Instructions To Complete A Space Matrix Chapter 6 The Axes

Instructions To Complete A Space Matrix Chapter 6the Axes Of The Spa

Instructions to Complete a SPACE Matrix (Chapter 6) The axes of the SPACE matrix represent two internal dimensions (Financial Position FP and Competitive Position CP) and two external dimensions (Stability Position SP and Industry Position IP). These four factors are the most important determinants of a company’s overall strategic position. Examples of these factors are included in Chapter 6 Table 6-2: Example Factors that Make Up the SPACE Matrix Axes Internal Strategic Position External Strategic Position Financial Position (FP) – Return on Investment, Leverage, Liquidity, Working capital, Cash flow, Inventory turnover, Earnings per share, Price earnings ratio. Competitive Position (CP) – Market share, Product quality, Product life cycle, Customer loyalty, Capacity utilization, Technological know-how, Control over suppliers and distributors. Stability Position (SP) – Technological changes, Rate of inflation, Demand variability, Price range of competing products, Barriers to entry into market, Competitive pressure, Ease of exit from market, Risk involved in business. Industry Position (IP) – Growth potential, Profit potential, Financial stability, Extent leveraged, Resource utilization, Ease of entry into market, Productivity, Capacity utilization. For your case study company, select the appropriate factors that define FP, CP, SP, and IP. Assign a numerical value ranging from +1 (worst) to +7 (best) to each of the selected FP and IP factors. Assign a numerical value ranging from -1 (best) to -7 (worst) to each of the selected SP and CP factors. On the internal FP and CP axes, make comparisons to competitors (same industry). On the external SP and IP axes, make comparisons to other industries. On the SP axis, -7 denotes highly unstable industry conditions, while -1 denotes highly stable conditions. Compute the average score for FP, CP, IP, and SP by summing the selected factors' values and dividing by the number of factors. Plot the resulting 4 average scores for FP, IP, SP, and CP on the appropriate axes in the SPACE matrix. Add the two average scores on the x-axis (CP + IP) and plot the point; similarly, add the two scores for the y-axis (FP + SP) and plot its point. Draw a vector from the origin (0,0) through the plot point, indicating the strategic position quadrant. Strategy recommendations are derived from which quadrant the vector falls into; for example, the Aggressive quadrant suggests growth strategies. For instance, if the calculated coordinates are (2.4, 1.4), then the organization should consider aggressive strategies such as market development, product innovation, or expansion, based on the quadrant. Use the example calculations and factors to analyze your company setting, then select relevant strategies accordingly. Formulate specific strategic statements in response to your analysis to guide company's strategic initiatives.