Strategic

Management

Presented By -
Vineeta Sonone
Roll No. - 47
Strategic Position and ACtion Evaluation

Strategic Management 2
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• Internal dimensions
• Financial Strength (FS)
• Competitive Advantage (CA)

• External dimensions
• Environmental Stability (ES)
• Industry Strength (IS)

Strategic Management 3
 FS
Financial Strength
Financial Strength
o Return on Sales
o Return on Assets
o Cash Flow
o Gearing
o Working Capital Intensity
CA IS
Competitive Advantage Industry Strength Competitive Advantage
o Market Share
o Quality
o Customer Loyalty
o Cost Levels
o Product Range
X axis (Blue line) ES
Y axis (Pink line) Environmental Stability
Environment Stability
o Political Uncertainty
o Interest Rates
o Technology
o Cyclical
o Environmental Issues
Industry Strength
o Growth Potential
o Life Cycle Stage
o Entry Barriers
o Customer Power
o Substitutes
4
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Aggressive
The Aggressive posture in the SPACE Analysis
Matrix occurs when all the dimensions are positive.
The implicit strategy is to aggressively grow the
business raising the stakes for all competitors. The
main danger is complacency.
Conservative
The Conservative posture arises when the firm is
financially strong but is unlikely to make significant
returns from the business. The strategy is to look
for diversification opportunities in more attractive
competitive situations.

Strategic Management 5
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Defensive
The Defensive posture in the SPACE matrix
occurs when all the dimensions are scored poorly.
Firms in this position are very weak and heading
for failure unless the external environment
becomes more favorable. The firm will need to
retreat from all but its strongest segments so that it
can concentrate its limited resources on a
turnaround.
Competitive
The Competitive posture arises when a firm has
strong advantages in an attractive industry but its
financial strength is insufficient to compensate for
environmental instability. The immediate strategy
is to improve its financial strength (raising capital,
improving profitability, merging with a cash rich
parent) whilst maintaining its competitive position.

Strategic Management 6
 FS
Financial Strength
X axis
Y axis

Conservative Aggressive

CA IS
Competitive Advantage Industry Strength

Defensive Competitive

7
ES
Environmental Stability
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Strategic Management 8
 Step 1 - Choose a set of variables to be used to gauge the competitive advantage (CA),
industry strength (IS), environmental stability (ES), and financial strength (FS).

Step 2 - Rate individual factors using rating system specific to each dimension. Rate
competitive advantage (CA) and environmental stability (ES) using rating scale from -6
(worst) to -1 (best). Rate industry strength (IS) and financial strength (FS) using rating scale
from +1 (worst) to +6 (best).

Step 3 - Find the average scores for competitive advantage (CA), industry strength (IS),
environmental stability (ES), and financial strength (FS).

Step 4 - Plot values from step 3 for each dimension on the SPACE matrix on the appropriate
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Maecenas porttitor (IS) dimensions. This will be your final point on axis X on the SPACE matrix.
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posuere, magna sed Step 6 - Add the average score for the SPACE matrix environmental stability (ES) and
financial strength (FS) dimensions to find your final point on the axis Y.
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Step 7 - Find intersection of your X and Y points. Draw a line from the center of the SPACE
matrix to your point. This line reveals the type of strategy the company should pursue.

Strategic Management 9
10
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30% 25% 20%

Category Title Category Title Category Title

10% 10% 5%
Category Title Category Title Category Title

Strategic Management 11
 Aggressive Profile and Conservative Profile

Strategic Management 12
 Competitive Profile and Defensive Profile

Strategic Management 13
Strategic Management 14
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