# MGT603 VU Assignment No 2 Spring 2012 Solution

THE CASE
Umer fabric is a textile company working in Faisalabad since 2008.It is vertically integrated unit covering complete range of operations from spinning to retailing. Umer fabric offers a wide range of products and is capable of producing more than 70 million meters of fabric per annum into garments. Since its inception they are working on the same principles without taking any innovation in their products. Due to huge competition in the market, company CEO
(Mr. Ahmed) observed a major decline in market share and low market growth for his products. He appointed you as a “strategic analyst” for this purpose to analyze the company’s strategic position in the market.
Following are the key indicators of his company’s position.
Internal Strategic Position
Financial Strength (FS) = + 4
Competitive Advantage (CA) = – 4.5
External Strategic Position
Industry Strength (IS) = + 1.5
Environmental Stability (ES) = – 2.0
The Requirement:
· Being a strategic analyst draw a space matrix according to the company’s strategic position and
discuss possible reasons of lying in specific quadrant. (15 marks)
Solution:
The SPACE matrix is constructed by plotting calculated values for the competitive advantage (CA) and industry strength (IS) dimensions on the X axis. The Y axis is based on the environmental stability (ES) and financial strength (FS) dimensions. The SPACE matrix can be created using the following seven steps:
Step 1: Choose a set of variables to be used to gauge the competitive advantage (CA), industry strength (IS), environmental stability (ES), and financial strength (FS).
Step 2: Rate individual factors using rating system specific to each dimension. Rate competitive advantage (CA) and environmental stability (ES) using rating scale from -6 (worst) to -1 (best). Rate industry strength (IS) and financial strength (FS) using rating scale from +1 (worst) to +6 (best).
Step 3: Find the average scores for competitive advantage (CA), industry strength (IS), environmental stability (ES), and financial strength (FS).
Step 4: Plot values from step 3 for each dimension on the SPACE matrix on the appropriate axis.
Step 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.
Step 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.
Step 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.

· Suggest most appropriate strategies to the company according to the selected quadrant for
improving its strategic position. (15 marks)