Prsentation on space matrix

SPACE MODEL

1. Presentation on space matrix Guided By: Ashish Saihjpal sir Presented By: Neha Sharma

2. SIGNIFICANCE OF THE STUDY: Strategy models provide a common focus point for discussion. The best strategies come of from the insight of applying the strategy tools and the discussions that happen within the management team and not as a direct result of using the planning model. Strategy models provides a common reference point. we can see a set of conditions or even a particular symptom and you can relate it back to the rest of the strategy model to understand more about what is happening at the moment, what is happening and perhaps what will happen.

3. Rationale Behind its Usage The most important thing in this it tries to answer how can we determine our position in the competitive environment to find a rational strategy based on this method is strategic position and action evaluation matrix .

4. Any organization having its activity in an oligopoly market, have to take into account the competition existing in that market in order to survive. Competitive strategy is the search of favorable, profitable and sustainable competitive position in a market against the forces that determine the competition in that market. Various methods have been proposed for that purpose: the Boston Consulting Group (BCG) approach, Profit Impact of Market Strategy (PIMS), Scenario Planning, etc.

5. Strategic Position and Action Evaluation matrix or space analysis matrix is a super technique for evaluating the sense and wisdom in a particular strategic plan. It was developed by strategy academics” Alan Rowe, Richard Mason, Karl Dickel, Richard Mann and Robert Mockler”. The Strategic Position Evaluation (SPACE) analysis framework is a very useful but not well known tool to develop and review company’s strategy.

6. the Strategic Position and Action Evaluation (SPACE) Matrix ………………. . The SPACE Matrix is a relatively easy to understand and use method as a decision aid. It uses two internal dimensions , two external dimensions To determine the organization’s strategic posture in the market and determine its course of action. Each of these four dimensions includes several factors assessed individually during the analysis

7. assumptions - By definition, 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 dimensions of the model are plotted on the Y axis. - ES values can be between -1 and -6. - FS values range from +1 to +6.

8. Factors that makes up the SPACE Matrix INTERNAL STRATEGIC POSITION EXTERNAL STRATEGI C 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

9. Table 1 : Dimensions & Strategies in SPACE Matrix with Details Defensive Conservative Competitive Aggressive Strategy Postures Dimensions unstable Stable Unstable stable Environment (ES) unattractive Unattractive Attractive attractive Industry (IA) weak Weak Strong strong Competitiveness weak high Weak high Financial strength *Rationalization * Divestment as appropriate * Cost reduction and product/ service rationalization * Invest in Search for new products/opportunities * Cost reduction, productivity improvement, raising more capital to follow opportunities and strengthen competitiveness Possibly merge Less competitive cash rich organization *Growth possibly by acquisition *Investment on opportunities * Innovate to sustain competitive advantage Appropriate Strategies

10. recommendations

11. AGGRESSIVE QUADRANT Excellent position to use internal strength: Take advantage of external opportunities Overcome Internal Weaknesses Avoid or minimize external threats CONSERVATIVE QUADRANT Firm should stay close to its core competences and not take risks

12. DEFENSIVE QUADRANT Focus on rectifying internal weakness and external threats COMPETITIVE QUADRANT Use Competitive strategies

13. How do I construct a SPACE matrix? The SPACE matrix is constructed by plotting calculated values for the  c ompetitive advantage (CA) and industry strength (IS) dimensions on the X axis . The Y axis is based on the environmental stability (ES) and financial strength (FS) dimensions . 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 advantage (CA), industry strength (IS), environmental stability (ES), and financial strength (FS). Step 2: Rate individual factors using rating system specific to each dimension. Rate competitive advantage (CA) and environmental stability (ES) using rating scale from -6 (worst) to -1 (best). Rate industry strength (IS) and financial strength (FS) using rating scale from +1 (worst) to +6 (best). Step 3: Find the average scores for competitive advantage (CA), industry strength (IS), environmental stability (ES), and financial strength (FS).

14. Step 4: Plot values from step 3 for each dimension on the SPACE matrix on the appropriate axis. Step 5: Add the average score for the competitive advantage (CA) and industry strength (IS) dimensions. This will be your final point on axis X on the SPACE matrix. Step 6: Add the average score for the SPACE matrix environmental stability (ES) and financial strength (FS) dimensions 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 .

15. Complete matrix……….