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SPACE Analysis – Strategic Position and Action Evaluation Matrix
by Paul Simister on September 1, 2011 The 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 and I don’t understand why it isn’t hugely popular.

Introduction To The Strategic Position and Action Evaluation Matrix aka SPACE Analysis
The Strategic Position and ACtion Evaluation (SPACE) analysis framework is a very useful but not well known tool to develop and review a company’s strategy. It can be used at The beginning of the exercise to predict the overall key themes . As a check at the end of the process. . It can also be used to evaluate individual strategic options generated by using a tool like the Ansoff Growth Matrix. SPACE Analysis is a systematic appraisal of four key issues that balance the external and internal factors that should determine the general theme of the strategy: External Industry Attractiveness Environmental Stability Internal Competitive Advantage Financial Strength By combining ratings on each dimension on one SPACE matrix diagram, the framework guides the strategic agenda. The dimensions are combined in a way that seems strange at first but makes sense because two sets of factors are assessed as strengths (financial strength and industry strength) and rated positive while the other two (competitive advantage and environmental stability) are assessed as potential weaknesses and rated negatively. The logic is that financial strength is needed to compensate for environmental instability. The more difficult the future environment is thought to be, the more important it is to have strong financials. Industry attractiveness and competitive advantage are seen as potentially alternative sources of superior profit. and indeed there are treated as such in my five pathways to profit in my Profit Tipping Point report. If both favour the business, then results should be very good, if both are unfavourable, then the business is in trouble.

The SPACE Analysis Matrix Diagram

A very strong position in the SPACE matrix This diagram shows that the firm is in a very favourable position and is able to take an aggressive growth strategy. It is operating in an attractive and stable industry and has major competitive advantages backed up by significant financial strength.

Assessing the SPACE Analysis Scores
Each factor in the Strategic Position and Action Evaluation matrix can be quickly judged but there are benefits for exploring each in detail. There are a large number of factors that can be considered and each industry will have its own key features which should be included in the detailed SPACE evaluation. A few factors to be considered to give you a flavour of what to include in your SPACE analysis are listed below.

SPACE Analysis Factors For Financial Strength
Return on Sales Return on Assets

For example if the Financial Strength is weak but the Environment Stability high then raising capital is appropriate but if the scores were the other way around then the business should be seeking to use its financial strength elsewhere. The strategy is to look for diversification opportunities in more attractive competitive situations. For more details see Competitive Strategy In SPACE.Return on Assets Cash Flow Gearing Working Capital Intensity Financial Strength is scored 6 great to 1 poor in the SPACE Analysis Matrix – for more details see Financial Strength In The SPACE Matrix SPACE Analysis Factors For Competitive Advantage Market Share Quality Customer Loyalty Cost Levels Product Range Competitive advantage is scored -1 (minus 1) great to –6 (minus 6) poor – for more details see Competitive Advantage In The SPACE Matrix SPACE Analysis Factors For Industry Attractiveness Growth Potential Life Cycle Stage Entry Barriers Customer Power Substitutes Industry attractiveness is scored 6 great and 1 poor in the SPACE analysis matrix – for more details see Industry Attractiveness In The SPACE Matrix SPACE Analysis Factors For Environmental Stability Political Uncertainty Interest Rates Technology Cyclical Environmental Issues Environmental stability is scored –1 (minus 1) great to –6 (minus 6) poor – for more details see Environmental Stability In The SPACE Matrix Scores switch between positive and negative so that the combined position can be assessed. For more details see Aggressive Strategy In SPACE. The firm will need to retreat from all but its strongest segments so that it can concentrate its limited resources on a turnaround. merging with a cash rich parent) whilst maintaining its competitive position. The immediate strategy is to improve its financial strength (raising capital. A firm operating with major competitive advantages in an unattractive industry will have a similar net score (and profitability potential) to another firm with little competitive advantage in an attractive industry. Fore more information see Defensive Strategies Uncertain situations in SPACE Analysis Sometimes the axis scores cancel each other out and the overall position falls between segments. The Competitive posture arises when a firm has strong advantages in an attractive industry but its financial strength is insufficient to compensate for environmental instability. The Conservative posture arises when the firm is financially strong but is unlikely to make significant returns from the business. The alternative strategic thrusts in the SPACE matrix The Aggressive posture in the SPACE Analysis Matrix occurs when all the dimensions are positive. Firms in this position are very weak and heading for failure unless the external environment becomes more favourable. However by examining the four dimensions the strategic imperatives can be established – the internal dimensions are easier to change but the external dimensions indicate whether it is likely to be worthwhile. . e.g. The Defensive posture in the SPACE matrix occurs when all the dimensions are scored poorly. Attractiveness of industry 5 (very strong) Competitive advantage -4 (weak – the business has more disadvantages than advantages) Net SPACE score on this dimension = 1 or Attractiveness of industry 2 (weak – things look difficult) Competitive advantage -1 (the company has powerful competitive advantages over all the competitors) Net SPACE score on this dimension = 1 The financial strength and environmental stability combination works the same way. For more details see Conservative Strategy In SPACE. improving profitability. The implicit strategy is to aggressively grow the business raising the stakes for all competitors. Interpreting the SPACE Analysis Matrix Diagram The arrow indicating the strategic thrust can be drawn from the origin by calculating the net result on each axis and plotting this net position. The main danger is complacency.

the Strategic Position and Analysis Evaluation matrix is only covered on pages 255 through to 265. by building a business to be proud of. you can net a pretty good idea of how you can approach a business well. In my copy of the fourth edition. Dickel. Have You Used SPACE Analysis -The Strategic Position and Action Evaluation Matrix? If you’ve used SPACE. space matrix strategy. energy and money invested. Paul Simister is a business strategy coach in the UK who helps small business owners to profit from differentiating their businesses. Finding Out More About SPACE Analysis I had to go back to the original book “Strategic Management – A Methodical Approach”. the competitive advantage dimension looks at your irresistible promise and whether you can reliably deliver it. value disciplines. Why Isn’t SPACE Analysis More Popular? The first time I came across the SPACE analysis matrix when I was doing my MBA strategy course at the Manchester Business School and by then I’d read quite a few strategy textbooks and since then. in other words. I like SPACE analysis because it can be applied at many different levels. You too can move past your profit tipping point (free report) by answering the seven big questions of business success (mp3) 7 0 StumbleUpon Submit Share 0 0 Like Search terms that have found this page include: space analysis. Published by Addison Wesley. Strategic Position and Action Evaluation. 2011 at 2:34 am This type of analysis really is effective. space matrix. Your thinking on competitive advantage can be guided by the generic strategies. Environmental stability and industry attractiveness draw on PEST Analysis and Porter’s Five Forces model. You can do the detailed analysis for each of the four SPACE dimensions and come up with a subjectively objective rating and crank out the numbers to find which posture is most suitable. many more books on strategy but SPACE analysis is hardly ever mentioned. space analysis matrix. While the Strategic Position and Action Evaluation Matrix is a bit of a mouthful. Reply Leave a Comment Name * E-mail * Website CAPTCHA Code * Submit Confirm you are NOT a spammer This blog uses premium CommentLuv which allows you to put your keywords with your name if you have had 3 approved comments. I’d like to hear about your thoughts and experience so please leave a comment. Mason. The SPACE Matrix And The Six Step Profit Formula It can be difficult to understand how various strategic planning models can help you to increase profit in your business which is why I use the Six Step Profit Formula as my model for profit improvement. The book is hard to find and expensive when new. Or you can do a quick and dirty SPACE analysis based on a feel for the factors and quickly know the big issues the business g=faces and which direction its strategy should be taking. either in your academic studies of business strategy or in practice. Rowe. And If used in conjunction with the SWOT analysis. the SPACE analysis assessment indicates whether the pay-off is likely to be enough reward for the time.way around then the business should be seeking to use its financial strength elsewhere. The SPACE Matrix & Other Strategic Planning Models The SPACE analysis matrix is one of my favourite strategic planning models which can help you to organise your thoughts and conclusions from the other strategy models. As well as helping you to think through the development of your starving crowd with the environmental stability and industry attractiveness dimensions in the SPACE Matrix. Use your real name and then @ your keywords (maximum of 3) Previous post: Bowman’s Strategy Clock – Your Strategic Options Next post: Value Chain Videos Subscribe to Differentiate Your Business Subscribe in a reader . strength of SPACE matrix Tagged as: SPACE Matrix { 1 comment… read it below or add one } Cmoe September 21. by being distinctive in the eyes of their customers and standing out in a crowded marketplace…. the value chain and customer value management. Mann and Mockler. While the Six Step Profit Formula provides a roadmap for improving any business. The good news is that there are a few second hand copies available from Amazon when I checked. space matrix analysis. it does describe the tool perfectly and SPACE is a great acronym.

then I'd love to hear from you. If you own or manage an SME in the UK and you want to move from tactical improvements to strategic business improvement. finance. I can be contacted on 0121 554 4057 or email me at paul@plancs.Subscribe in a reader Why You Need To Read “The Profit Tipping Point” About Me – Paul Simister I believe you need to differentiate your business to be successful in these super-competitive times when it can be tough to get attention. let alone action from potential customers and clients.co. have a Masters In Business Administration (MBA) from the Manchester Business School and I'm a Certified Guerrilla Marketing Coach. I've worked as a business strategy coach and consultant for SME's in the UK since 1995 using my strategy. I'm a Chartered Accountant. marketing and process improvement skills. To search. It's like many businesses. Individually the marketing looks good and a strong case is made for buying the generic product or service but it doesn't differentiate and create buyer preference. Our task is to make sure your business stands out like the blue zebra and gets the attention it deserves by being different in ways that matter to the customers. type and hit enter Who I Work With I help owners of small and medium sized businesses to create differentiation which sets their businesses apart from competitors in ways that matter to . Popular Articles Ansoff Growth Matrix Balanced Scorecard Bowman's Strategy Clock Business Health Check Core Competence Five Forces Analysis McKinsey 7 S PEST Analysis Scenario Planning SPACE Matrix Strategy Canvas Success Factors SWOT Analysis Unique Selling Point Value Chain Analysis Recommended Products Business Growth System Digital Marketer Ryan Deiss There are over 200 pages about business strategy and differentiation on this blog.uk Does Your Marketing “Dazzle” Like A Zebra? A zebra look stunning on its own but a group of zebras is called a dazzle because they all merge into one to protect them from lions.

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