The SPACE matrix evaluates a company on basis of different variables and thereby used to assign a score considering their

importance for the company. It analyzes four different areas (2 internal and 2 external) that are represented in a graphical method. The purpose of this matrix is to study the position of the company in one of these four quadrants and giving a suggestion according to which quadrant results- about what type of strategies a company should follow: conservative, aggressive, defensive or competitive. The first step is to address each of the four areas of question: The internal strategic dimensions represented by o The financial strength (FS) and o The competitive advantage (CA); The external strategic dimensions represented by o The environmental stability (ES) and o The industry strength (IS).

Once all the variables have been considered and scored, an average score is calculated for each internal and external dimension. This is done by adding all the scores of the single variables and dividing it by the number of variables considered in that dimension. Each of these four numbers is plotted in the x and y axis of the matrix. The CA and IS are plotted on the x axis, while the FS and ES in the y axis. The next step is to figure out in which of the four quadrants the company will fall. To do this, the x value is obtained by adding CA and IS, and the y value by adding FS and ES. These two new values are plotted and they will determine the quadrant.

Financial strength (FS) It includes everything that refers to the financials of the company. We can consider Return on Investment (ROI) Leverage Liquidity of the company Cash flow.

Each one of these variables is given a numeric value from 1 (worst) to 6 (best) according to our perception of how good the company is doing regarding that variable. If the company has a high ROI compared to the industry, the variable can have a 6. Experience is required to evaluate each factor as there is no procedure defined on how to do it. Competitive Advantage (CA) The next variable considered in the internal strategic dimension is competitive advantage. Some of the factors to considered are Market share, Quality of the product, Product life cycle, Customer loyalty, The know-how and power of company over its suppliers and intermediaries.

As in the other internal strategic dimension, each variable considered is given a numerical value, but in this case from -1 (being the best) to -6 (being the worst). Industry strength (IS) It considers external forces that belong to the industry where the company develops its activities. Variables considered for finding industry strength are: Growth potential, Profit potential, Financial stability, Resource utilization and Productivity.

In this dimension also each of these variables is given a score that goes from 1 (worse) to 6 (best).

Environmental stability (ES) ES refers to how stable is the market where the company operates. Following factors are considered for evaluating ES: Rate of technological change, Inflation, Demand variability, Price range of competing products, Risks of the industry and The barriers to enter or exit the market.

The more stable is the market; more favorable is for the company to operate in it. A score from 1 (best) to -6 (worst) is given to each of the variables considered. The strategic position of the company and alternatives of the strategic behavior are following: Aggressive position - an attractive and relatively stable industry, the company has a competitive advantage and it can protect it, a critical factor is the possible entry of new competitors into the industry, it may be considered new acquisitions, increasing market share and focusing on competitive products Competitive position - attractive and relatively unstable environment, the company has some competitive advantage, a critical factor is the companys financial strength - the company should look for ways of their attachment, the solution is the possibility of joining another company, increasing production efficiency and strengthening cash flow Conservative position - a stable industry with low growth rate and financially stable company, a critical factor is in the product competitiveness, company should protect its successful products and develop new ones and think about the possibilities of the penetration into the industry more attractive and reduce costs. Defensive position - an unattractive industry, the company lacks competitive products and financial resources, a critical factor is the competitiveness, and the company should reduce costs, reduce investment and consider leaving the Indus

Maruti Suzuki
Financial strength Return on investment o ROI- 5.38, above average, Score- 4 Leverage (debt to equity ratio) o D/E ratio-0.07, low, Score-6 Liquidity (access to quick money when needed) (imbalanced to solid) o Current ratio- 1.04,Quick ratio- 0.90, Score-4 Cash flow (low to high) o Net Cash Flow-156.20, Low, Score-2

Maruti Suzuki Financial strength -16/4 = 4.00

Competitive Advantage Market share (small to large) o .40%, score- -1 Product quality (inferior to superior) o Maruti gypsy- Medium, score- -3 Product life cycle (late to early) o 1985,score- -6 Customer loyalty (low to high) o Medium,score- -3 Speed of new product introductions (slow to fast) o Fast o Alto, Swift, Swift Dzire, Wagon R, Ritz, Omni, Eeco, Sx4, Estilo, Grand Vitara, Kizashi, and new Ertiga(12) Score- -1

Maruti Suzuki Competitive Strength= -14/5 = -2.8

Industry strength Growth potential, o High: Maruti growth potential 6%; Automobile (four wheelers) growth potential 6% Score: 6 Profit potential, High: Maruti udhyog 19.7%, Industry potential 15.6% Score: 6 Financial stability, High Resource utilization Inventory turnover ratio: 2.23 Productivity: Maruti Suzuki is high on productivity therefore we give it a score of 5

Tata Motors
Financial Strength Financial strength Return on investment o ROI- 5.38, above average, Score- 4 Leverage (debt to equity ratio) o D/E ratio-0.75, medium, Score-3 Liquidity o Current Ratio-0.42, Quick ratio- 0.40, Low ,score-1 Cash flow (low to high) o Net Cash Flow-205.57(reducing year on year), Low, Score-2

Return on investment (low to high) ROI -0.64, Low, Score- 1 Leverage (debt to equity ratio) (inbalanced to balanced) D/E ratio- 0.75, Medium,score-3 Liquidity (access to quick money when needed) (inbalanced to solid) Current Ratio-0.42, Quick ratio- 0.40, Low ,score-1 Cash flow (low to high)
-795.75,verylow,score- 1

Economies of scale and experience (low to high) Economies of scale- high, established-1945,score-6 Tata motors Finance score- 17/7 = 2.42 Competitive Advantage

Market share (small to large) .13.12%, score- -3

Product quality (inferior to superior)TATA sumo superior, score- -1 Product life cycle (late to early)-1994 .1994,score- -3

. Customer loyalty (low to high)- high .score- -6

Vertical integration (low to high)-Medium .score- -3 Speed of new product introductions (slow to fast) Indica Vista, Indigo Manza, Indigo eCS, Indica eV2, IndicaeXeta, and Indigo XL. Medium, score- -3 Tata competitive score = -19/6 = -3.16