SPACE MATRIX:

INTERNAL STRATEGIC POSITION EXTERNAL STRATEGIC POSITION

COMPETITIVE ADVANTAGE (CA) INDUSTRY STRENGTH (IS)

Product life cycle -4 Financial stability 5

Market share -1 Growth potential 5

Product quality -2 Profit potential 5

Customer loyalty -3 Productivity 5

AVERAGE -2.5 AVERAGE 5

TOTAL X-AXIS SCORE 2.5

FINANCIAL STRENGTH (FS) ENVIORMENTAL STABILITY (ES)

Return on investment 5 Inflation rate -4

Liquidity 5 Demand variability -4

Leverage 4 Price range of competing products -2

Cash flow 6 Barriers to entry -2

AVERAGE 5 AVERAGE -3

TOTAL Y-AXIS SCORE 2

SPACE MATRIX:

1. Given the following information, develop a SPACE Matrix for the HP:
 FS = +5; ES = -3; CA = -2.5; IS = +5.

The directional vector of the SPACE Matrix lies in the upper right quadrant, indicating
that Aggressive -type strategies are most appropriate.

Financial Strength: 5
Competitive Advantage: -2.5
Environmental Stability: -3
Industry Strength: 5

Directional Vector Coordinates:

X-axis:(-2.5) + 5 = 2.5;
Y-axis: 5+ (-3) = 2

Conservative 2.5 Aggressive

2
Defensive Competitive

So HP’s strategy selected my Space matrix is Aggressive which are these following:

Aggressive:

1. Backward, Forward, Horizontal Integration

2. Market Penetration

3. Market Development

4. Product development

5. Diversification (Related or unrelated)

The Internal-External (IE) Matrix:

 The IFE total Weighted Score
Strong Average Weak

3.0 to 4.0 2.0 to 2.99 1.0 to 1.99

(IFE) 2.68
3 2 1
4
I II III

3
IV V VI
(EFE) 2.87

The EFE Total

Weighted
Score
2 VII VIII IX

V = Hold and Maintain

The directional vector of HP’s IE Matrix lies in the V quadrant, indicating that Hold and
Maintain-type strategies are most appropriate. So HP should adopt Following strategies.

1. Market Penetration

2. Product development