SPACE Matrix

Strategic Position & Action Evaluation (SPACE) Matrix is another management tool used to help analyze a company. It can also used to determine what sort of strategy the company should undertake. The SPACE Matrix is broken down into four quadrants as being aggressive, conservative, defensive, and competitive. Additionally, the SPACE Matrix analysis functions upon two internal strategic dimensions which are financial strength (FS) and competitive advantage (CA). Besides, the SPACE Matrix methodology also studies two business’ external strategic dimensions such as environmental stability (ES) and industry strength (IS). The CA (values from -1 to -6) and IS (values from +1 to +6) are representing by the X-axis of the Cartesian graph whereas the FS (values from +1 to +6) and ES (values from -1 to -6) are representing by Y-axis. After drawing these SPACE matrix graph, the overall strategic positioning of a company can be determined. SPACE matrix for Maybank: Internal strategic position Y-axis Financial Strength (FS) (score: +6 best, +1 worst)] +6: Operative earnings per share increased +4: Liquidity slightly decreased Total y-axis score: +5.00 -2.00 = +3.00 +5: Revenues increased +5: Return on Equity increased +5: Efficiency ratio stable Average: +5.00 X-axis Total x-axis score -1.25 + 4.80 = +3.55 Competitive Advantage (CA) (score: -1 best, -6 worst) -1: Market share -2: Service Quality -1: Customer Loyalty & reputation -1: Management Experience Average : -1.25 Average: +4.80 External strategic position Environmental Stability (score: -1 best, -6 worst) -2: Price or interest range of competing products -1: Inflation rates -2: Technology Changes -3: Competitive Pressure -2: Demand Variability Average: -2.00 Industry Strength (IS) (score: +6 best, +1 worst) +6: Growth Potential +5: Profit Potential +5: Financial Stability +4: Resource Utilization +4: Technologies Know-how

Maybank’s SPACE Matrix Graph

Conservative
+6

Aggressive

+4

(3.55, 3.00)
+2

-6

-5

-4

-3

-2

-1 -2

+1

+2

+3

+4

+5

+6

-4

Defensive

-6

Competitive

According to the graph above, we noticed that Maybank’s falls into the aggressive quadrant of the SPACE Matrix. It is located at the coordinates of 3.55 for x-component and a y –component of 3.00. It shows that Maybank has a strong competitive position in the market with rapid growth. It is also indicates that Maybank should adopt an aggressive strategy. It needs to use its internal strengths to develop a market penetration and market development strategy. Other possible strategies include product development, integration with other banks and also concentric diversification.

Aggressive Position There are numerous tactics fall into the aggressive strategy category. One of the strategies is market development. As stated above, we can note that Maybank is biggest bank in Malaysia and has 361 local branches and 88 branches in overseas. However, Maybank is not located in every area of Malaysia. Therefore, it should try to expand their branches into new geographical areas or markets. Besides, Maybank should also aggressively find ways to grow its business overseas such as Thailand, Pakistan and middle-east. This objective can be attained through mergers and acquisitions (M&A). Besides, Maybank should carry out the market penetration strategy. The management of Maybank can think out the best way to sustain and compete in exist market as well as new market. This method would be hire high level employees from the competitors strong in those areas. Moreover, Maybank should focus on doing more market research. Many clients are attracted to the company who is doing strong research. Therefore, Maybank should do research to investigate customers’ discontent. Then, the company can improve their service and product quality through customers’ suggestion. In addition to that, market research can show the demand in different areas. Thus, the company will be success in every area by determining the demand boundaries. Other than that, Maybank need to implement a strategy on product development. The management should aim on offering new services such as helping their customers or corporations manage interest rate and currency risks. By doing this, the Maybank can move forward to obtain bigger slice of investment banking.

SPACE Matrix Conclusions • • • • • • • • Maybank’s high reputation helps in attracting customers’ loyalty Compete in an unstable environment Maybank should develop new market to various area of Malaysia as well as overseas They should expand its services and products such as helping corporations manage interest rate and currency risks Eliminate inefficiencies and improves services quality. It can be done by doing market research to investigate unfavorable performance. Then, make full use of the resources to improve it. Seek Integration Opportunities such as merger and acquiring other existing banks in different areas Hire potential employee either from competitors or from other sources to get bigger improvement Seek new and good management staffs to get a better company direction