Map of strategic groups
Strategic group is a collection of companies of the sector, which carry a similar competitive strategy. This strategy can be determined by key factors of success. These factors are common to a particular industry (such as specialization, brand, distribution channels, product quality, technical leadership, vertical integration, service, price, etc.) although they occur in individual enterprises in a different form. Strategic group map is a tool for the analysis of competition in the sector, and thus allows to observe the relationships that occur in groups and between them. [A.Stabryła 2000, s.158].
Stages of design
Creating a map managers should perform following steps:
- Choose determinants (strategic dimensions) that are essential for particular sector, and in the same time can be used for differentiation.
- Choose a pair of such factors that best differentiate the analyzed companies in the industry.
- Apply selected features on the coordinate axes X and Y.
- Place the businesses in the matrix using chosen characteristics.
- Mark the circles showing the company closest to each other. These points are the strategic groups.
To be more precise analysis can use plotted logos (square, rectangle), which illustrates the most competitive area, an area where used a combination of strategies is most effective. You should also plot the lines representing the mobility barrier that determines firms located close to the most efficient combination of strategy and those that must modify their strategies if they want to increase their competitiveness.
Rules of preparing
In order to effectively study the sector managers must follow a few rules during the construction of maps:
- Strategic dimensions should not be closely correlated.
- Strategic dimensions should set obstacles to mobility within the industry.
- Dimensions should be measurable.
Besides, it is also recommended to make several maps based on various factors, as well as periodical repetition of plotting maps based on the same factors, in order to observe the dynamics of change in the industry.
- Reger, R. K., & Huff, A. S. (1993). Strategic groups: A cognitive perspective. Strategic Management Journal, 14(2), 103-123.