The document discusses various strategic planning matrices used to evaluate a firm's internal strengths and weaknesses and external opportunities and threats. It describes the SWOT analysis, TOWS matrix, and SPACE matrix. The TOWS matrix involves matching a firm's internal strengths and weaknesses with external opportunities and threats to develop four types of strategies - SO, WO, ST, and WT. The SPACE matrix uses financial strength, competitive advantage, environmental stability, and industry strength factors to determine an appropriate aggressive, conservative, defensive, or competitive strategy.

1. General Environment

2. SWOT Analysis
Strengths
Weakness
Opportunities
Threats

3. General Environment
TOWS Matrix
Threats
Opportunities
Strengths
Weaknesses

4. TOWS Matrix
Develop four types of strategies
– Strengths-Opportunities (SO)
– Weaknesses-Opportunities (WO)
– Strengths-Threats (ST)
– Weaknesses-Threats (WT)

5. SO Strategies
Threats
Opportunities
Weaknesses
Strengths
(TOWS)
SO
Strategies
Use a firm’s
internal
strengths to take
advantage of
external
opportunities

6. WO Strategies
Threats
Opportunities
Weaknesses
Strengths
(TOWS)
WO
Strategies
Improving
internal
weaknesses by
taking
advantage of
external
opportunities

7. ST Strategies
Threats
Opportunities
Weaknesses
Strengths
(TOWS)
ST
Strategies
Using firm’s
strengths to
avoid or reduce
the impact of
external threats.

8. WT Strategies
Threats
Opportunities
Weaknesses
Strengths
(TOWS)
WT
Strategies
Defensive
tactics aimed at
reducing internal
weaknesses
and avoiding
environmental
threats.

9. TOWS Matrix
Steps in developing the TOWS Matrix
1.
2.
3.
4.
List the firm’s key external opportunities
List the firm’s key external threats
List the firm’s key internal strengths
List the firm’s key internal weaknesses

10. TOWS Matrix
Developing the TOWS Matrix
5.
6.
7.
8.
Match internal strengths with external opportunities
and record the resultant SO Strategies
Match internal weaknesses with external
opportunities and record the resultant WO Strategies
Match internal strengths with external threats and
record the resultant ST Strategies
Match internal weaknesses with external threats and
record the resultant WT Strategies

11. TOWS Matrix
StrengthsS
WeaknessesW
List Strengths
List Weaknesses
SO Strategies
WO Strategies
Use strengths to take
advantage of opportunities
Overcome weaknesses
by taking advantage of
opportunities
Threats-T
ST Strategies
WT Strategies
List Threats
Use strengths to avoid
threats
Minimize weaknesses and
avoid threats
Opportunitie
s-O
List Opportunities

12. SPACE Matrix
Strategic Position and Action Evaluation Matrix


Four quadrant framework
Determines appropriate strategies




Aggressive
Conservative
Defensive
Competitive

13. SPACE Matrix
Two Internal Dimensions


Financial Strength [FS]
Competitive Advantage [CA]
Two External Dimensions


Environmental Stability [ES]
Industry Strength [IS]

14. SPACE Matrix
Overall Strategic position determined by:
–
–
–
–
Financial Strength [FS]
Competitive Advantage [CA]
Environmental Stability [ES]
Industry Strength [IS]

15. SPACE Matrix
Developing the SPACE Matrix:
•
•
•
•
•
•
EFE Matrix
IFE Matrix
Financial Strength
Competitive Advantage
Environmental Stability
Industry Strength

16. SPACE Matrix
•
•
•
Select variables to define FS, CA, ES,
& IS
Assign numerical ranking from +1
(worst) to +6 (best) for FS and IS;
Assign numerical ranking from –1
(best) to –6 (worst) for ES and CA.
Compute average score for FS, CA,
ES, & IS

17. SPACE Matrix
•
•
•
Plot the average scores on the Matrix
Add the two scores on the x-axis and
plot point on X. Add the scores on the
y-axis and plot Y. Plot the intersection
of the new xy point.
Draw a directional vector from origin
through the new intersection point.

18. SPACE Factors
Internal Strategic Position
External Strategic Position
Financial Strength (FS)
Environmental Stability (ES)
Return on investment
Leverage
Liquidity
Working capital
Cash flow
Ease of exit from market
Risk involved in business
Technological changes
Rate of inflation
Demand variability
Price range of competing products
Barriers to entry
Competitive pressure
Price elasticity of demand

19. SPACE Factors
Internal Strategic Position
External Strategic Position
Competitive Advantage CA
Industry Strength (IS)
Market share
Product quality
Product life cycle
Customer loyalty
Competition’s capacity utilization
Technological know-how
Control over suppliers & distributors
Growth potential
Profit potential
Financial stability
Technological know-how
Resource utilization
Capital intensify
Ease of entry into market
Productivity, capacity utilization

20. SPACE Matrix
FS
Conservative
Aggressive
+6
+5
+4
+3
+2
+1
CA
IS
-6
-5
-4
-3
-2
-1
+1
-1
+2 +3
+4
+5
+6
-2
-3
-4
-5
Defensive
-6
ES
Competitive