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Strategic Management
Notes SPACE Matrix
The Strategic Position and Action Evaluation (SPACE) matrix is another important technique. It
reveals which of the following strategies is most appropriate for an organisation:
1. Aggressive strategies
2. Conservative strategies
3. Defensive strategies
4. Competitive strategies
Figure 9.9: The SPACE Matrix
Financial Strength
Y-axis
Conservative Aggressive
Competitive X-axis Industry
Advantage Strength
Defensive Competitive
Environment Stability
The axes of the space matrix represent two internal dimensions, namely, financial strength and
competitive advantage and two external dimensions, namely, environmental stability and
industry strengths, as shown in the Figure 9.9.
The directional vector of each profile indicates the type of strategies to pursue: conservative,
aggressive, defensive or competitive.
Aggressive Quadrant
When a firm’s directional vector falls in the “aggressive quadrant” of the matrix. It is in an
excellent position to use its internal strength to:
1. take advantage of external opportunities
2. overcome internal weaknesses
3. avoid or minimize external threats
The firm can adopt any of the aggressive growth strategies like market penetration, market
development, product development, backward and forward integration, horizontal integration,
concentric and conglomerate diversification or a combination strategy.
Conservative Quadrant
When a firm’s directional vector falls in the “conservative quadrant”, it means the firm should
stay close to its core competencies and not take excessive risks. Conservative strategies include
market penetration, market development, product development and concentric diversification.
Defensive Quadrant
When the directional vector falls in the “defensive quadrant”, it suggests that the firm should
focus on rectifying internal weaknesses and external threats, through defensive strategies.
Defensive strategies or retrenchment strategies include turnaround, divestiture, bankruptcy or
liquidation.
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