Formulation Framework

TOWS Matrix

SPACE Matrix

Stage 2:
BCG Matrix
The Matching Stage

IE Matrix

Grand Strategy Matrix

Ch 6-1
Fred R. David
Prentice Hall
 SPACE Matrix
Strategic Position and Action Evaluation Matrix

 Four quadrant framework

 Determines appropriate strategies
 Aggressive
 Conservative
 Defensive
 Competitive

Ch 6-2
Fred R. David
Prentice Hall
 SPACE Matrix

Two Internal Dimensions

 Financial Strength [FS]
 Competitive Advantage [CA]

Two External Dimensions

 Environmental Stability [ES]
 Industry Strength [IS]

Ch 6-3
Fred R. David
Prentice Hall
 SPACE Matrix
Overall Strategic position determined by:

– Financial Strength [FS]

– Competitive Advantage [CA]
– Environmental Stability [ES]
– Industry Strength [IS]

Ch 6-4
Fred R. David
Prentice Hall
 SPACE Matrix
Developing the SPACE Matrix:

• EFE Matrix
• IFE Matrix
• Financial Strength
• Competitive Advantage
• Environmental Stability
• Industry Strength
Ch 6-5
Fred R. David
Prentice Hall
 SPACE Matrix
• Select variables to define FS, CA, ES,
& IS
• Assign numerical ranking from +1
(worst) to +6 (best) for FS and IS;
Assign numerical ranking from –1 (best)
to –6 (worst) for ES and CA.
• Compute average score for FS, CA,
ES, & IS
Ch 6-6
Fred R. David
Prentice Hall
 SPACE Matrix
• Plot the average scores on the Matrix
• Add the two scores on the x-axis and
plot point on X. Add the scores on the
y-axis and plot Y. Plot the intersection
of the new xy point.
• Draw a directional vector from origin
through the new intersection point.

Ch 6-7
Fred R. David
Prentice Hall
 SPACE Factors
Internal Strategic Position External Strategic Position

Financial Strength (FS) Environmental Stability (ES)

Return on investment Technological changes

Leverage Rate of inflation
Liquidity Demand variability
Working capital Price range of competing products
Cash flow Barriers to entry
Ease of exit from market Competitive pressure
Risk involved in business Price elasticity of demand

Ch 6-8
Fred R. David
Prentice Hall
 SPACE Factors
Internal Strategic Position External Strategic Position

Competitive Advantage CA Industry Strength (IS)

Market share Growth potential

Product quality Profit potential
Product life cycle Financial stability
Customer loyalty Technological know-how
Competition’s capacity utilization Resource utilization
Technological know-how Capital intensify
Control over suppliers & distributors Ease of entry into market
Productivity, capacity utilization

Ch 6-9
Fred R. David
Prentice Hall
 SPACE Matrix
FS
Conservative Aggressive
+6
+5
+4
+3
+2
+1

CA IS
-6 -5 -4 -3 -2 -1 -1 +1 +2 +3 +4 +5 +6

-2
-3
-4
-5
Defensive -6 Competitive
ES Ch 6-10
Fred R. David
Prentice Hall