How To Draw A Strategic Group Map

Chapter 3: Evaluating the External Environment

Mapping Strategic Groups

1. Empathise what strategic groups are.
2. Learn 3 means that analyzing strategic groups is useful to organizations.

The analysis of the in an manufacture tin offer important insights to executives. Strategic groups are sets of firms that follow like strategies (Hunt, 1972; Brusque et al., 2007). More than specifically, a strategic group consists of a set of industry competitors that accept similar characteristics to one another but differ in important ways from the members of other groups (Figure iii.25 "Strategic Groups").

Figure 3.25 Strategic Groups [Epitome description]

Understanding the nature of strategic groups within an industry is important for at least iii reasons. Kickoff, emphasizing the members of a firm'due south group is helpful because these firms are usually its closest rivals. When assessing their firms' operation and considering strategic moves, the other members of a group are oft the best referents for executives to consider. In some cases, one or more strategic groups in the manufacture are irrelevant. Subway, for example, does non need to worry well-nigh competing for customers with the likes of The Keg and Earls. This is partly because firms face up : factors that make it unlikely or illogical for a business firm to change strategic groups over time. Because Subway is unlikely to offer a gourmet steak likewise as the experience offered past fine-dining outlets, they can largely ignore the actions taken by firms in that restaurant industry strategic group.

Second, the strategies pursued by firms within other strategic groups highlight alternative paths to success. A firm may be able to infringe an idea from another strategic grouping and use this idea to improve its state of affairs. During the recession of the late 2000s, mid-quality restaurant chains such as Mr. Mikes and Swiss Chalet used a variety of promotions such as coupons and meal combinations to try to attract upkeep-conscious consumers. Firms such as Subway and Quiznos that already offered low-priced meals still had an inherent price advantage over Mr. Mike's and Swiss Chalet;  however, in that location is no tipping expected at the former restaurants, but there is at the latter. It must accept been tempting to executives at Mr. Mike's and Swiss Chalet to attempt to expand their entreatment to upkeep-conscious consumers by experimenting with operating formats that do non involve tipping.

3rd, the analysis of strategic groups tin can reveal gaps in the industry that represent untapped opportunities. Inside the restaurant business, for example, it appears that no national concatenation offers both very loftier-quality meals and a very diverse carte du jour. Perhaps the firm that comes the closest to filling this niche is the Cheesecake Factory, a concatenation of approximately 150 outlets in the Usa and ane location in Canada (Toronto), whose carte du jour includes more than 200 lunch, dinner, and dessert items. The Keg already offers very loftier quality nutrient; its executives could consider moving the firm toward offering a very diverse bill of fare besides. This would involve considerable risk, withal. Perhaps no national chain offers both very high quality meals and a very diverse bill of fare considering doing so is extremely difficult. Nevertheless, examining the strategic groups in an manufacture with an eye toward untapped opportunities offers executives a risk to consider novel ideas.

Examination of the strategic groups in an manufacture provides a house's executives with a better understanding of their closest rivals, reveals culling paths to success, and highlights untapped opportunities.

1. What other colleges and universities are probably in your schoolhouse'south strategic grouping?
2. From what other groups of colleges and universities could your schoolhouse learn? What specific ideas could be borrowed from these groups?

References

Chase, M. S. (1972). Competition in the major dwelling appliance manufacture 1960–1970. (Unpublished doctoral dissertation). Harvard University, Cambridge, MA

Brusk, J. C., Ketchen, D. J., Palmer, T., & Hult, G. T. (2007). Business firm, strategic group, and industry influences on operation. Strategic Management Periodical, 28, 147–167.

Image descriptions

Effigy 3.25 prototype clarification: Strategic Groups.

Strategic groups are sets of firms that follow similar strategies. Understanding the nature of strategic groups within an industry is important in part because the members of a firm'southward group are normally that firm'south closest rivals. Beneath we illustrate several strategic groups in the restaurant manufacture

The perceived quality and breadth of bill of fare of dissimilar restaurants

Breadth of Menu	Low Perceived Quality	Medium Perceived Quality	High Perceived Quality
Small	KFC, New York Fries, Beaver Tails	Tim Horton's, Subway, Quiznos	n/a
Medium	Burger King, White Spot, McDonald's	n/a	The Keg, Earle's, Montana'due south Cookhouse
Large	Denny'southward, iHop	Swiss Chalet, Mr. Mikes, East Side Mario's	n/a

[Render to Effigy 3.25]

Source: https://opentextbc.ca/strategicmanagement/chapter/mapping-strategic-groups/

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