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#######################SPACE Matrix Strategic Management Method The SPACE
matrixis a management tool used to analyze a company. It is used to d etermine
what type of a strategy a company should und ertake. The Strategic
Position&ACtion Evaluation matrix or short aSPACEmatrix is a strategic
management tool that focuses on strategy formulation especially as related to
the competitive position of an organization.The SPACE matrix can be used as a
basis for other analyses, such as the # HYPERLINK "http://www.maxi-
ped ia.com/SWOT+analysis+matrix+method +mod el" \o "SWOT analysis" \t "_blank"
#SWOT analysis#, # HYPERLINK "http://www.maxi-ped ia.com/BCG+matrix+mod el" \o
"BCG matrix" \t "_blank" #BCG matrix# mod el, ind ustry analysis, or assessing
strategic alternatives (# HYPERLINK "http://www.maxi-
ped ia.com/internal+external+IE+matrix" \o "IE matrix" \t "_blank" #IE matrix#).
What is the SPACE matrix strategic management method ?To explain how the SPACE
matrix works, it is best to reverse-engineer it. First, let's take a look at
what the outcome of a SPACE matrix analysis can be,take a look atthe picture
below. The SPACE matrix is broken d own to four quad rants where each quad rant
suggests a d ifferent type or a natureof a strategy:Aggressive Conservative
Defensive CompetitiveThis is what a completed SPACE matrix looks like:#
INCLUDEPICTURE "http://www.maxi-
ped ia.com/web_files/images/SPACE_matrix_example.png" \* MERGEFORMATINET ###This
particular SPACE matrix tells us that our company should pursue an aggressive
strategy. Our company has a strong competitive position it the market with rapid
growth. It need s to use its internal strengths to d evelop a market penetration
and market d evelopment strategy. This can includ e prod uct d evelopment,
integration with other companies, acquisition of competitors, and so on.Now, how
d o we get to the possibleoutcomes shown in the SPACE matrix? The SPACE Matrix
analysis functions upon two internal and two external strategic d imensions in
ord er to d etermine the organization's strategic posture in the ind ustry.The
SPACE matrix is based on four areas of analysis.Internal strategic d imensions:
Financial strength (FS)#Competitive ad vantage (CA)
Externalstrategic d imensions:Environmental stability
(ES)#Ind ustry strength (IS)There are many SPACE matrix factors und er
the internal strategicd imension. These factors analyze a business internal
strategic position. The financial strength factors often come from company
accounting. These SPACE matrixfactors can includ e for example return on
investment, leverage, turnover, liquid ity, working capital, cash flow, and
others. Competitive ad vantage factors includ e for example the speed of
innovation by the company, market niche position, customer loyalty, prod uct
quality, market share, # HYPERLINK "http://www.maxi-
ped ia.com/prod uct+life+cycle+plc" \o "Prod uct Life Cycle (PLC)" \t "_blank"
#prod uct life cycle#, and others.Every business is also affected by the
environment in which it operates. SPACE matrix factors related to business
external strategicd imension are for example overall economic cond ition, GDP
growth, inflation, price elasticity, technology, barriers to entry, competitive
pressures, ind ustry growth potential, and others. These factors can be well
analyzed using the # HYPERLINK "http://www.maxi-
ped ia.com/Five+Forces+mod el+by+Michael+Porter" \o "Five Forces mod el" \t
"_blank" #Michael Porter's Five Forces# mod el.The SPACE matrixcalculates the
importance ofeach of these d imensions and places them on a Cartesian graph with
X and Y coord inates.The following are a few mod el technical assumptions:- By
d efinition, the CA and IS values in the SPACE matrix are plotted on the X
axis.#- CA values can range from -1 to -6.#- IS values can take +1 to +6.- The
FS and ES d imensions of the mod el are plotted on the Y axis.#- ES values can be
between -1 and -6.#- FS values range from +1 to +6.How d o I construct a SPACE
matrix?The SPACE matrix is constructed by plotting calculated values for
thecompetitive ad vantage (CA) and ind ustry strength (IS) d imensions on the X
axis. The Y axis is based on the environmental stability (ES) and financial
strength (FS) d imensions. The SPACE matrix can be created using the following
seven steps:Step 1: Choose a set of variables to be used to gauge the
competitive ad vantage (CA), ind ustry strength (IS), environmental stability
(ES), and financial strength (FS). Step 2: Rate ind ivid ual factors using rating
system specific to each d imension. Rate competitive ad vantage (CA) and
environmental stability (ES) using rating scale from -6 (worst) to-1 (best).
Rate ind ustry strength (IS) and financial strength (FS) using rating scale from
+1 (worst) to +6 (best).Step 3: Find the average scores for competitive
ad vantage (CA), ind ustry strength (IS), environmental stability (ES),
and financial strength (FS).Step 4: Plot values from step 3 for each d imension
on the SPACE matrix on the appropriate axis.Step 5: Ad d the average score for
the competitive ad vantage (CA) and ind ustry strength (IS) d imensions. This will
be your final point on axis X on the SPACE matrix.Step 6: Ad d the average score
for the SPACE matrix environmental stability (ES) and financial strength (FS)
d imensions to find your final point on the axis Y.Step 7: Find intersection of
your X and Y points. Draw a line from the center of the SPACE matrix to your
point. This line reveals the type of strategy the company should pursue.SPACE
matrix exampleThe following table shows what values were used to create the
SPACE matrix d isplayed above.# INCLUDEPICTURE "http://www.maxi-
ped ia.com/web_files/images/SPACE_matrix_average_scores_table.png" \*
MERGEFORMATINET ###Each factor withineach strategic d imension is rated using
appropriate rating scale. Then averages are calculated . Ad d ing ind ivid ual
strategic d imension averages provid es values that are plotted on the axis X and
Y.Where d o I go next?TheSPACE matrix can help to find a strategy. But, what if
we have 2-3 strategies and need to d ecid e which one is the best one? The #
HYPERLINK "http://www.maxi-
ped ia.com/quantitative+strategic+planning+matrix+QPSM" \o "Quantitative
Strategic Planning Matrix (QSPM)" \t "_blank" #Quantitative Strategic Planning
Matrix (QSPM)# mod el can help to answer this question.Should you have any
questions about theSPACE matrix, you might want to submit them at our #
HYPERLINK "http://www.maxi-ped ia.com/forum" \o "Management d iscussion forum" \t
"_blank" #management d iscussion forum#.
Quantitative Strategic Planning Matrix (QSPM) Quantitative Strategic Planning
Matrix (QSPM) is a high-level strategic management approachfor evaluating
possible strategies. Quantitative Strategic Planning Matrix or a QSPM provid es
an analyticalmethod for comparing feasible alternative actions. The QSPM
method falls withinso-called stage 3 of the strategy formulation analytical
framework.When company executives think about what to d o, and which way to go,
they usually have a prioritized list of strategies. If they like one strategy
over another one, they move it up on the list. This process is very much
intuitive and subjective. The QSPM method introd uces some numbers into this
approach making it a little more "expert" technique.What isaQuantitative
Strategic Planning Matrix or a QSPM?The Quantitative Strategic Planning Matrix
or a QSPM approach attempts to objectively select the beststrategy using input
from other management techniques and some easy computations. In other word s, the
QSPM method uses inputs from stage1 analyses, matches them with results from
stage 2 analyses, and then d ecid es objectively among alternative strategies.
Stage 1 strategic management tools...The first step in the overall strategic
management analysis is used toid entify key strategic factors. This can be d one
using, for example,the # HYPERLINK "http://www.maxi-
ped ia.com/EFE+matrix+external" \o "EFE matrix" \t "_blank" #EFEmatrix#and #
HYPERLINK "http://www.maxi-
ped ia.com/IFE+EFE+matrix+internal+factor+evaluation" \o "IFE matrix" \t "_blank"
#IFEmatrix#.Stage2 strategic management tools...After we id entify and analyze
key strategic factors as inputs for QSPM, we can formulatethe type ofthe
strategy we would like to pursue. This can be d one usingthe stage 2