Space Matrix as a decision making tool in competitive environment
The SPACE matrix is a crucial strategic management tool utilized to analyze and assess firm’s competitive position. Main aim of this matrix to determine what type of a strategy a firm should follow up. Space Matrix is a critical tool to find out strategic formulation and decision making in terms of competitive position of firm. Managers or decision makers can be leveraged from Space Matrix as a basis for other strategic management tools, such as the SWOT analysis, BCG matrix model, industry analysis or the others). This tool is a four-quadrant framework which shows us whether aggressive, conservative, defensive, or competitive strategies are most appropriate for a given organization.
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Space matrix based on four areas of analysis within these. As a most important determinant of a company, financial strength and competitive advantage make up internal dimensions. Environmental stability and Industry strength constitutes external strategic dimensions. In the internal dimension part, key factors regarding financial strength mostly come from company accounting. (Cross, 2003) These critical success factors can be return on investment, leverage, liquidity, ease of exit from the market and the risk involved in business, cash flow and etc. Competitive advantage (having critical importance to marketers) key factors are as an example, technological know how, market niche position, customer loyalty, product quality, market share, product life cycle, and others. Every company is influenced by external environment (industry and environmental stability) that company is …show more content…
We are putting CA and IS values in Space Matrix on the X axis and CA values can range from 0 to -6 and IS Values can range from 0 to 6. FS and ES Dimensions are drawn on the Y Axis and ES values can be between 0 and -6 and FS values can take 0 to 6.
After weighting and scoring each dimension’s critical success factors, we can reach total result and determine strategic position of company. Aggressive posture tell us that we are competing in an attractive industry with and stable economic conditions and shows that this company is a powerful financially. Competitive position shows us characteristics of an attractive industry in a relatively unstable environment. (Rudder, 1998) Company in this position must invest in productivity, save costs and merge with a financially strong company. Competitive posture implies that company can show low growth in a stable industry conditions. In this position, firm should focus on new product development and try to enter into more attractive markets. (Rudder, 1998) Protecting competitive products, improving cash flow and cutting costs is crucial for this positioned strategy. Lastly, Defensive position gives us information regarding unattractive industry conditions and competitiveness is critical for this
As strategy consultants of McCormick & Associates, we use Porters Five Forces Model as a framework when making a qualitative evaluation of a firm's strategic position (Appendix 1.2). These five forces determine the competitive intensity and therefore attractiveness of a market. These forces affect the ability of a company to serve its customers and make a profit. A change in any of the forces normally requires a company to re-assess the market place.
When testing if a corporate strategy is leading the company to success, there are techniques that can be used to project data collected from the company. Long term attractiveness, competitive strength, and the nine cell industry attractiveness/business strength matrix are used to highlight strategic positions of each business in a diversified company. The industry attractiveness gages the prospects for long-term performance. Competitive strength measures how strong the units are positioned in a business in their industry. Lastly, the nine cell industry attractiveness/business strength matrix merges information on attractiveness and competitiveness to show where in the industry does a unit fit when it comes to long-term success. Walt Disney
Arthur, A., Thompson, Margaret, A., Peteraf, John, E. Gamble, A., J., Strickland III. (2014). Crafting & Executing Strategy: The Quest for Competitive Advantage 19e: Concepts & Cases. C6-C25.
Dynamic strategic management encompasses the approaches, tools and activities organizations utilize to determine direction, increasing the likelihood of organizational goal attainment. It is an approach that suggests organizations operating in uncertain environments require a flexible plan to minimize risk and take advantage of opportunity As a tool developed to analyze a firm’s position within its operating environment, a Strengths, Weaknesses, Opportunities and Threats (SWOT) analysis provides insight into how internal and external factors are inhibiting or facilitating advancement toward reaching organizational objectives within a dynamic environment. This paper aims to understand how a SWOT analysis assisted the Calgary International Airport Authority create a competitive business plan for their future in an uncertain environment.
Porter, M. E. (2008). The five competitive forces that shape strategy. Harvard business review, 86(1), 25-40.
Because the subject matter of strategic management is so inherently complex and because each one of us brings his own personal biases to the analysis, it was suggested early on that virtually all case material in the field be analyzed from the perspective of more than one methodology. Profit theory and industrial chains were selected as the first of a number of viable approaches to the analytical process. It would have been equally correct to select the Five Competitive Forces analysis refined by Michael Porter, one of the major figures in the field of strategic management. This methodology addresses the same issues but differs only in the language that they use to describe corporate behavior. The five forces are:
As illustrated by Hill, Jones, & Schilling (2014), to assist organizations in choosing future strategies, they can perform a SWOT analysis to determine its strengths; weaknesses, opportunities and threats (p. 17). Hill, Jones, & Schilling (2014) not that, in order to determine future strategies, it is important an organization perform this analysis to “build on and protect company strengths, and eradicate
The BCG matrix is also a matrix that is used for the purpose of strategy formulation of a firm, but it is a four cell matrix. It is used to measure the position of a firm in relation to its relative market share as well as its market growth. In case of these two being high a firm is classified as a star. In case of these being low they are classified as dogs. In case of only a high market growth it is rated as a cash cow and in case of only a high market share it is rated as a question mark. Based on this t...
Competitive advantage is the advantage for the competitors and gained by the offerings from the consumers that have the greater value either by the low prices of the products and by providing the benefits and services to the consumers that denotes the high price. It is a set of the innovative and different features of the company and the products and services sale to the consumers so that company can achieve the targets what they have decided and it is the betterment for the enterprise in the competitive market (Porter, 2011). There are three determinants which can be used in the competitive advantage that what the company produce for their consumers, their target market that what they have to achieved and the competition from the other entity
In a world of free trade, growing competition and accessibility to foreign markets, the need for methodical market analysis and assumptions is steadily rising in today’s business environment. It is just a normal way of thinking to primarily intent to eliminate the financial before entering a new and foreign market. This suggests that enterprises have to develop an overall strategy for their business in order to gain competitive advantage and consequently market share. With the words of Michael E. Porter, professor at Harvard University and leading authority on competitive strategy, this desirable market success is indirectly linked to the individual structure of a market. The unique structure of a single market influences the strategic behaviour and the development of a competitive strategy within a firm. The competitive strategy finally decides whether a company performs successfully on the market or not. Referring to this interpretation of business success, M. E. Porter established his five forces framework that enables directives to gather useful information about the business environment and the competitive forces in industries.
This work will determine the baseline of the current market situation for the company, which is essential for any further exercise and analysis. To understand how the business model correlates with the product marketing, need to see if there is any evident cause-effect relationship between product characteristics and the nature of the product company. If such correlation exists, it will be important to see the transition of such characteristics into the company marketing strategy. It can show how company’s strategies can be successfully addressed in a real-world scenario. Both internal and external analysis, SWOT matrix will help to determine the company’s current market position.
Both Porter and Miles and Snow’s strategy typologies are based on the concept of strategic equifinality, or the ability for firms to be successful via differing managerial strategies (Hambrick, 2003, p. 116). Porter 's strategy is more generic while Miles and Snow’s is more specific in nature. Porter’s generic strategy typology is based on economic factors centering on the source of a firm’s competitive advantage and the scope of a firm’s target market (González-Benito & Suárez-González, 2010). Porter’s typology emphasizes a firm’s cost, product differentiation or non-differentiation and market focus. When utilizing Porter’s strategy typology, a firm must first decide to target its products toward the mass market versus a market niche or focus. Secondly, a firm will determine if it wishes to minimize costs or differentiate its products with differentiation meaning that firms will most likely forego lower costs (Parnell, 2014, p. 184). This can lead a firm to develop a myriad of strategies between these options. Strategies which may have or not have focus, may or not be differentiated, may or not be low cost or any combination of strategies. In contrast to Porter, Miles and Snow’s typology is more specific in nature.
The positioning school of strategy emphasizes making a strategy based on proper market analysis and logic so that organization’s product would have a dominant position in the market against other competitors. Furthermore, the positional school of strategy encourages competitive advantage over competitors while using decision-making and performance measurement tools such as the Porter’s five forces and the Boston Consulting Group Matrix to determine how to maintain dominance in the
...lopment industry as well as the strengths and weaknesses within the company. The Business Strategy should reflect the main issues that determine the long-term
Firstly, there is a need to focus on the company competitive dimensions before embarking on the decisions. In this aspect, the Competitive capabilities are the Cost, Quality, Time, and Flexibility dimensions that a process or value chain actually processes and is able to...