SPACE Matrix English

8/4/2019 SPACE Matrix English

1/11

549

The SPACE Matrix: A Tool forCalibrating CompetitionLaetitia Radder and Lynette Louw

The SPACEMatrix: Another Aid inStrategic Decision-makingCompetition is at the core of the success or failure ofany organization. Competitive strategy, on the otherhand, is the search for a favourable competitive po-sition in an industry and is aimed at establishing aprofitable and sustainable position against the forcesthat determine industry competition.' Successfulstrategies are based on an understanding of the macroenvironment, the industry and the organization'sinternal environment. Knowledge about the com-plexities of these environments enables the orga-nization to better choose how and where to competemost effectively, given its products, services, capa-bilities and limited organizational resources.Various methods have conventionally been used to

analyse the environment and determine the com-petitiveness of an organization, e.g., the Boston Con-sulting Group (BCG)approach, General Electric Stop-light Strategy, McKinsey's Industry Attractiveness/Company Strength Matrix, Profit Impact of MarketStrategy (PIMS)2and Scenario Planning." Some limi-tations ofthese techniques have, however, been indi-cated by Hunger and Wheelen," Barnett andWilstead," Thompson and Strickland" and Dyson."The SPACE (Strategic Position and Action Evalu-ation) Matrix" is an attempt to overcome some oftheselimitations. Compared with, e.g., the McKinsey andGeneral Electric portfolio approaches, where one ofthe axes of the matrix measures the overall attrac-tiveness of the industry in which the organizationoperates and the other axis represents the organ-ization's ability to compete in its marketls], theSPACE method adds two key dimensions to thematrix, i.e., the industry's stability or turbulence, andthe organization's financial strength. All four of the

dimensions are assessed in terms of several factors,each of which is evaluated separately. Including alarge number of factors enables the manager to exam-ine a particular strategic alternative from several per-spectives, and therefore slhe is likely to select a betterstrategy.rf!) Pergamon

PH: S0024-6301(98)00053-3Long RangePlanning, Vol. 31. No.4. pp. 549 to 559, 1998

@ 199B Elsevier Science Ltd. All rights reservedPrinted in Great Britain

0024-6301/98 $19.00+0.00


2/11

After extensive consultation and discussion withbusiness managers and consultants, it became clearthat the SPACE method is not yet well-known inSouth Africa. Many of the managers and consultants,however, were interested to learn more about it.Although the SPACE method has been documentedin literature.":" there are few published reports on itsapplication or evaluation. Subsequent to the researchreported in this article, a large South African manu-facturer in a related industry has applied the SPACEmethod in making outsourcing decisions.As the SPACEmethod is useful in determining the

appropriate strategic posture for an organization, theprimary objective of this article is to make strategicplanners aware ofits potential. A secondary objectiveis to report on the application of the method in SouthAfrica.

MethodologyAfter evaluating the profiles of qualitative and quan-titative research, as well as the criteria for the choiceof the most appropriate research method." a quali-tative approach was chosen for this study. The prin-ciples of qualitative research also corresponded wellwith the objectives ofthe research, i.e., to understand,rather than to predict, with a focus on interpretation.The case study method as a particular form of quali-

tative research was used, taking the form of quali-tative interviews with senior management of all themanufacturers (five in total) in a specific SouthAfrican industry. Senior management were inter-viewed in each case, but owing to the extreme com-petitiveness in the industry and the sensitivity of thedata, none of the organizations or their respondentsare identified. For the illustrative purposes of thisarticle, the three cases which best portrayed the appli-cability of the SPACE method were chosen and arereported on. These organizations are further referredto as Organizations A, Band C.In applying the SPACE method, the methodology

as reported by Rowe et 01.15 was followed. No changeswere made to the dimensions or the variables con-stituting these, as the purpose was to test the appli-cability of the method as proposed by the originalauthors. The perceived merits of the proposed methodas applied in the current study, are evaluated in theconcluding section of this article.The basic mechanics of the SPACEmethod are dis-

cussed in the next section, followed by a report on itsapplication in a South African manufacturing situ-ation.

The DimensionsThe strategic posture of an organization as deter-mined by means of the SPACE method, is based on

550two internal dimensions and two external dimen-sions. The internal dimensions, i.e., financial strengthand competitive advantage, are the major deter-minants of the organization's strategic position,whereas the external dimensions of environmentalstability and industry strength characterize the stra-tegic position of the entire industry. The differentdimensions result in an aggressive, competitive, con-servative or defensive strategic posture for the orga-nization. These postures, in turn, can be translatedinto generic competitive strategies, thus helping themanager to define the appropriate strategic thrust forthe business, i.e., overall cost leadership, differ-entiation, focus or defensiveness.Each of the four dimensions comprises several key

factors which are studied individually. The key fac-tors which determine environmental stability (ES)include: technological change; rate of inflation;demand variability; price range of competing pro-ducts; barriers to entry into the market; competitivepressure and price elasticity of demand. Factorsdetermining industry strength (IS) include: growthand profit potential; financial stability; technologicalknow-how; resource utilization; capital intensity;ease of entry into the market and productivity orcapacity utilization. Competitive advantage (CA)is ofspecific importance to marketers. Critical factors inthis dimension are: market share, product quality;product life cycles and product replacement cycles.Other variables include: customer loyalty; com-petition's capacity utilization; technological know-how and vertical integration. Factors influencing thefourth dimension, namely, financial strength (FS),include: return on investment; leverage; liquidity;capital required/available; ease of exit from the mar-ket and the risk involved in business."The manager now assigns appropriate values of

between 0 and 6 to each individual factor (See Table1). The averages for each group of factors are thenplotted on the SPACE chart. By connecting the ave-rage values plotted, a four-sided polygon displayingthe weight and direction of the particular assessmentis constructed. The strategic position can also bedetermined by adding the two scores on the axesopposite each other to obtain a directional vector thatpoints to a specific location in the chart, as illustratedby Figure 1.

The Strategic PosturesFour basic postures are shown in the SPACE chart,i.e., an aggressive posture, competitive posture, con-servative posture and defensive posture. The aggres-sive posture is typical in an attractive industry withstable economic conditions. Financial strength usu-ally enables an organization with this posture to pro-

The SPACEMatrix: A Tool for Calibrating Competition


3/11

1. Factors determining environmental stabilityTechnological changes Many 0 1 2 3 4 5 6 FewRate of inflation High 0 1 2 3 4 5 6 LowDemand variability Large 0 1 2 3 4 5 6 SmallPrice range of competing products Wide 0 1 2 3 4 5 6 NarrowBarriers to entry into market Few 0 1 2 3 4 5 6 ManyCompetitive pressure High 0 1 2 3 4 5 6 LowPrice elasticity of demand Elastic 0 1 2 3 4 5 6 InelasticOther 0 1 2 3 4 5 6Average

2. Factors determining industry strengthGrowth potential Low 0 1 2 3 4 5 6 HighProfit potential Low 0 1 2 3 4 5 6 HighFinancial stability Low 0 1 2 3 4 5 6 HighTechnological know-how Simple 0 1 2 3 4 5 6 ComplexResource utilization Inefficient 0 1 2 3 4 5 6 EfficientCapital intensity High 0 1 2 3 4 5 6 LowEase of entry into market Easy 0 1 2 3 4 5 6 DifficultProductivity /capacity utiIization Low 0 1 2 3 4 5 6 HighFlexibility, adaptability Low 0 1 2 3 4 5 6 HighOther 0 1 2 3 4 5 6Average3. Factors determining competitive advantageMarket share Small 0 2 3 4 5 6 LargeProduct quality Inferior 0 2 3 4 5 6 SuperiorProduct life cycle Late 0 2 3 4 5 6 EarlyProduct replacement cycle Variable 0 2 3 4 5 6 FixedCustomer loyalty Low 0 2 3 4 5 6 HighCompetition's capacity Low 0 2 3 4 5 6 HighTechnological know-how Low 0 2 3 4 5 6 HighVertical integration Low 0 2 3 4 5 6 HighOther 0 2 3 4 5 6Average4. Factors determining financial strengthReturn on investment Low 0 1 2 3 4 5 6 HighLeverage Imbalance 0 1 2 3 4 5 6 BalancedLiquidity Imbalance 0 1 2 3 4 5 6 BalancedCapital required/capital available High 0 1 2 3 4 5 6 LowCash flow Low 0 1 2 3 4 5 6 HighEase of exit from market Difficult 0 1 2 3 4 5 6 EasyRisk involved in business Much 0 1 2 3 4 5 6 LittleOther 0 1 2 3 4 5 6Average

tect its competitive advantage. Such an organizationmay also take full advantage of opportunities in itsown or related industries, look for acquisition can-didates, increase market share and/or allocateresources to products that have a definite competitiveedge. Entry of new competitors is, however, a crucialfactor.A competitive posture is characteristic of an attrac-

tive industry in a relatively unstable environment. Theorganization with such a posture is at a competitiveadvantage and could acquire financial resources toincrease marketing thrust, add to the sales force, andimprove or extend the product line. Such an orga-nization could also invest in productivity, cut costs, ormerge with a cash-rich organization. Financialstrength is, however, of critical importance.

The conservative posture is distinctive of a lowgrowth but stable market. The focus is on financialstability, while product competitiveness is the criticalfactor. In this situation organizations could prunetheir product lines, cut costs, make cash flowimprovements, protect competitive products, focuson new product developments, and try to enter intomore attractive markets.A defining characteristic ofthe defensive posture is

an unattractive industry where competitiveness is thecritical factor. The organization finding itself in thisdimension often lacks a competitive product andfinancial strength. Itcould prepare for retreat from themarket, discontinue marginally profitable products,reduce costs and capacity and defer or minimizeinvestments.

Long Range Planning Vol. 31 August 1998


4/11

CONSERVATIVEPOSTURE

AGGRESSIVEPOSTURE

\\\- (Polygon)\\\\\

(Directionalvectorl=-s-

DEFENSIVEPOSTURE

The characteristics of the different strategic pos-tures and their suggested associated strategies aresummarized in Table 2.17

Case Study: An Application inSouth African IndustryThe scores for the individual factors constituting thefour dimensions, as indicated by the respondents, aresummarized in Table 3, while Table 4 reflects thescores in the respective dimensions.The data from Table 4 were used to construct the

vectors as shown in Figures 2-4. These figures alsosummarize the strategic postures adopted by the three

((

J(

COMPETITIVEPOSTURE

organizations and the suggested future actions. In thesubsequent discussion, each of the four dimensionsare commented on, followed by the SPACE chart anda discussion of the adopted strategic posture and re-commended action for the particular organization.

Organization AFactors determining environmental sta-bility. The score obtained for this dimension was- 2.4. The industry in which the organization ope-rates is relatively stable. The critical factors whichdominate this dimension in the particular industryare: high competitive pressure; high rate of inflation;many barriers to entry; and high price elasticity of



5/11

Strategic postureDimension Aggressive Competitive Conservative DefensiveEnvironment Stable Unstable Stable UnstableIndustry Attractive Attractive Unattractive UnattractiveCompetitiveness Strong Strong Weak WeakFinancial strength High Weak High WeakAppropriate strategies Growth-possibly by Cost reduction, Cost reduction and Rationalizationacquisition productivity product/serviceimprovement, raising rationalization Divestment asCapitalize on more capital to follow appropriateopportunities opportunities and Invest in search for newstrengthen products, services andInnovate to sustain competitiveness competitivecompetitive opportunities

advantage Possibly merge with aless competitive butcash-rich organization

A B C1. Factors determining environmental stabilityTechnological change Many 0 2 3 4 5 6 Few 4 4 4Rate of inflation High 0 2 3 4 5 6 Low 2 3 2Demand variability Large 0 2 3 4 5 6 Small 4 2 4

Price range of competing products Wide 0 2 3 4 5 6 Narrow 5 1 4Barriers to entry into market Few 0 2 3 4 5 6 Many 5 6 5Competitive pressure High 0 2 3 4 5 6 Low 1 3 2Price elasticity of demand Elastic 0 2 3 4 5 6 Inelastic 4 3 32. Factors determining industry strengthGrowth potential Low 0 2 3 4 5 6 High 2 2 1Profit potential Low 0 2 3 4 5 6 High 3 5 3Financial stability Low 0 2 3 4 5 6 High 5 4 4Technological know-how Simple 0 2 3 4 5 6 Complex 6 5 5Resource utilization Inefficient 0 2 3 4 5 6 Efficient 5 5 5Capital intensity High 0 2 3 4 5 6 Low 1 4 4Ease of entry into market Easy 0 2 3 4 5 6 Difficult 5 6 5Productivity/capacity utilization Low 0 2 3 4 5 6 High 6 3 3Flexibility, adaptability Low 0 2 3 4 5 6 High 3 5 23. Factors determining competitive advantageMarket share Small 0 1 2 3 4 5 6 Large 6 5 3Product quality Inferior 0 1 2 3 4 5 6 Superior 6 5 4Product life cycle Late 0 1 2 3 4 5 6 Early 4 4 4Product replacement cycle Variable 0 1 2 3 4 5 6 Fixed 2 2 5Customer loyalty Low 0 1 2 3 4 5 6 High 4 1 4Competition's capacity Low 0 1 2 3 4 5 6 High 3 4 3Technological know-how Low 0 1 2 3 4 5 6 High 6 5 5Vertical integration Low 0 1 2 3 4 5 6 High 5 2 44. Factors determining financial strengthReturn on investment Low 0 2 3 4 5 6 High 4 4 4Leverage Imbalance 0 2 3 4 5 6 Balanced 5 4 4Liquidity Imbalance 0 2 3 4 5 6 Balanced 5 3 4Capital required/capital available High 0 2 3 4 5 6 Low 2 2 3Cash flow Low 0 2 3 4 5 6 High 4 3 4Ease of exit from market Difficult 0 2 3 4 5 6 Easy 0 0 1Risk involved in business Much 0 2 3 4 5 6 Little 3 1 2



6/11

Organization A Organization B Organization CEnvironmental stability (ES)Industry strength (IS)Competitive strength (CA)Financial strength (FS)

-2.44.0-1.53.3

-2.94.3

-2.42.4

-2.63.8

-2.03.1

;;;;,3

;';

;;

;';'

;';

;;'

;';'

demand. The industry segment is highly competitive,signifying that the market is well covered by rivalorganizations. This in turn implies that market entrywould be relatively difficult for new entrants. Accord-ing to the respondents of the organization, numerousbarriers to entry exist which include high capital out-lays, high technological research and developmentcosts, and most significantly, the increasing threat ofsubstitute products in the form of imports. The reasonfor the high price elasticity of demand can be attri-

(ES)

buted to the fact that price reductions in the industryhave a short-term effect on market share. OrganizationA attempted to achieve higher profitability by main-taining premium prices for its products.Factors determining industry strength. Thescore for industry strength was 4.0. Such a score istypical of a relatively stable industry. The factors con-tributing to this situation are high capital intensity;low growth potential; high productivity/capacity uti-



7/11

(FSI

............ Moved from aggressive............trategy in 1970's and 1980's. . . .

. . . . . . . .

OPTION 1. . . . . . . .

OPTION 2-lf not proactive couldmove to defensive posture

lization; high technological know-how; and soundfinancial stability. Expansion of production capacityor diversity requires large capital outlays, empha-sizing the need for financial stability. Organization Adisplayed a healthy financial position, allowing it toinvest in research and development programmesessential for maintaining market leadership in theindustry segment. The organization's high tech-nological know-how and stable financial resourceshelped it to maintain a cost leadership position. Allthe respondents of Organization A were in agreementthat the total industry is characterized by a slowgrowth rate. However, the specific industry segmentis displaying the highest growth within the industry.Factors determining competitive advan-tage. It is apparent from the dimension score of-1.5 that the organization has a very strong com-petitive advantage within the industry segment (thelower the negative score, the stronger the competitive

'internal restructuring'clear corporate position

'SPU corporate position

advantage). The distinguishing factors contributing tocompetitiveness include: good product quality; tech-nological know-how; moderate competitor capacityutilization; and high market share. At the time of thestudy, Organization A had the highest market sharein the industry segment. This could be attributed tothe all-round performance superiority displayed byits new product, supported by rapid and superiortechnological innovation. An effective marketingcampaign contributed to creating the perception of asuperior product image for their new product.Factors determining financial strength. Ahealthy financial position was reflected by a scoreof 3.3. The important factors in this dimension are:difficulty of exit from the market; high capitalrequired and capital availability; moderate return oninvestment, aswell asbalanced financial leverage andliquidity. The large capital outlay required during set-up acts as a barrier to entry in the market and further



8/11

results in a high commitment on entry into the indus-try. This also implies a difficulty in exit from theindustry, as assets cannot be sold easily. Entry can,however, be attained through the organization'sacquisition by large conglomerates.Interpretation of adopted strategic posture andrecommended actions. The co-ordinates of thedirectional vector (2.5; 0.9) as shown in Figure 2,indicate that Organization Ahas successfully adoptedan aggressive posture and is well entrenched in thisindustry segment. The organization exhibits a definitecompetitive advantage which can be protected withfinancial strength. Its superiority in the industry seg-ment can be ascribed to numerous factors, whichinclude superior product innovation and tech-nological research, skilful marketing, excellentcapacity utilization, high and increasing marketshare, and excellent management with a strategicfocus and a healthy financial position. The only criti-

cal factor is that of entry of new competitors in termsof imports and major strategic moves by existing rivalorganizations.At the time of the study, Organization A was fol-

lowing a strategy of overall cost leadership withinthe adopted strategic posture. A strategic planningprocess has allowed it to withstand any problems thathave arisen and has laid the foundation for futuresuccess. Full advantage can be taken of opportunitieswithin the industry segment (concentration) and/or itcan search for acquisition candidates in its own orrelated industries (concentric diversification) or evenfollow a strategy of vertical integration.

Organization BFactors determining environmental sta-bility. The score of - 2.9 obtained for this dimen-sion indicate that Organization B experienced theindustry segment as moderately stable. The critical



9/11

factors which dominate this dimension are low tech-nological changes; high price range of competingproducts; and high barriers to entry into the market.Low technological changes imply that new productinnovations are introduced to the market at mediumterm intervals. Technological research for the specificproduct of Organization B is done abroad, while thefine tuning and development are done locally. Conse-quently, the launching of a new product (fromresearch to introduction to the market) takes approxi-mately two-four years. The sentiment conveyed bythe respondents ofOrganization Bwas that competingproducts in this industry segment vary in price andthat brand choices are made by consumer/dealers pri-marily on performance criteria. Consumers in thisindustry segment reportedly tend to link price criteriawith variables such as product status, when makingtheir final brand choice. High entry barriers can beattributed to high set-up costs and the high costassociated with purchasing technology from abroad.Factors determining industry strength. Anindustry strength score of 4.3 was obtained, oncemore implying that the industry in which the orga-nization functions is relatively stable and attractive.High profit potential, high technological know-how,relatively high resource utilization and difficult entryinto the market are the contributing factors. It wascommonly acknowledged by the respondents that thisparticular industry segment is a very profitable one,but that exit therefrom is very difficult because of thehigh cost associated with 'dead assets'. Exit can beachieved through the acquisition of the organizationby a rival manufacturer.Factors determining competitive advan-tage. A competitive advantage score of - 2.4 wasregistered. The factors contributing to this dimensionscore are relatively high market share, high productquality and a comparatively lower dealer loyalty. Therelatively high market share which Organization Benjoyed can be ascribed to high product quality andto the perception held by local consumers that itsproduct is imported.Factors determining financial strength. Abelow average financial score of 2.4 was recorded forOrganization B. The factors that led to this situationare high capital requirements, moderate cash flow,high risk involved in business and difficult exit fromthe market. The organization attempted to maintain abalanced capital structure between equity and debtfinancing to avoid financial distress costs, whilemaintaining a moderate cash flow. The two factorsthat offset this dimension score are difficult exit fromthe industry and high risk associated with the par-ticular line of business.

557Interpretation of adopted strategic posture andproposed actions. On examining the dimensionscores and vector as shown in Figure 3, it is evidentthat Organization B has adopted a competitive stra-tegic posture in the industry segment. It is possiblethat this organization may be forced into a defensivestrategic position in the future, should the negativeshift not be countered. The aim of the organizationshould possibly be to return to the aggressive strategicposture which it previously held. In doing so, Orga-nization B could follow the generic strategy of dif-ferentiation that is intended to add value to its prod-uct. Such a strategy would require skilful marketingefforts accompanied by product innovation andsuperior product engineering. Alternatively, theorganization could consider following a strategy ofturnaround. A turnaround strategy suggests thatrestructuring of middle management should be anissue high on the organization's agenda. Middle ma-nagement could be made leaner, allowing for minorcost reductions, which could be utilized in a newmarketing effort. Tactics which could also beimplemented include early retirements, 'goldenhandshakes' and retrenchments, if necessary. Topmanagement could start thinking more strategicallyand formulate a clear corporate vision for the orga-nization as a whole and for each of its business units.A skilful marketing effort accompanied by superiorproduct innovation would probably allow Orga-nization B to maintain a high market share and a com-petitive strategic posture and could increase capacityutilization. The business needs to identify a corporateposition within the organization and this, togetherwith management restructuring, could lead tosuccess.Organization CFactors determining environmental sta-bility. The score obtained for environmental stab-ility in the case of Organization Cwas - 2.6. Like theother two organizations, the respondents of Organ-ization C viewed the environment as being mod-erately stable.Factors determining industry strength. Theperception of a relatively strong industry wasreflected by the score of 3.B. The extreme factors withan influence on industry strength were indicated tobe complex technological know-how and high entrybarriers, offset by low industry growth potential.Complex technological know-how was also regardedas one of numerous entry barriers that exist whenfunctioning in this specific industry. Organization C'saffiliation with major internationally based orga-nizations allows it to keep abreast of technologicaladvancement within the industry. Although highcosts are incurred in purchasing technology, it allows



10/11

the organization to maintain its aggressiveness in themarketplace and maintain technological pace withthe increasing threat from imported products.Factors determining competitive advantage.Organization C has a distinct competitive advantagewithin the industry segment as indicated by a scoreof -2.0. Important factors are moderate market share,superior product quality, fixed replacement cycles,relatively high customer loyalty and advanced tech-nological know-how. The launch of a new product,accompanied by an aggressive marketing campaignwas, however, expected to boost the existing mod-erate market share. With the introduction of its newproduct and the elimination of a less successful one,the organization moved into gaining a competitiveadvantage and adopting an aggressive strategicposture. The new product was aimed at achievinga high market share through offering the consumersuperior product quality at competitive prices. Fur-thermore, management at Organization C hoped tomaintain high customer loyalty and take full advan-tage of the international technology available to it.

Factors determining financial strength. A sa-tisfactory financial position was illustrated by a scoreof 3.1. The important factors in this dimension arethe balanced leverage and liquidity, high degree ofdifficulty associated with exit from the market andgood cash flow position. Organization C put a highvalue on maintaining a balanced leverage position toavoid financial distress costs, and on maximizing thetax advantage associated with debt usage, therebyenabling the financing of aggressive ventures whenopportunities arise within the market.

Interpretation of adopted strategic posture andsuggested actions. On interpreting the dimen-sion scores for Organization C and the underlyingfactors influencing them, it is clear that the organ-ization can adopt an aggressive strategic posturewithin the industry segment as shown in Figure 4.This posture was based on its distinct competitiveadvantage and stable financial position. The direc-tional vector co-ordinates of 1.8 and 0.5, however,indicate that the organization is an early adopter andhas not yet settled into this posture. Itpreviously helda defensive strategic posture in the industry segmentdue to the poor performance of one of its products.In the interim Organization C has moved from thedefensive posture through the competitive strategicposture as was evident by the turnaround and con-glomerate strategies followed as reported by therespondents. Organization C's involvement in thegeneric strategy of product differentiation for its newproduct supported this move towards the aggressivestrategic posture.

558The SPACE chart, as shown in Figure 4, indicates

that as an early adopter of an aggressive strategic pos-ture, Organization C could strive to attain the genericstrategy of overall cost leadership. Possible alter-natives are concentric diversification, concentrationand vertical integration. In order to maintain its cur-rent posture, the organization has to ensure highermarket share, establish a distinct competitive advan-tage and a strengthened financial position which canbe achieved by adopting a cost leadership strategy.Organization C has to urgently address the issue ofincreased market share and capacity utilization, asthe increasing threat of imported products may makeit difficult to do so in future.

Concluding RemarksThe case study indicated that the SPACE method asproposed by Rowe e t a 1.1 8 can be used effectively asan aid in rational decision-making in a manufacturingsituation as its four dimensions provide for a more in-depth analysis than is possible with some of the othertwo-dimensional models. A number of caveats, how-ever, exist, namely:o It is not clear exactly how the list of factors con-stituting each ofthe four dimensions was selected.The current list is probably not exhaustive andcould also include factors such as internal capa-bilities.

o When the SPACE method is applied to industriesother than manufacturing, another list of factorsand even dimensions may have to be constructed,paying attention to key success factors, whilebeing careful not to include factors of negligibleimportance.

o It is doubtful that the individual factors in eachdimension are of equal importance. A universalrating or weighting system may overcome thisproblem.

o It is uncertain whether the level of importance ofeach factor will remain unchanged with changesin the environment. Rowe et a1.19 attempted toovercome this problem by proposing the SUPERSPACE and adding two items, i.e., the relativeimportance of each factor and the chance of sus-taining the importance level of the factor. Bymul-tiplying these two items, a combined effect isobtained. Whereas the SPACE method assumesthat the various factors will continue at their cur-rent levels in the future, the SUPER SPACE indi-cates the likelihood of the factors remaining at thesame level.

o A measure of market share of the firm as well as ameasure of industry size may have to be includedto make comparisons more realistic.



11/11

559The findings of the case study in general support

the claims by the developers of the SPACE methodthat it provides a comprehensive approach whichgives managers at all levels of the organization anadditional way of considering the many different fac-tors relevant to proposing a particular strategy. Apartfrom providing managers with another aid in rational

decision-making, the major advantage of the SPACEmethod is that by forcing managers to carefully assesseach factor in the four dimensions, they can moreeffectively examine alternatives and achieve consen-sus. It also helps them to recognize the significance ofeach of the factors needed to maintain a competitiveposture in the industry.

References1. M. E. Porter, Competitive Advantage: Creating and Sustaining Superior Performance, TheFree Press, New York (1985).

2. S. P. Schaars, Marketing Strategy: A Customer-driven Approach, Free Press, New York(1991 ).

3. J. Jeannet and H. D. Hennessey, Global Marketing Strategies, Houghton Miffl in Co.,Boston (1992).

4. J. D. Hunger and T. L. Wheel en, Strategic Management, 4th Edition, Addison-Wesley,Massachusetts (1993).

5. J. H. Barnett and W. D. Wilstead, Strategic Management-Concepts and Cases, PWS-Kent Publishing, Boston (1988).

6. A . A . Thompson (Jr) and A . J. Strickland (III), Strategic Management-Concepts andCases, 9th Edition, Irwin, Chicago (1996).

7. R. G . Dyson, Strategic Planning: Models and Analytical Techniques, John Wiley & Sons,New York (1990).

8. A . J. Rowe, R. D. Mason, K. E. Dickel, R. B. Mann & R. J. Mockler, Strategic Management:A Methodological Approach, 4th Edition, Addison-Wesley, Massachusetts (1994).

9. J. L. Thompson, Strategic Management: Awareness and Change, 3rd Edition, Chapman& Hall, London (1997).10. G. M. Khan and E. A. AI-Buarki, Strategic planning in Bahrain, Management Decision 30(5)

(1992).11. C. Homburg, Strategieformulierung mit hilfe von Space, Zeitschrift fur Planung 1( 1) (1990).12. K. Reese, Strategic Management and Corporate Restructuring, Southern Book, Halfway

House (1994).13. G. J. Hooley and J. Saunders, Competitive Positioning: The Key to Market Success,

Prentice Hall, New York (1993).14. R. Bennet, How is management research carried out? In N. G. Smith and P. Dainty (eds):

The Management Research Handbook, Routledge, London (1991).15. A . J. Rowe et al., op cit. (1994).16. A . J. Rowe et el., op cit. (1994).17. J. L. Thompson, op cit. (1997).18. A . J. Rowe et et., op cit. (1994).19. A . J. Rowe et el., op cit. (1994).


SPACE Matrix English

Documents

Transcript of SPACE Matrix English