The SPACE matrix assesses a business along four dimensions to find an appropriate strategic thrust and in this article, we’ll look at the SPACE factors for industry attractiveness.
Industry Attractiveness In The SPACE Matrix
According to the creators of the Strategic Position and Action Evaluation Matrix, (Strategic Management – A Methodical Approach”, Rowe, Mason, Dickel, Mann and Mockler. Published by Addison Wesley) the following items should be considered when assessing Industry Attractiveness or Industry Strength:
- Growth potential (low to high)
- Profit potential (low to high)
- Financial stability (low to high)
- Technological know-how (simple to complex)
- Resource utilisation (inefficient to efficient)
- Capital intensity (low to high)
- Ease of entry into the market (easy to difficult)
- Productivity; capacity utilisation (low to high)
- Manufacturer’s bargaining power (low to high)
Industry attractiveness is on the same axis as competitive advantage and a good score is a high score.
Interpreting Industry Attractiveness In The SPACE Matrix To Your Situation
I’d be looking to include some measure for competitive rivalry – although the authors may argue that it is implied in the profit potential – but I’ve seen good industries destroyed by kamikaze competition based on price wars.I’d also want to look at the ability of customers to exercise their bargaining power to squeeze the profits.
Paul Simister is a business strategy coach who helps business owners to differentiate their businesses and develop winning strategies. Get your free copy of my ebook The Six Steps Profit Formula.
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