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STRATEGIC GROUP IN

THE INDUSTRY

BY-ANKITA SRIVASTAVARITIKA SRIVASTAVA

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Definition:

A strategic group is a group of firms in an industry

following the same or similar strategy.

EXAMPLE - For example restaurant industry.

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STRATEGIC GROUP MAPPING

Firms in same strategic group have two ormore competitive characteristics in common.

Have comparable product line breadth Sell in same price/quality range Emphasize same distribution channels Use same product attributes to appeal to

similar types of buyers

Use identical technological approaches Offer buyers similar services Cover same geographic areas

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Procedure for Constructing aStrategic Group Map

STEP 1: Identify competitive characteristicsthat differentiate firms in an industry from

one another STEP 2: Plot firms on a two-variable mapusing pairs of these differentiatingcharacteristics

STEP 3: Assign firms that fall in about the

same strategy space to same strategic group STEP 4: Draw circles around each group,

making circles proportional to size of groupsrespective share of total industry sales.

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Competitor analysis

Sizing up strategies and competitive strengths andweaknesses of rivals involves assessing.

Which rival has the best strategy?

Which rivals appear to have weak strategies? Which firms are poised to gain market share,

and which ones seen destined to lose ground? Which rivals are likely to rank among the

industry leaders five years from now?

Do any up-and-coming rivals have strategies andthe resources to overtake the current industryleader?

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Identifying strategic groups:

Identify principal strategic variables which distinguish firms. Forexample , single product Vs product family, private labeling Vsbranded products, push Vs pull marketing, etc.

Choose variables that produces the greatest contrast between

firms, usually the CSFs. Do not use correlated variable. Sometimes it is useful to being grouping firms before selecting

strategic variables. Position each firm in relation to these variables Analyzing the attractiveness of each group by performing a five

force on each group

Identify the mobility barriers that inhibit movement of firmsbetween strategic groups

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Value of strategic groups as ananalytical tool

Identify barriers to mobility that protect agroup from attacks by other groups.

For instance if the Identify groups whose

competitive position may be marginal ortenuous Chart the future direction of firmsstrategies Thinking through the implicationsof each industry trend for the strategic groupas a whole

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LIMITATIONS:

Industries or landscapes are neither createdequal nor stay equal. The concept of extendedcompetition provides a comprehensiveframework for assessing structural attractiveness

A firms strategy can increase or decrease itsexposure to competitive forces Other thingsbeing equal, a firm should seek to trigger actionsthat improve structural attractiveness But it isntenough to look at just structural attractiveness:

competitive position must also be considered

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THANK YOU