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Analytical Tools
Strategic Management
SPACE Matrix
SPACE Matrix
The Strategic Position and ACtion Evaluation (SPACE)

matrix focuses on strategy formulation especially as
related to the competitive position of an
organization.
The SPACE matrix is based on 4 areas of analysis:
Financial Strength (FS)
Internal strategic dimension
Competitive Advantage (CA)
Environmental Stability (ES)
External strategic dimension
Industry Strength (IS)
Source: http://www.maxi-pedia.com/SPACE+matrix+model+strategic+management+method
SPACE Matrix
There are four (4) quadrants where each

quadrant suggests a different type or a nature of
a strategy:
Aggressive
Conservation
Defensive
Competitive
There are 7 steps to develop a SPACE matrix.
Step to develop SPACE Matrix

1.
2.
3.
4.
5.
6.
7.
Select a set of variables to define FS, CA, ES, & IS

Assign a numerical value:
1.
From +1 to +6 to each FS & IS dimension
2.
From -6 to -1 to each ES & CA dimension
Compute an average score for each FS, CA, ES, & IS
Plot the average score on the appropriate axis.
Add the average scores of CA and IS on the x-axis and plot the
point.
Add the average scores of ES and FS on the y-axis and plot the
point.
Draw a directional vector from the origin through the new
intersection point.
Sample of SPACE Matrix
A completed SPACE matrix look like
BCG Matrix
BOSTON CONSULTING GROUP (BCG)

WHY BCG ??
Business growth rate
High
The key purpose of portfolio models was to assist a

company in achieving a balanced portfolio of
business
Helped companies answer that question by providing
them a way to analyze product lines in search of
growth opportunities
Low
High
Imbalance, for example, could be caused either by

excessive cash generation with too few growth
opportunities or by insufficient cash generation to
fund the growth requirements
Low
Relative position
(Market Share)
The Boston Consulting Group (BCG), founded in

1963, was a pioneering consulting that introduced
influential concepts such as the experience
curve and the growth-share matrix
This consisted of businesses whose profitability,

growth and cash flow characteristics would
complement each other
Leaders in the
business
Require heavy
investment to
maintain market
share
Consume large
amounts of cash
and generates large
amount of cash
Will absorb great amount

of cash if market share
remain low
Potential to become cash
cow or star but also dog
Investment remain
constantly high
High growth,
High market share
High growth,
Low market share
Generate more
cash than required
Keep profits high
invest to maintain
current level
Foundation of a
company
Low growth,
High market share
Low growth,
low market share
Avoid and minimize

the number of dogs
in a company
Beware of
expensive turn
around plans
Do not have
potential to bring in
much cash
BCG Matrix NESTLE

Nescafe
Chocolate
remained strong
brand leader in
the market.
Rise of
competitors and
start lose the grip
in the market.
High in research
and development
(R&D) cost
coffee market is
still growing
Market share is
still growing
Brand name has
been embedded
into customers
heart
Maggi Noodle, Milo
Mineral Water
concept of
packaging is not
welcomed
Weak in market,
difficult to make
profit
Value Chain
Value Chain Analysis
Why Value Chain Analysis;

Understand the key activities within an industry or company
Determine whether there is any backward or forward integration in an industry
Map key players at each stage of an industrys value chain
Map the customers experience at each stage in a companys value chain
Primary activities
Secondary activities
Inbound Logistics - involve relationships with

suppliers and include all the activities required
to receive, store, and disseminate inputs.
Operations - are all the activities required to
transform inputs into outputs (products and
services).
Outbound Logistics - include all the activities
required to collect, store, and distribute the
output.
Marketing and Sales - activities inform buyers
about products and services, induce buyers to
purchase them, and facilitate their purchase.
Service - includes all the activities required to
keep the product or service working effectively
for the buyer after it is sold and delivered.
Procurement - is the acquisition of inputs, or

resources, for the firm.
Human Resource management - consists of
all activities involved in recruiting, hiring,
training, developing, compensating and (if
necessary) dismissing or laying off personnel.
Technological Development - pertains to the
equipment, hardware, software, procedures
and technical knowledge brought to bear in
the firm's transformation of inputs into
outputs.
Infrastructure - serves the company's needs
and ties its various parts together, it consists
of functions or departments such as
accounting, legal, finance, planning, public
affairs, government relations, quality
assurance and general management.
Strategy Maps
16
17
18

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Analytical Tools

The Strategic Position and ACtion Evaluation (SPACE)

There are four (4) quadrants where each

There are 7 steps to develop a SPACE matrix.

Step to develop SPACE Matrix

Select a set of variables to define FS, CA, ES, & IS

Sample of SPACE Matrix

A completed SPACE matrix look like

BOSTON CONSULTING GROUP (BCG)

The key purpose of portfolio models was to assist a

Imbalance, for example, could be caused either by

The Boston Consulting Group (BCG), founded in

This consisted of businesses whose profitability,

Will absorb great amount

Avoid and minimize

BCG Matrix NESTLE

Maggi Noodle, Milo

Value Chain Analysis

Why Value Chain Analysis;

Inbound Logistics - involve relationships with

Procurement - is the acquisition of inputs, or

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