Strategic Analysis: SWOT & SPACE Matrices
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Questions and Answers

What type of strategy uses a firm's strengths to take advantage of external opportunities?

  • SO Strategies (correct)
  • WT Strategies
  • WO Strategies
  • ST Strategies

    • Which strategy is aimed at improving internal weaknesses by leveraging external opportunities?

  • SO Strategies
  • ST Strategies
  • WT Strategies
  • WO Strategies (correct)

    • What do ST strategies primarily focus on?

  • Mitigating external threats using internal strengths (correct)
  • Developing new markets for products
  • Transforming weaknesses into strengths
  • Exploiting internal strengths to create innovations

    • Which of the following best describes WT strategies?

    <p>Defensive tactics aimed at reducing weaknesses and avoiding threats</p> Signup and view all the answers

    If a company is facing external threats and has internal weaknesses, which strategy should it prioritize?

    <p>WT Strategies</p> Signup and view all the answers

    Which position is indicated as 'Aggressive' in the SPACE Matrix?

    <p>Market development</p> Signup and view all the answers

    What does the 'FP' in the SPACE Matrix represent?

    <p>Financial position</p> Signup and view all the answers

    Which strategy is classified under the 'Defensive' category in the SPACE Matrix?

    <p>Liquidation</p> Signup and view all the answers

    What does 'IP' stand for in the SPACE Matrix?

    <p>Industry position</p> Signup and view all the answers

    Which of the following is NOT a type of strategy under the 'Aggressive' classification?

    <p>Liquidation</p> Signup and view all the answers

    Which strategy involves reducing the scale of operations?

    <p>Divestiture</p> Signup and view all the answers

    In the SPACE Matrix, which of the following is classified under related diversification?

    <p>Horizontal integration</p> Signup and view all the answers

    Which of the following strategies is typically associated with the 'Conservative' position in the SPACE Matrix?

    <p>Market development</p> Signup and view all the answers

    What is the primary focus of backward integration?

    <p>Expanding a company's role to fulfill tasks of businesses up the supply chain</p> Signup and view all the answers

    Which of the following definitions best describes horizontal integration?

    <p>Acquiring businesses that operate at the same level in the value chain within the same industry</p> Signup and view all the answers

    In the SPACE Matrix, what does aggressive strategies include?

    <p>Backward, forward, horizontal integration and market penetration</p> Signup and view all the answers

    Which type of integration involves acquiring businesses that provide goods or services downstream in the supply chain?

    <p>Forward integration</p> Signup and view all the answers

    What does the directional vector in the SPACE Matrix indicate?

    <p>Strategic options for the organization.</p> Signup and view all the answers

    What is one of the common strategies mentioned in the SPACE Matrix for defensive positioning?

    <p>Liquidation</p> Signup and view all the answers

    Which quadrant's position in the SPACE Matrix suggests an aggressive strategy?

    <p>The top-right quadrant.</p> Signup and view all the answers

    Which of the following is NOT a type of integration mentioned?

    <p>Lateral integration</p> Signup and view all the answers

    What should be plotted on the x-axis of the SPACE Matrix?

    <p>The sum of FP and CP scores.</p> Signup and view all the answers

    Which integration strategy focuses on creating competitive advantages by aligning similarly positioned companies?

    <p>Horizontal integration</p> Signup and view all the answers

    What does market development in the context of the SPACE Matrix refer to?

    <p>Entering new markets with existing products</p> Signup and view all the answers

    Which of the following best describes a conservative strategy profile?

    <p>High financial strength in a declining industry.</p> Signup and view all the answers

    What is the significance of the resultant point on the SPACE Matrix?

    <p>It indicates the overall strategic direction for the organization.</p> Signup and view all the answers

    What profile is characterized by competing fairly in an unstable industry?

    <p>Competitive strategy profile.</p> Signup and view all the answers

    How are the average scores for FP and CP combined in the SPACE Matrix?

    <p>They are added for a resultant coordinate.</p> Signup and view all the answers

    What type of organization is indicated by major competitive advantages in a high-growth industry?

    <p>Aggressive strategy profile.</p> Signup and view all the answers

    What does SP in the SPACE Matrix refer to?

    <p>Stability position based on profit volatility</p> Signup and view all the answers

    How are financial position (FP) and industry position (IP) values rated in the SPACE Matrix?

    <p>From +1 (worst) to +7 (best)</p> Signup and view all the answers

    What numerical range is used for stability position (SP) and competitive position (CP) in the SPACE Matrix?

    <p>-1 (best) to -7 (worst)</p> Signup and view all the answers

    Which step is NOT part of developing the SPACE Matrix?

    <p>Conduct market surveys for industry trends</p> Signup and view all the answers

    How should the average score for financial position (FP) be calculated?

    <p>Sum variable ratings and divide by the number of variables</p> Signup and view all the answers

    Which factors are considered when assessing the stability position (SP)?

    <p>Technological advances and seasonal shifts</p> Signup and view all the answers

    When comparing organizations in the SPACE Matrix, which dimensions are compared to competitors?

    <p>Financial position (FP) and competitive position (CP)</p> Signup and view all the answers

    What is the best approach for determining the competitive position (CP) in the SPACE Matrix?

    <p>Compare with industry leaders</p> Signup and view all the answers

    Study Notes

    SWOT Matrix

    • Aims to identify internal strengths and weaknesses and external opportunities and threats
    • SO strategies use strengths to take advantage of opportunities.
    • WO strategies use opportunities to improve weaknesses.
    • ST strategies use strengths to avoid threats.
    • WT strategies are defensive tactics that reduce weaknesses and avoid threats.

    SPACE Matrix

    • Helps determine the strategic position of an organization based on financial position, competitive position, stability position, and industry position.
    • Used to formulate alternative strategies for an organization.
    • Four quadrants represent different strategic options based on the company's position: Aggressive, Conservative, Competitive, and Defensive.
    • Can be used to determine strategic options based on a company’s strategy, from aggressive to defensive.

    SPACE Matrix Variables

    • FP (Financial Position): Evaluates a company's financial strength, including profitability, liquidity, leverage, and cash flow.
    • CP (Competitive Position): Gauges a company's market share, brand recognition, customer loyalty, and competitive advantages.
    • SP (Stability Position): Assesses the stability of the industry and the external environment, including factors like political, economic, social, technological, environmental, and legal (PESTEL) changes.
    • IP (Industry Position): Analyzes the growth potential and attractiveness of the industry, including factors like market size, competition, and barriers to entry.

    SPACE Matrix Development

    • Select variables for each dimension
    • Assign numerical values to each variable ranging from +1 (worst) to +7 (best) for FP and IP, and –1 (best) to –7 (worst) for SP and CP.
    • Calculate average scores for FP, CP, SP, and IP
    • Plot the average scores on a two-dimensional graph.
    • Draw a directional vector from the origin of the graph through the intersection of the average score lines.
    • The vector's location in a quadrant suggests appropriate strategies.

    Integration Strategies

    • Forward Integration: Gaining control over operations and processes closer to the customer.
    • Backward Integration: Moving further back in the value chain to control raw materials, suppliers, or manufacturing processes.
    • Horizontal Integration: Expanding operations within the same industry to gain market share, eliminate competitors, or expand into new geographical markets.

    Strategic Options with SPACE Matrix

    • Aggressive Strategy: Used by companies with strong financial and competitive positions in a growing and stable industry.
    • Conservative Strategy: Used by companies with financial strength in a stable but non-growing industry.
    • Competitive Strategy: Used by companies with a strong competitive position but facing challenges in a volatile industry.
    • Defensive Strategy: Used by companies with a weak financial and competitive position in a shrinking or unstable industry.

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    Related Documents

    EIM2301 Engineering Management Lecture 03 PDF

    Description

    Test your knowledge on the SWOT and SPACE matrices, essential tools for strategic analysis. This quiz covers internal and external assessment methods, including strategies for leveraging opportunities and strengths. Challenge yourself and enhance your understanding of strategic planning!

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