A properly designed business management plan should determine a company’s competitiveness in its sector and, on that basis, its strategic position. This is essential to survive in a challenging business environment and to further develop the company. Another method that helps in decision-making processes and looking for opportunities is the SPACE analysis. How does it work? Let’s find out!
SPACE is an acronym that stands for Strategic Position and Action Evaluation. External factors (environmental stability and industry attractiveness) and internal factors (competitive advantage and financial strength) are responsible for the company’s specific position.
The above technique is most often used to evaluate strategic plans, processes, and can also complement a SWOT analysis or BCG matrix.
The SPACE strategic analysis uses a matrix that shows the areas influencing the company. There are four of them, to which you can assign sample indicators:
A certain number of points are assigned to each of the mentioned areas – environmental stability and competitive advantage can get a score between -6 and 0, where the lower the score, the weaker the company’s position. As for the industry attractiveness and financial strength – they receive a score between 0 and 6, where a higher score means a stronger position. Then, an average score for IS, ES, CA, and FS is calculated. The individual quadrants indicate a type of strategy the company should use to improve its market position. They are also referred to as postures.
After moving the received data to the matrix, we can choose a type of strategy that will bring the most benefits to the company at the moment and what actions we need to take.
Typically, such a posture is adopted by financially stable businesses operating in sustainable markets. It’s worth focusing on advantages within the organization, while avoiding excessive confrontation with competitors, so as not to jeopardize the company’s position. In order to increase market share, it’s advisable to:
It applies to companies in a stable industry that choose to compete with other players. It is an advantageous position that allows them to use their strengths and opportunities to contribute to the company’s growth. Their strategy should include:
Representatives of this tactic have weaker clout in a fiercely competitive environment. They must take appropriate steps to protect themselves from worsening their position and falling. Sample solutions may include:
A strategy that can be used by entrepreneurs operating in an attractive sector, however, without financial strength. For this reason, it is necessary to:
The SPACE analysis is a useful tool for entrepreneurs and executives to make decisions. Thanks to a holistic approach, where both external and internal factors are taken into account, it is possible to take the right direction for future actions.
Read also: What is a strategic analysis?
If you like our content, join our busy bees community on Facebook, Twitter, LinkedIn, Instagram, YouTube, Pinterest, TikTok.
Author: Andy Nichols
A problem solver with 5 different degrees and endless reserves of motivation. This makes him a perfect Business Owner & Manager. When searching for employees and partners, openness and curiosity of the world are qualities he values the most.
Pinterest, which made its debut on the social media scene a decade ago, never gained…
Thinking carefully on a question of how to promote a startup will allow you to…
A podcast in marketing still seems to be a little underrated. But it changes. It…
Video marketing for small business is an excellent strategy of internet marketing. The art of…
Are you wondering how to promote a startup business? We present crowdfunding platforms and websites…
How to use social media to increase sales? Well, let's start like that. Over 2.3…