The Strategic Position and Action Evaluation (SPACE) Matrix is a strategic management tool primarily used for strategy formulation, with a specific emphasis on assessing an organization’s competitive position. It enables organizations to make more informed decisions about future strategies.
Main Benefits of The SPACE Matrix
The SPACE Matrix proves to be a valuable instrument for the process of strategic planning and making informed decisions.
The SPACE Matrix helps you:
- to get a clear understanding of the organization’s current strategic position,
- to assess an organization’s competitive position and develop strategic plans,
- to analyze an organization’s internal and external factors to determine its strategic direction,
- to invest the right resources for maximum impact.
Explanation of The SPACE Matrix
The SPACE Matrix integrates internal and external dimensions.
Internal strategic dimensions include:
- Financial strength
- Competitive advantage
External strategic dimensions include:
- Environmental stability
- Industry strength
By evaluating these four dimensions, you can categorize the organization into one of four quadrants: Aggressive, Competitive, Defensive, or Conservative.
Each quadrant provides specific strategic pathways for the organization, such as embracing aggressive growth, exploring market development, maintaining stability, or considering reduction as a potential strategic direction.
Conservative Quadrant: In the conservative quadrant, organizations experience limitations in their internal capabilities and face challenges within a competitive industry or an uncertain external environment. However, they benefit from strong financial stability. The strategies often recommended for this quadrant lean towards maintaining the existing status quo, prioritizing stability, reducing costs, and avoiding excessive risks.
Aggressive Quadrant: In the aggressive quadrant, organizations have high financial strength, high industry strength, and a notable competitive advantage. They benefit from operating in a relatively stable industry. The recommended strategic approaches for this quadrant often involve pursuing aggressive growth strategies, increasing market share, focusing on competitive products, and fostering innovation.
Defensive Quadrant: In the defensive quadrant, organizations lack both competitive advantage and financial strength. The strategic choices often gravitate towards achieving stability and safeguarding the organization, potentially involving measures like cost reduction, downsizing, or retrenchment.
Competitive Quadrant: In the competitive quadrant, the company is located between industry attractiveness and environmental stability. The company has some competitive advantages, and the focus is on financial stability. Strategic considerations for this quadrant may revolve around improving or differentiating products, widening the product line, and improving marketing effectiveness.
The process of developing a SPACE Matrix involves several steps aimed at evaluating an organization’s competitive stance and devising strategic pathways:
- Identify and list internal and external factors,
- Assign a weight to each factor, commonly within a range of -1 to -6, where -6 denotes significant weakness, and +6 signifies considerable strength,
- Rate each factor on a scale from -1 to -6,
- Calculate total scores,
- Identify the quadrant in which the organization falls,
- Suggest appropriate strategic directions based on the quadrant in which the organization is positioned,
- Periodically review and adjust the factors, weights, and ratings.
How to Apply The SPACE Matrix
To apply The SPACE Matrix to your business, FITMINDS is providing an adoption of the model that fits your company and your company’s needs. By using The SPACE Matrix, businesses can make informed strategic decisions.
Contact us to get more information or discover your probable personalized roadmap for The SPACE Matrix.
Additional Tips and Readings
- You can learn more about strategy formulation methods with Mintzberg’s 5ps of Strategy.
- To determine what type of strategy is right for your business, you can check PORTER’S Generic Strategies.
- To ensure long-term competitive advantage, you can read our VRIO Framework.
- To read more about marketing strategies, you can check Simonson & Rosen’s Influence Mix.
Contact us to get more information or discover your probable personalized roadmap for The SPACE Matrix.
