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Appl
Application of SPACE Matrix

Case Study:
Study Mahde Beton Concrete Construction Company
ahmood ghochani1* Fateme kazami1 Mohamadreza karimi alavije2
Seyed mahmoo
1.Master of Business Admins
dminstrative , Ershad-Damavand Higher Education Institute
stitute, Tehran, Iran
2. Faculty Member
ber of
o Management Department, Allame Tabatabaie University,
Unive Tehran, Iran
* E-mail
ail of the corresponding author:Mahmoodghochani@gmail.
gmail.com

Abstract
One of the most important questions
stions for concrete construction firms managers is thatat wha
what the current status of
their concrete construction firm is. This
Th paper presents the application of strategic position
sition and action evaluation
matrix (Space Analysis) to find the an
answer of this question for a concrete constructionn the best
b degree of strategy
managing to execute four strategie
rategies against the rivals, namely aggressive, conserv nservative, defensive and
competitive strategies. Value off each factor mentioned in this matrix, were earned by preparing
pr questionnaire
surveys. These factors were listed
sted in four groups (Financial Strength, Industry Attractiv
tractiveness, Environmental
Stability and Competitive Advantage)
age) to identify which kind of strategy should be used
ed by this
t firm.
Key words: Strategy ,Space Analysis
alysis, aggressive, conservative, defensive and competitive
titive strategies

1. Introduction
Today, the most important concern cern oof most of the organizations is formulating thee strategies
strat their success is
guaranteed in complex environmentamental changes. Strategic planning provides some tools ols fo
for the organizations to
follow the formulation of the stratstrategy in various aspects of the organization and nd manage
m their strategic
performance [11]. Now, strategic ic management
man is widely applied in various levels of busines
usiness.
Strategic management is considered
dered as the set of decisions and operations that are applie
applied by managers for all
the organization levels. This is the set of decisions that can lead into long-term activities
ies of the organization [12].
In other words, the general pointint of strategic management is that the managers needd to know k what factors are
used to improve the organizationn condition
cond for the success of the performance in the future
uture [1].

2. The significance of the study

Strategy models provide a common mon focus
f point for discussion. The best strategies come oof from the insight of
applying the strategy tools and the dis
discussions that happen within the management teamam and
an not as a direct result
of using the planning model.Strategy
ategy m
models provide a common reference point. You can see a set of conditions or
even a particular symptom and you ccan relate it back to the rest of the strategy model
el to uunderstand more about
what is happening at the moment,nt, what
wha is happening and perhaps what will happen[3].

3. Research question
The most important thing in this
is article
artic tries to answer how we can determine their position
positi in the competitive
environment To find a rational strategy
strateg based on. The method used in this article is Strategi
trategic Position and Action
Evaluation Matrix In that way it is described
des in detail.

4. Theoretical base
4.1. SPACE Analysis – Strategicgic Po
Position and Action Evaluation Matrix
The Strategic Position and Action
ction Evaluation Matrix or SPACE analysis matrix is a super technique for
evaluating the sense and wisdomom in a particular strategic plan. It was developed byy stra
strategy academics Alan
Rowe, Richard Mason, Karl Dickel,
ickel, Richard Mann and Robert Mockler.The Strategic ategic Position and ACtion
Evaluation (SPACE) analysis framework
framew is a very useful but not well known tooll to ddevelop and review a
company’s strategy : [3]
It can be used at
• The beginning of the exercis
xercise to predict the overall key themes
• As a check at the end off the pprocess.
• It can also be used to evalu
evaluate individual strategic options generated by using
sing a tool like the Ansoff
Growth Matrix.
SPACE Analysis is a systematic ic app
appraisal of four key issues that balance the external
nal an
and internal factors that
should determine the general theme
eme oof the strategy:
External
• Industry Attractiveness

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• Environmental Stability
Internal
• Competitive Advantage
• Financial Strength
By combining ratings on each dimen dimension on one SPACE matrix diagram, the framework ework guides the strategic
agenda.
The dimensions are combined ined iin a way that seems strange at first but makes sense because two sets of
factors are assessed as strengthss (financial
(fina strength and industry strength) and rated positiv
positive while the other two
(competitive advantage and environvironmental stability) are assessed as potential weaknesses esses and rated negatively.
The logic is that financial strength
gth is needed to compensate for environmental instability. ility. The
T more difficult the
future environment is thought too be, the th more important it is to have strong financials. [8]
Industry attractiveness andd competitive
com advantage are seen as potentially alternativ
rnative sources of superior
profit. and indeed there are treated
ated as a such in my five pathways to profit in my Profit ofit Tipping
Ti Point report. If
both favour the business, then results
result should be very good, if both are unfavourable, ble, ththen the business is in
trouble.
4.2. Assessing the SPACE Analysisalysis Scores
Each factor in the Strategic Position
ition and
a Action Evaluation matrix can be quickly judged ed but
bu there are benefits for
exploring each in detail.There are re a la
large number of factors that can be considered andd each industry will have its
own key features which should be inc included in the detailed SPACE evaluation. A few facto factors to be considered to
give you a flavour of what to include
clude in your SPACE analysis are listed below.
4.3. SPACE Analysis Factors For or Fin
Financial Strength
1. Return on Sales
2. Return on Assets
3. Cash Flow
4. Gearing
5. Working Capital Intensity
The factors for Financial Strengthngth aare marked from 1 to 6 and a high score is good, ood, a low score indicates
financial weakness.: [3]
• Return on investment (low to high)
• Leverage (debt to equity ty ratio
ratio) (inbalanced to balanced)
• Liquidity (access to quick ick money
mo when needed) (inbalanced to solid)
• Capital required versuss capital
capit available) (high to low)
• Cash flow (low to high)
• Ease of exit from market et (dif
(difficult to easy)
• Risk involved in the business
usiness (much to little)
• Inventory turnover (slow w to fast)
f
• Use of economies of scale ale and
an experience (low to high)
4.3.1. Interpreting Financial Streng
trength In The SPACE Matrix To Your Situation
High profit margins and access to cash to invest when you want it are valuable in any business.
busin
Several of the financial measureses are not black and white: [15]
1. Leverage ranges from imbalanced
imba (bad) to balanced (good) on the basis that equity
eq finance is more
expensive than moderate te leve
levels of debt so the business should aim for the lowest
est weighted
we average cost of
capital
2. Liquidity also ranges fromrom imbalanced
im (bad) to balanced (good) because highh levels
leve of cash will depress
returns on investment while liquidity problems will mean the business struggles gles to pay creditors as they
fall due and may mean the bu business is technically insolvent.
Businesses have different financial
cial neneeds in terms of:
• asset intensity – some busine
businesses need large investments in capital equipment
• working capital cycles – a supermarket
s will be paid in cash by customers well bbefore it has to pay its
suppliers while a distributor
butor may m have to hold high levels of stocks/inventories,
es, finance
fina trade debtors and
even pay for imported goods before they are despatched. [26]
4.3.2. The Impact On Strategicc Dire Direction For Different Levels Of Financial Strength
Financial strength is used to offset any environmental instability on the y-axis of the SPACE PACE matrix diagram.
A strong score on financial strength
ength backed up with reasonable environmental stability ility ssuggests that either an
aggressive strategy or conservativetive strategy
s is appropriate depending on the positionn for competitive
c advantage
and industry attractiveness.

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A poor score without remarkable le envi

environmental stability indicates that either a competitive
etitive strategy or defensive
strategy is required.
4.4. SPACE Analysis Factors For C Competitive Advantage
1. Market Share
2. Quality
3. Customer Loyalty
4. Cost Levels
5. Product Range
Competitive advantage is scored -11 (minus 1) great to –6 (minus 6) poor – for more ore dedetails see Competitive
Advantage In The SPACE Matrix: [3] [3
• Market share (small to large)
• Product quality (inferioror to superior)
su
• Product life cycle (late to early)
ear
• Product replacement cycleycle (variable
(v to fixed)
• Customer loyalty (low to high) hig
• Competition’s capacity utilisation
utilis (low to high)
• Technological know-how ow (lo
(low to high)
• Vertical integration (low w to high)
h
• Speed of new product introdu
introductions (slow to fast)
4.4.1. Interpreting Competitivee Advantage
Adv In The SPACE Matrix To Your Situation tion
This dimension more than any other in the SPACE matrix needs to be adapted too your you business sector.The
competitive advantage matrix shows
hows that even market share isn’t necessarily a strong cause of advantage in some
situations.
However to best assess competitive
tive ad
advantage to use in the SPACE matrix, I need to look
ook in detail at my business,
my customers and competitors to see who is providing the best customer value.The followin llowing strategy techniques
will help are Value chain analysis, Customer
Cu value attribute maps and Key Success Factors
actors.
4.4.2. The Impact On Strategicc Direction
Dire For Different Levels Of Competitive Advantdvantage
The competitive advantage ratingng will
wil either reinforce or counteract the rating for industry
ustry attractiveness as they
are on the same axis in the SPACECE ma matrix.
A strong rating on the Industry Attractiveness
Attrac / Competitive Advantage axis points to an aggressive
ag strategy or a
competitive strategy.A weak rating
ting indicates
in that a Conservative strategy or defensivee strategy
strate is appropriate.
4.5. SPACE Analysis Factors For Industry
Ind Attractiveness
1. Growth Potential
2. Life Cycle Stage
3. Entry Barriers
4. Customer Power
5. Substitutes
Industry attractiveness is scored 6 gre
great and 1 poor in the SPACE analysis matrix – for or momore details see Industry
Attractiveness In The SPACE Matrix atrix: [3]
• Growth potential (low to high)hig
• Profit potential (low to high)
• Financial stability (low to high)
hig
• Technological know-how ow (si
(simple to complex)
• Resource utilisation (ineffici
nefficient to efficient)
• Capital intensity (low to high)
high
• Ease of entry into the market
arket (easy to difficult)
• Productivity; capacity utilisa
utilisation (low to high)
• Manufacturer’s bargainingning power
p (low to high)
4.5.1. Interpreting Industry Attract
ttractiveness In The SPACE Matrix To Your Situation tion
The Five Forces model created by Michael
M Porter should be considered to see if there
ere ar
are additional attributes
which need to be considered for yyour particular situation. we’d be looking to includ include some measure for
competitive rivalry but we’ve seen good g industries destroyed by kamikaze competitiontition based on price wars.
we’d also want to look at the ability
ility of
o customers to exercise their bargaining power too sque
squeeze the profits. [7]
4.5.2. The Impact On Strategicc Direction
Dire For Different Levels Industry Attractivenesseness
A strong rating on the Industry Attrac
Attractiveness / Competitive Advantage axis points to an aggressive
ag strategy or a
competitive strategy. A weak rating
ating indicates that a Conservative strategy or defensivesive ststrategy is appropriate.
[9]

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4.6. SPACE Analysis Factors For E Environmental Stability

1. Political Uncertainty
2. Interest Rates
3. Technology
4. Cyclical
5. Environmental Issues
Environmental stability is scored –11 (minus 1) great to –6 (minus 6) poor – for moree deta details see Environmental
Stability In The SPACE Matrix: [3]
• Technological changes (High to Low)
• Rate of inflation(High to Low Low)
• Demand variability (much uch tto little)
• Barriers to entry into marketarket (much to little)
• Competitive pressure/rivalryivalry (much to little)
• Price range of competing ng pro
products (narrow to wide)
4.6.1. Interpreting Industry Attract
ttractiveness In The SPACE Matrix To Your Situation tion
Environmental stability is offsett by Fi Financial Strength on the y-axis of the traditional SPACE
SPAC matrix. [7]
4.6.2. The Impact On Strategicc Direction
Dire For Different Levels Industry Attractiveness eness
A strong score backed up with th reasonable
reas financial strength suggests that either an aggressive strategy or
conservative strategy is appropriate.
riate. A poor score without remarkable financial strength ength indicates that either a
competitive strategy or defensivee strat
strategy is required. [9]
4.7. Interpreting the SPACE Analys nalysis Matrix Diagram
The Strategic Position and Action tion Evaluation
E Matrix (SPACE Matrix) is a useful guide to help you to decide
which strategy is most appropriateate in which situation.
The SPACE Matrix assesses thee business
busin across four dimensions
• Industry Attractiveness
• Environmental Stability
• Competitive Advantage
• Financial Strength
to come to a recommended strategictegic thrust
t which can be:
• Aggressive Strategy
• Competitive Strategy
• Conservative Strategy
• Defensive Strategy
4.8. Aggressive Strategy
The Figure 1 favourable positions ons in all four dimensions and therefore the businesss can follow an aggressive
strategy as it leverages its strengths
gths into
in the opportunities available [3]
SPACE Analysis recommends that businessesbu in such a strong position take the following
wing aactions:
• Continue to invest in innovat
nnovation to sustain and build the competitive advantage ge which
wh exists.
• Cover any moves made de by competitors to develop alternative competitivee advantages.
adva Close off the
opportunities to build a diffdifferentiated value proposition that may prove attractiv
ttractive to segments of the
market.
• Aggressively build market rket sh
share by moving above the fair value line in the custom
ustomer value map. [18]
• Raise the stakes for other her competitors
com to play the game. This may be throughh rapid product innovations,
marketing campaigns orr reducing
redu prices to levels that competitors find difficult
ult to match.
• Grow within the market et through
thro acquisitions.
• Follow up on possible opportunities
oppo in the market including backward or forwar
forward vertical integration.
[11]
• Move into related markets kets which
w complement the existing position.
This aggressive, offensive strategygy will
wil make it tough for competitors to trade and certainly
ainly ddifficult to build up the
resources to challenge for market et leadership
lead unless they have very deep pockets.
The two big concerns in this very ry favourable
favo position are:
1. Avoid complacency – business
busine can seem also too easy but new threats may come ome from
fr substitute markets
or as technology makess different
diffe sectors converge.
2. Avoid running foul of anti--competition policies. Sometimes a business that is too strong can attract the
attention of regulators and eespecially if it uses predatory pricing aimed at driving drivin competitors out of
business. [10]

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4.9. Competitive Strategy

The competitive strategy approach ch is rrecommended when the business scores well on the IndustryInd Attractiveness /
Competitive Advantage (IA/CA)ax A)axis of the SPACE matrix but unfavourably on th the Financial Strength
/ Environmental Stability (FS/ES) ES) axis.
ax The high IA/CA score can be when: [3]
• The industry is considered ered at attractive and the company has competitive advantagesntages over its rivals (a very
strong position).
• The industry is considered ered atattractive and the business is neutral on competitive ve advantage.
adv
• The industry is reasonable able but
bu the business has a strong competitive advantage. ge. [17]
[17
The low FS/ES score can be when:
• The environment is unstable stable and the company is weak financially.
• The environment is considernsidered to be unstable and the business has modest financia nancial resources.
• The business is weak financiinancially but environmental stability is reasonable. [18]
The key strategic imperative is to acquireac financial strength to compensate for the enviro
environmental instability so
that the business can then follow low an a aggressive strategy. The business needs to split its attention between
strengthening the balance sheet and improving
im the underlying profitability of its sales.To
s.To sstrengthen the balance
and to provide the funds for expansion
ansion, it can:
• Raise extra share capital al or even
e long term loans. A private business can turn to priv
private equity in terms of
business angels or venture
ture capital
ca firms to provide cash although this will dilute
ute the interest of the current
shareholders.
• Merge with a cash rich comp company who is looking for opportunities to expand.
• Form alliances to gain access to tangible and intangible assets without havingg to in incur high investment
costs.
• Improving profitabilityy will also lead to strengthening the balance sheett prov provided the gains aren’t
withdrawn by the owners.ers. ThThis will take time to build up cash and equity. [2]
To improve profitability of thee business
busi and take advantage of its strong combined ed pos
position on the industry
attractiveness / competitive advantag
vantage axis, the business should:
• Reduce its fixed and variable
ariable costs provided it doesn’t damage the competitive ve advantage.
adv Innovate to
improve productivity.
• Emphasise the differentiationtiation competitive advantages, make sure they are commun mmunicated well to the
market and increase prices
ices to improve margins. This action will depend on where here tthe business is on the
customer value map.
• Expand into new markets kets and
a products where the business is confident itt will be profitable see the
Ansoff Growth matrix. [15]
4.10. Conservative Strategy
The business is trapped into a weak eak position
po in an unexciting market – this is the dog positio
osition in the Growth Share
Matrix characterised by low market rket share
sh and low (perhaps negative) market growth. The ccompany has a choice:
[3]
1. To improve its currentt comp competitive position by developing competitive advantag vantages or focusing on the
more attractive niches of the overall market.
2. Looking outside the currentrrent m market for profitable opportunities, either buildingng on existing
e resources and
capabilities or diversifying
ying in into a new area.
Combined the individual assessments ments are negative but this may be:
• IA and CA are both weak
• IA is OK but CA is weak
• IA is weak but CA is OK
If the industry looks bad and the busin
business has significant competitive advantages, then any remaining
r profitability
is under major threat and the business
usiness can become a cash drain which will reduce financia nancial strength to diversify
elsewhere.
The business should look to trim costs and any loss making customers and products ucts wwherever it can to buy
more time to find attractive diversific
rsification opportunities. It should also cut back on capaci
capacity so that it shrinks to
fit the future market expectations.
Otherwise the business may ay be able to improve its position through a determined ined ststrategy to improve its
competitive advantages. Businesses sses new to strategic management and customer value lue strategies
str may find they
can make major gains through focused focuse action and even find overlooked assets and opportunities.
oppor The business
should be careful it doesn’t over-inve invest since upside is weak because the market isn’tt considered
consi to be attractive.
The business may identify niches es wh
where it does have advantages or can quickly develop elop advantages
ad that are not
appreciated in the wider market.

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The nice thing about the conserv

onservative strategy in the SPACE matrix is that the busine business is not under major
threats from the environment andd because
beca of its financial strength, it has time to consider
ider its options.
4.11. Defensive Strategy
A defensive strategy is recommended
ended by SPACE analysis when: [3]
1. The Industry Attractiveness
eness / Competitive Advantage axis is negative; and
2. The Financial Strength /Envi/Environmental Stability axis is also negative
A defensive strategy doesn’t have to come out of weakness but from strength. Sometimes times maintaining the status
quo suits a market leader or someone
meone who is operating under a high price umbrella of a m market leader because
profits are high and life is easy. This ccan be dangerous since the industry is inviting ann aggressive
aggr move by a new
entrant to the market but sometime etimes “a bird in the hand is better than two in the he bu
bush.”Markets are very
comfortable when competitors co-exi exist in their own little spaces and don’t threaten each oother beyond localised
skirmishes on the borders. I’vee knownkno plenty of business owners who don’t wantt to ggrow their businesses
significantly. they don’t have thee desi
desire to manage a big business. [9]
Different defensive strategy options
ions apply
a in different parts of the business:
4.11.1. Defensive Marketing Strategtrategy
First be clear on which product-marke
markets you want to defend, which you want to grow and w which you will allow to
be taken from you without a seriousious fight.
fi
The growth-share matrix from the BostonBo Consulting Group may help as it looks across oss th
the market growth rates
and your market share to create four ccategories: [7]
• Stars – growing market, t, high share / to grow aggressively
• Cash cows – stable or shrinking
shrink market, high share / to defend strongly – these ese are
ar your main source of
profit and cash
• Question marks – growing ing market,
m low market share/ live up to their names.
.
• Dogs – stable or shrinking ing mmarket, low market share/ to harvest i.e. to let yourr mark
market share drift away as
you manage for short term
erm cash
ca and profit.

5. Methodology
The current study is applied inn term
terms of the type of goal and is descriptive and case
ase study
st in terms of data
collection and data processing.. The most important source in this study is the existing
sting documents in various
sections of the organization as human
huma resources, market research, financial, marketing,
ing, pproduction and quality
and in data collection, additional
al data
dat are used in terms of the views of local and intern
international managers and
experts and research scientific centers
enters.
In this paper, 34 the number of managers and professionals people have responded
ponded to the questionnaire
and by Using Strategic Position and Action
A Evaluation Matrix, we define company'ss position.
posit This study is the
use of average weights.

6. Analysis of the results

According to The tables obtained ined from
fr the Strategic Position and Action Evaluation tion Matrix,
M Mahde Beton
Concrete Construction Company centerscent in the SPACE matrix is placed in the position on of offensive strategy and
According to what was said earlier about organizations that are in the position offers an aggressive strategy to
Mahde Concrete Concrete Constructio
truction Company for research in the following.
6.1. Offensive Strategy As A Frontarontal Attack
In a frontal attack you would target
rget a competitor in the area of its strengths. In the customer
tomer matrix you target the
same basic value proposition usinging either
eit a lower price or a large-scale marketing campaignpaign. If you win it’s
through brute force, not subtly. The co competitor immediately knows that it is under attackack and
an is likely to respond
vigorously. This makes frontal attacks very risky and often expensive. The targeted competi mpetitor may well have the
advantages of a low cost position and strong, committed relationships with customers.
A frontal attack is only a viable offensive
offens strategy if:
• The market is commoditised itised with few little differentiation and standard customer
omer nneeds.
• The brand equity and customustomer loyalty for the targeted competitor is low.
• The targeted competitorr has few financial resources (or strong allies) relativee to the financial strength of
the attacker.
6.2. Offensive Strategy As A Flankilanking Attack
Instead of attacking a competitorr where
wher it is strong in a frontal attack, a flanking attack looks for weaknesses in the
competitors product range and attacks there instead.

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In the customer value map, the compe

competitor may be attracting business it is the best option
ion without
wi being a close fit
with the needs of the market segment.
segme This makes it vulnerable to a flanking attack ck fro
from a competitor who
produces a differentiated product ct targeted
targe at a specific niche. While the competitor will be aware
aw of the aggressive
competitive move, it may not be particularly
partic concerned if little volume is looked threatened.
tened. It may decide that the
size of the market is not worth thehe fight
fig providing its core market position is not threatened.
tened.
6.3. Offensive Strategy As Encirclem
circlement
In the encirclement offensive strategy
rategy, the targeted competitor is attacked from two orr more directions at once to
confuse the response.
For example on the customer value lue map,
m the aggressive competitor could launch threee new products:
1. At the same value pointt as the th incumbent but without the aggression involved in the frontal attack.
2. Below the value pointt to attractat price switchers who don’t appreciate everythin ing that the incumbent
offers.
3. Above the value point to attract
attra customer segments who feel under-served by the in incumbent and who are
willing to pay a premium m pri
price.
The company that is attacked has as to deal
d with three threats at once and if it cuts pricee to fi
fight off the low priced
offering, it risks the price reduction
tion spspilling over into the other customer segments.
6.4. Offensive Strategy As A Bypass
ypass Attack
In this version of offensive strategy,
tegy, the aggressive competitor does not go head-to-head head against
a the incumbent
competitor but instead targets areas where it isn’t. While this isn’t a direct attack,, it can ca be thought of as a
pre-emptive strike into new marketmarkets and new complementary products and is likely to be targeting the
incumbent’s own offensive strategies.
tegies. [3]
Another proposed strategy for the t company include: Penetrate in the market, Market Mark extension, Product
extension, upward and downward ward Vertical integration, Homogeneous variety, Non--homogeneous variety,
Horizontal variety, …….[4].

7. References
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Shojai, Tehran. Economical affairs
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tural rresearch office.
3.H.Rows, R.Mason and K.DickelStra
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Reading Massachusetts: Addison--Wesley publishing co.
4.Keller Janson, Louren & Luccke ccke Richard.(2006).The
R Essentials of Strategy, Harvard
ard bbusiness School Press,
Boston, Massachusetts & Society
ciety For
F Human Resource Management Virjonia.
5. David, Fred. R. Translated by Parsian.
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6. Webster, L.j. , Reif, W.E. and nd Br
Bracker, J.S., (1989). The Manger’s Guide to Strateg
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Hayes, R.L.(1967). From Strategic Planning to Strategic
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8. Armstrong, J.S., 1982. The value
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o formal planning for strategic decisions. Strategic
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9. Backoff, R., Wechsler, B., Crew, R., 1993. The challenge of strategic management ment iin local governments.
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10. Kemp, R., 1991. Strategic plannin
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11. Miller, C.C., Cardinal, L.B., ., 1994.
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. Figure & Table

Table 1 : D
Dimensions & Strategies in SPACE Matrix with Details
Det
Defensive Cons
Conservative Competitive Aggressive Strategy Postures

Dimension
Unstable Stable Unstable Stable Environment
Unattractive Unattractive
Unat Attractive Attractive Industry
Weak Weak Strong Strong Competitiveness
Weak High Weak High Financial strength
* Rationalization * Cost * Cost * Growth Appropriate
* Divestment as reduc
reduction and reduction, possibly by Strategies
appropriate produc service
product/ productivity acquisition
ration
rationalization improvement, *Investment on
* Invest in raising more opportunities
search for new capital to follow * Innovate to
pro
products/ opportunities sustain
oppo
opportunities and strengthen competitive
competitiveness advantage
Possibly merge
less competitive
cashrich
organisation

Table
le 2 : Factors Determining Financial Strength
1. Return on investment high 6 5 4 3 2 1 0 low
2. Leverage (debt to equity ratio) balanced 6 5 4 3 2 1 0 inbalanced
3. Liquidity solid 6 5 4 3 2 1 0 inbalanced
4. Capital required versus capital available low 6 5 4 3 2 1 0 high
5. Cash flow high 6 5 4 3 2 1 0 low
6. Ease of exit from market easy 6 5 4 3 2 1 0 difficult
7. Risk involved in the business
siness little 6 5 4 3 2 1 0 much
8. Inventory turnover fast 6 5 4 3 2 1 0 slow
9.Use of economies of scalele and experience high 6 5 4 3 2 1 0 low
32
= 3.56
9

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Table 3: Factors
Fa Determining Competitive Advantage
1. Market share large 6 5 4 3 2 1 0 small
2. Product quality superior 6 5 4 3 2 1 0 inferior
3.Product life cycle early 6 5 4 3 2 1 0 late
4.Product replacement cycle fixed 6 5 4 3 2 1 0 variable
5.Customer loyalty high 6 5 4 3 2 1 0 low
6.Competition’s capacity utilisatio
lisation high 6 5 4 3 2 1 0 low
7.Technological know-how high 6 5 4 3 2 1 0 low
8.Vertical integration high 6 5 4 3 2 1 0 low
9. Speed of new product introducti
oductions fast 6 5 4 3 2 1 0 slow
32
= 3.56 = −2.44
44
9

Table 4: Factors Determining Industry Attractiveness

1. Growth potential high 6 5 4 3 2 1 0 low
2. Profit potential high 6 5 4 3 2 1 0 low
3. Financial stability high 6 5 4 3 2 1 0 low
4.Technological know-how complex 6 5 4 3 2 1 0 simple
5.Resource utilisation efficient 6 5 4 3 2 1 0 inefficient
6.Capital intensity high 6 5 4 3 2 1 0 low
7.Ease of entry into the market
arket difficult 6 5 4 3 2 1 0 easy
8.Productivity; capacity utilisat
tilisation high 6 5 4 3 2 1 0 low
9. Manufacturer’s bargaining
ning po
power high 6 5 4 3 2 1 0 low
Average 36
=4
9

Table 5 : Facto Determining Environmental Stability

Factors
1.Technological changes Low 6 5 4 3 2 1 0 High
2.Rate of inflation Low 6 5 4 3 2 1 0 High
3.Demand variability (much to little) Low 6 5 4 3 2 1 0 High
4.Barriers to entry into market
marke (to) much 6 5 4 3 2 1 0 little
5.Competitive pressure/rivalr
/rivalry (to) Low 6 5 4 3 2 1 0 High
6.Price range of competing
ting products
p (to) narrow 6 5 4 3 2 1 0 wide
Average 18
= 3 = −3 `
6

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Figure 1: Matrix SPACE

Figure 2 : Matrix SPACE for Mahde Beton Concrete

Construction Firm

FS Aggressive
Conservative
3.56

CA 4 IS

-2.44

-3

Defensive Competitive
ES

59
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