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Strategic group mapping

This document discusses strategic group mapping, which is a technique used to analyze a firm's competitive position within its industry. It involves identifying the key competitive factors that distinguish strategic groups, plotting representative firms on a two-dimensional map based on these factors, and using a third variable like market share to depict group size. Strategic group mapping helps identify a firm's direct competitors, potential partners, and opportunities to move between groups. While useful for competition analysis, it provides a static view that does not account for industry disruption through innovation.

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Submitted to: Submitted by Ms Sanjna Walia Harleen Kaur Head, PG. Deptt of Commerce M.com 3rd (sem) Kamla Nehru College for Women, Phagwara.
A strategic group is a concept used in strategic Management that groups companies within an industry that have similar business models or similar combinations of strategies. For example, the restaurant industry can be divided into several strategic groups including fast-food and fine-dining based on variables such as preparation time, pricing, and presentation
Strategic group mapping is a technique for looking at your position in your sector, field or market. It is tool for competition analysis Strategic group map help to define the scope of firm`s competitors
PROCESS
STEP 2 – IDENTIFY YOUR TWO KEY VARIABLES Map the firm on two variable grid using different strategic dimensions and these dimensions should not be highly correlated . The competitive factors should be expressed in a low to high range with measurable variables. for example variable can be technology quality , safety features ,better services , price etc Quality Product line Breadth
IDENTIFY THE THIRD VARIABLE Put the firm that fall in about the same space in same strategic group . Draw the circles around each strategic group. The circles should be proportional to market share, income level or any other kind of dimensions. For example luxury car are put in one group like Audi and BMW.
You’ll need to objectively plot the points on the map. First locate X, then Y, then place the appropriately sized circle or figure. Use the third variable as a key measure of competitive advantage, and demonstrate how the first two variables help explain why there is variance in performance among the competitors in a group.
EXAMPLE OF SGM Price/Quality L o w H i g h Dealer network High Audi BMW Tata jaguar Maruti Ford Hyund ai Honda & toyota Nis sa n
Assess the overall map. Identify the variance . Your map should of kind that reveals a firm`s competitive position. In summary, your map should have at least a little, if not a lot, of ‘gap!’ in it. That is, when you share your map with the client, the client should gain true insight into why the firm is in a strong or weak competitive position in the industry.
 To identify who your direct and indirect competitors (or possible partners) are  It can illustrate how easy it might be to move from one strategic group to another  Moreover, sgm may also help account for difference among firm`s profitability with an industry.  It may help identify future opportunities or strategic problems
 The mapping process help the firm in indentify its close rivals.  Different strategic groups offer to buyer different value propositions .  the strategies pursued by firms within other strategic groups highlight alternative paths to success. A firm may be able to borrow an idea from another strategic group and use this idea to improve its situation.
 This model is static and ignore the role of innovation  This focus is on industry and group structures rather than individual companies  Successful innovation creates change in industry structure and altering the competitive environment
 The influence of Porter´s Five Forces loses importance as strategic groups can have very different characteristics within an industry (e.g. big businesses have a much higher bargaining power with their suppliers when compared to small businesses, as they have a much higher quantity of orders).
....... The concept of strategic groups is more focused on the competition within a group. In these strategic groups decisive competition takes place, as the competition with other groups is of minor importance. For example luxury restaurants do not compete with fast food chains, tough they both belong to the same sector.
REFERENCES http://mbalectures.com/management/strategic- management/1000/strategic-group mapping.html Google Books www.wikipedia.org www.scribd.com wweb.uta.edu http://2012books.lardbucket.org www.strategy-train.eu drfaisalmgt703.files.wordpress.com