SPACE

MATRIX

Steps to Develop a
Space Matrix
1. Select a set of variables to define Financial Position (FP),
Competitive Position (CP), Stability Position (SP), and
Industry Position (IP)

2. Rate FP and IP dimensions using rating scale from +1 (worst) to7

(best) and for SP and IP using rating scale from -1 (best) to -7
(worst). For FP and CP axes, make comparison to COMPETITORS.
On IP and SP, make comparison to OTHER INDUSTRIES.

3. Find the average scores for competitive advantage (CA),

industry strength (IS), environmental stability (ES),
andfinancial strength (FS).

4. Plot values from step 3 for each dimension on the

SPACE matrix on the appropriate axis.
5. Add the average score for the competitive advantage (CA)
and industry strength (IS) dimensions. This will be your final
point on axis X on the SPACE matrix.
6. Add the average score for the SPACE matrix environmental
stability (ES) and financial strength (FS) dimensions to find
your final point on the axis Y.
7. Find intersection of your X and Y points. Draw a line from the
center of the SPACE matrix to your point. This line reveals
the type of strategy the company should pursue.

Example of Strategy
Profile

Excellent position to
use internal strength:
1. Take advantage of
external
opportunities
2. Overcome Internal
Weaknesses
3. Avoid or minimize
external threats

Strategies
Market Penetration
Market Development
Product Development
Backward Integration
Forward Integration
Horizontal Integration
Diversification

Example of Strategy
Profile
Strategies
Market Penetration
Market Development
Product Development
Related Diversification
Staying close to the
firms competencies
and not taking
excessive risks

Example of Strategy
Profile

Strategies
Market Penetration
Market Development
Product Development
Backward Integration
Forward Integration
Horizontal Integration

Example of Strategy
Profile
Strategies
Retrenchment
Divestiture
Liquidation
Related Diversification
Focus on rectifying
internal weakness and
avoiding externa
threats

Steps to Develop a
Krispy Kreme
Space Matrix
Kreme Doughnut (KKD) Corp. has offered delicious
donuts and coffee since 1937. Krispy Kremes Hot
Light stores can be found In approx. 649 locations
in 20 countries.
The companys mission is To touch and enhance
lives through the joy that is Krispy Kreme,
and its vision is To be the worldwide leader in
sharing delicious tastes and creating joyful
memories.

SPACE Matrix for Krispy

Kreme
Internal Analysis
Financial Position (FP)
ROI

External Analysis
Stability Position

Inflation
-2

Technological Changes
-6

Leverage
Liquidity
2
Working Capital
1
Cash Flow
2
Average

Price Elasticity of
Demand
-3
Competitive Pressure
-7
Barriers to entry into
Market
-4
Average

2
Competitive Position (CP)
Market Share
-7

-4.4
Industry Position (IP)
Growth Potential
6

KKD is in a precarious defensive position,

struggling to compete against Dunkin
Donuts, Starbucks, and Tim Hortons.