Are you wondering how to achieve success in business? Are you looking for a way to define your company's strategic position? The SPACE analysis comes in handy, as it allows you to examine the industry in which a given enterprise operates or will operate. Check what to pay attention to!
SPACE analysis: what is it?
This technique takes into account both the external and internal environment. Thanks to this, it allows you to design an effective strategy. When it comes to the external environment, we can distinguish two groups of factors:
- environmental stability (ES): technological change, price range of competing products, demand volatility, inflation, substitute pressure, price elasticity of demand.
- industry attractiveness (IA): bargaining power of producers, complexity of entering the industry, labor productivity, use of resources, financial stability, profit potential, use of production capacity, growth potential.
To assess the indoor environment, the SPACE analysis includes:
- competitive advantage (CA): vertical integration, innovation cycle, product quality, customer loyalty, product life cycle, market share,
- financial strength (FS): liquidity, return on investment, debt ratio, inventory turnover, cash flow, available and required capital.
Each of the factors listed should be assigned a value of 0-6. For competitive advantage and financial strength, the range is from 0 to -6. Said values are given in the corresponding axes of the matrix.
How to stand out from the competition?
To prepare an effective business strategy, you need to know your rivals' strengths and weaknesses. Standing will help you in this competition monitoring. By tracking the market, you can react quickly to changes. Knowing the current trends will help you manage your brand and product. Remember that the competition is awake, so it is worth monitoring their actions on an ongoing basis. The SPACE analysis will also work well in this case.
Are you wondering how to prepare an effective business strategy?
Entrust it to us!
Regardless of whether you have been setting up a business or have been running it for some time, you should run it on a regular basis competition analysis. By drawing conclusions from your research, you can protect yourself against a serious error or failure. Before you introduce a new product, service or brand to the market, analyze your competitors' activities. Compare rivals' offers, their target groups and prices, so you will develop an excellent competitive strategy.