Introduction
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. The purpose of this paper is to discuss the three matrices and learn how this information can define possible strategies to capitalize and add value to Amazon.
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 (Thongsookularn, 2019). It has four quadrants, each defining the specific temperament of the strategy to choose: competitive, defensive, conservative, and aggressive (George et al., 2019). 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 (Mulder, 2019). 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 (Mulder, 2019). 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.
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 (“Introduction to the grand strategy matrix,” n.d.). 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.
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 (Anh & Tien, 2021). 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 (Anh & Tien, 2021). 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.
Adding Value to Amazon
Amazon is one of the most influential American corporations with a strong competitive advantage and various development opportunities. Considering the SPACE matrix, it is possible to suggest that Amazon chooses and should further choose the aggressive strategy, focusing on competitions with similar businesses and having financial strength (Mulder, 2019). Consequently, Amazon should consider taking certain actions to add value, including offering the lowest prices, increasing the market share, and selling unique products. What is more, it is possible to apply the Grand matrix to the Amazon case, and the company will probably fall into the upper right quadrant, having an advantageous competitive position and rapid market growth. Therefore, Amazon may take into consideration strategies like product development and forward or backward integration (“Introduction to the grand strategy matrix,” n.d.). Finally, the QSP matrix may be used to define the best strategic plan that will provide advantageous outcomes and lead the company to higher success.
Conclusion
To draw a conclusion, one may say that the three matrices discussed in the paper are rather effective, but it is crucial for organizations to choose the best one depending on the situation. When the case is not severe, it is possible to use the Grand matrix because it involves only two factors. In more serious situations, managers should prefer the SPACE matrix to focus on the four criteria and choose the temperament of the action. Finally, when there are several possible solutions, the QSP matrix allows selecting the most appropriate and beneficial one.
References
Anh, D. B. H., & Tien, N. H. (2021). QSPM matrix based strategic organizational diagnosis. A case of Nguyen Hoang Group in Vietnam. International Journal Multidisciplinary Research and Growth Evaluation, 2(4), 67-72.
George, B., Walker, R. M., & Monster, J. (2019). Does strategic planning improve organizational performance? A meta‐analysis. Public Administration Review, 79(6), 810-819.
Introduction to the grand strategy matrix. (n.d.). Lucidity.
Mulder, P. (2019). SPACE analysis. Toolshero.
Thongsookularn, S. (2019). The processes of generating corporate strategic options and selecting strategic alternatives. EAU Heritage Journal Social Science and Humanities, 9(3), 49-62.