s experience at each stage in a company’s value chain

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Strategy Maps

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