Strategic Position and Action Evaluation (SPACE)

Literature Review

Evidences in both academic publications and the practicing worlds recognize that competition is at the core of the success or failure of any organization. That is, organization develops business strategy in order to compete effectively. Based on the "strategy as positioning" concept, to compete to one's advantage, organization must find a suitable position in the industry.

The SPACE –which is a more objective approach of SWOT analysis –is a valuable method guiding organization to formulate a suitable strategic position in the industry to realistically and effectively make use of both internal and external competitiveness and performance conditions. The internal states are determined by: (1) Competitive advantage, (2) Financial stability, and the external states are determined by (1) Industry strength, and (2) Environmental stability, as shown schematically in Fig. 3.

Fig. 3: The SPACE Analysis Framework

Two notable strategic positions for competitive advantage are widely acknowledged, namely price leadership and product differentiation. For product differentiation, company must attempt to identify unique value which the customers are willing to pay. Companies with unique competitive advantage, in that the companies choose product features strategically in response to existing or anticipated actions of competitors, can allow them to position competitively or advantageously in brand space uniquely. Companies with cost leadership positioning should demonstrate the ability to realize advantages of cost efficiency and acquire the ability to make use of economic profits. The sources of competitive advantage, according to Porter, have to be linked to the activities that pervade the value chain.

In reality, the nature of competitive advantage is beyond cost leadership and differentiation, and could involve product quality, delivery reliability,process flexibility or a host of other factors. In short, competitive advantage demonstrates as anything separating the organization from the others and keeps it alive and growing. Companies need to recognize that competitive advantage can only be developed over long periods of time (i.e.,path dependence), such as in how organization trains its employees, and puts to efficient and effective contributions.

Though SPACE matrix concept has been examined and studied in many places, such as inRadder andLynette, the usage is isolated and independent of other context or variables. If that is so, SPACE usefulness would be very limited, and serves only as SWOT analysis. Thus, this research proposes that employees should be an important basis to contribute to the internal factors of SPACE states of the organization, namely 1) competitive advantage, and 2) financial stability to contribute to the strategy position posture of the organization.

In particular, the following theoretical direction, illustrated in Fig. 4, is assumed and to be empirically assessed:

Fig. 4: Theoretical Framework

Note that this framework, if validated with significant differences, statistically, can be another empirical test and example supporting the validity of the resource-based theory of competitive advantage. The performance measures employees-related and contributed organizational performance, and can be used to serve to track the implementation of the business strategies, and to indicate the effectiveness of the strategic position in the industry.