SPACE MATRIX

SPACE Matrix stands for Strategic Position and Action Evaluation

Matrix. it is a Four-Quadrant framework which indicates whether
aggressive, conservative, defensive, or competitive strategies are most
appropriate for a given organization

2nd Quadrant 1st

Quadrant

3rd Quadrant 4th Quadrant

 Most important determinants of an organization’s
overall strategic position

• Two Internal dimensions (financial position [FP] and competitive position

[CP])
• Two External dimensions (stability position [SP] and industry position [IP])

Internal Dimension

2nd Quadrant 1st

Quadrant
External
Dimension

3rd Quadrant 4th Quadrant

• +ve Y-axis: Aggressive
• -ve X-axis: Conservative
• 3rd Quadrant: Defensive
• 4th Quadrant: Competitive

Internal Dimension

2nd Quadrant 1st

Quadrant

3rd Quadrant 4th Quadrant External

Dimension
 FINANCIAL
STRENGTH

Conservative Aggressive

INDUSTRY STRENGTH
COMPETITVE
STRATEGY

Defensive Competitive

ENIVRONMENT STABILITY
 AGGRESSIVE QUADRANT
Aggressive Posture is adopted by the
business that enjoys competitive
advantage and has strong financial
strength, the industry it is working in is
attractive and environment is also stable.

COMPETITIVE
QUADRANT
• Enjoys competitive advantage
• Low financial strength
• Industry is attractive
• Environment is unstable
 DEFENSIVE QUADRANT
• Low financial strength
• Lacks competitive advantage
• Industry is not attractive
• Environment is not stable

CONSERVATIVE
QUADRANT
• Strong financial strength
• Lacks competitive
advantage
• Industry is not attractive
• Environment is not
stable
 Factors that makes up the SPACE
Matrix
INTERNAL STRATEGIC POSITION EXTERNAL STRATEGIC POSITION

FINANCIAL COMPETITIVE ENVIRONMENTAL INDUSTRY

STRENGTH ADVANTAGE STABILITY STRENGTH
Return on Market Share Technological Profit Potential
investment Changes
Leverage Product Quality Rate of Inflation Financial Stability

Liquidity Product Life Cycle Demand Variability Extent Leveraged

Working Capital Customer Loyalty Place range of Resource Utilization

competing products
Cash flow Capacity Utilization Barriers to entry into Ease of entry into
the market market
Inventory Turnover Technological Know- Competitive Productivity,
how Pressure capacity utilization
Earnings per share Control over Ease of Exit from
suppliers and market
distributors
 Example on the basis of
Quadrants
Let’s take a look on telecommunication industry in India.
• Where, reliance Jio adopted aggressive posture and entered into the industry
aggressively to gain greater market share. to do this they adopted strategies such as
market penetration, market development and product development and gained
competitors’ customer by focusing on pricing and distribution.
• Indian railway can be related to competitive posture because no company provides
similar services at such low rate and the company is not earning larger profits from
few years.
• Referring again telecommunication industry we can relate Vodafone in conservative
posture because the company has good financial strength but has limited competitive
advantage and the industry in not attractive.
• In defensive posture company like Telenor india which not had competitive advantage
nor financial strength and the industry is not attractive, hence, the company found it
difficult to survive in the unstable environment and later acquired by Airtel.