Strategic planning is an integral part of a successful company’s operations and processes. It allows organizations to assess their positions within industries and define the steps necessary to solve issues or rise to a higher level. Strategic planning may be performed using different tools, including SPACE, Grand, and QSP matrices. While all three are effective and helpful, the last one is implemented during the final stage of strategic planning.
1. SPACE Matrix
Overall, the SPACE matrix is a specific strategic management tool that companies use to analyze their positions. SPACE stands for the Strategic Position and Action Evaluation, focusing on strategy formulation and especially the improvement of competitiveness. It has four quadrants, each defining the specific temperament of the strategy to choose: competitive, defensive, conservative, and aggressive. Further, the Y-axis top is financial strength, and the bottom is environmental stability, being the factors of the external environment. The right of the X-axis shows industry attractiveness, and the left shows competitive advantage, which are the internal environment criteria. Various factors and sub-factors influence each criterion, and finally, the firm can see the area they need to focus on and the strategy’s position they should choose. The information about this matrix can be rather helpful for firms with multiple factors influencing their environment, and this analysis will allow the company to choose the best strategy and then evaluate the results.
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2. Grand Matrix
The Grand matrix is a relatively recent strategic tool that has been gaining consideration and popularity since 2017. Generally, two dimensions are used within this matrix to look through alternative strategies: competitive position and market growth. Therefore, there are four quadrants, each having a number of the best strategies for a particular situation. For example, if market growth is rapid and the firm’s competitive advantage is high, it can focus on market penetration, product development, or forward and backward integration. In case one of the indicators is low, the company may consider joint ventures or diversification (if market growth is slow) or focus on liquidation or market development (if the firm’s competitiveness is weak). Finally, if both competitiveness and market growth are negative, diversification, differentiation, or cost reduction may help in such a tricky situation. Therefore, this matrix should be chosen if the organization’s purpose is to assess and improve its competitiveness and make choices based on market development.
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3. QSP Matrix
The QSP matrix, standing for Quantitative Strategic Planning, is another useful tool. Basically, it is helpful in distinguishing between the already selected possible strategic options and choosing the most fitting and effective one. This matrix insists that companies need to constantly evaluate their internal and external environments, monitor the advantages and disadvantages of the options, and conduct research. When using the QSP matrix, managers fill out a table, listing and evaluating each selected option’s weaknesses, strengths, threats, and opportunities, finally seeing the best one through calculating attractiveness scores. Overall, this is a great and rather efficient matrix because formulating several options is not as difficult as making the final decision. This strategic planning tool should be used by firms to assess the possible solutions they have selected to then choose the one that will likely provide more effective outcomes.
Read More: Quantitative Strategic Planning (QSP) Matrix