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Lesson#25

THE STRATEGIC POSITION AND ACTION EVALUATION-1

Learning objective
After understanding this chapter you are able to understand SPACE matrix and also understand how to
prepare the space matrix of any organization and how it is helpful for strategic formulation framework

The Strategic Position and Action Evaluation (SPACE) Matrix

The Strategic Position and Action Evaluation (SPACE) Matrix is another important Stage 2 matching tool
of formulation framework. It explains that what is our strategic position and what possible action can be
taken. It is not closed matrix. It is prepared on graph. It is closed matrix. This follow counter clock wise
direction. It contains four-quadrant named aggressive, conservative, defensive, or competitive strategies.
The axes of the SPACE Matrix represent two internal dimensions financial strength [FS] and competitive
advantage [CA]) and two external dimensions (environmental stability [ES] and industry strength [IS]).
These four factors are the most important determinants of an organization's overall strategic position.
It is divided into two internal and external dimensions which are as follow (Internal dimensions) financial
strength, competitive advantage, (External dimensions) environment stability and industry strength. This
sequence is convention to be followed as graphed above. This frame work determines appropriate set of
strategies for each quadrant. First quadrant is aggressive the firm fall in this quadrant that fellow the
aggressive strategy. Second quadrant is conservative all those firms that fall n this quadrant that must fallow
conservative strategy and in next the firm fellow the defensive strategy. All the firms fall on competitive
follow that strategy. After a rating is assigned ranging from +1 (worst) to +6 (best) to each of the variables
that make up the financial strength and industry strength dimensions. Assign a numerical value ranging
from -1 (best) to -6 (worst) to each of the variables that make up the environment stability and Competitive
advantage dimensions.

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Key Terms: strategic management competitive advantage strategic management components strategic management concept strategic management control strategic management defined strategic management development strategic management division strategic management dynamic

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