SPACE Strategic Position and Action Evaluation - is one of the methods of testing the total development capacity of a company. It facilitates taking decisions in relation to the diversification of the company's business and the evaluation of individual domains.
Procedure of action in this method can be divided into four steps:
- Determination of four dimensions of space, in which manager identifies the position of the company, as well as characterizing them determinants.
- Draw a coordinate system whose axles (+x, -x, +y, -y are respectively: IS, CA, FS, ES).
- Quantify the dimensions and determinants.
- Determine the strategic position of the company.
Determinants of external dimensions: the strength of the sector and the stability of the environment. Determinants of internal dimensions: financial potential and competitive advantage. Details are shown in table 1.
Table 1. Determinants of external and internal dimensions
|External dimensions||Internal dimensions|
|Industry strength IS industry strength)
||Financial potential FS financial strength)
|The stability of the environment ES environmental stability)||Competitive advantage CA- competitive advantage)|
Source: [A. Stabryła 2000, s.362-363]
The coordinate system is built as follows:
- vertical axis (Y) on the side of positive (top)-FS, and negative ES,
- horizontal axis (X) positive side (right)-IS negative, left - CA.
Quarters of the chart represent:
- the first (x+, y+)-aggressive strategy,
- the second (x-, y+)-conservative strategy,
- third-defensive strategy,
- fourth-competitive strategy.
The intensity of the dimensions is estimated according to the selected scale, and for (IS) and (FS) a value of 1 is the lowest rating and 6-the highest. For (CA) and (ES) -6 is the lowest evaluation, and -1 - the highest.
In order to take into account the strength of the impact of variables, you can enter the weight (rank) for each of the variables, and then the weighted rating will be the product of scoring and rank assigned to the variable. It is assumed that the sum of all the weights for one dimension is 1, and the total indicator for the dimension is equal to the sum of the weighted assessments of each variable.
Coordinate value is calculated as the mean value (average) for the sum of points of common dimensions for the given axis. x = f¯(IS) + f¯(CA) y = f¯(FS) + f¯(ES), where m f¯(IS) = SUMA (fi (IS)) / m 1 Other values are calculated using similar equations. Designated point P with coordinates (x, y) shows the strategic position of the company in accordance with manager can pick out the right strategy for a particular company.
In the SPACE method, it is assumed that the weak competitive position of the company could be compensated by the high attractiveness of the industry and vice-versa, while working in the declining industry may be compensated by a high competitive position in the sector. Similarly, a strong finance of companies allow fairly free function even in conditions of high volatility of environment, and stable environment does not require large financial resources.
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