Strategic group
In business administration, the term strategic group refers to a group of companies within an industry that pursue a similar competitive strategy or have a similar organizational structure (e.g. all providers of niche products).
Due to these similarities, companies in a strategic group are similarly affected by external influencing factors (changes in market conditions , government intervention, etc.) and have similar potential returns .
A strategic group in a market has a homogeneous strategic behavior, which, according to Michael Porter , can be checked in the expression of certain strategic dimensions. These criteria are:
- Degree of specialization according to product range, customer segment, regional coverage (see competitive matrix );
- Brand Identification - the extent to which the company prefers brand differentiation over other strategies.
- "Push" vs. "Pull" - the extent to which the company encourages customers to inquire (pull) or stimulates sales channels to sell (push)
- Choice of the distribution channel - starting with your own distribution channels up to sales by generalists
- Product quality - in terms of raw material, specifications, permissible tolerances, features, etc.
- Technology leadership
- Vertical integration
- Cost item
- service
- Pricing policy
- Leverage
- Relationships with parent companies
- Relations with home and host governments
In general, the competition within the strategic group is more pronounced than the competition between the individual strategic groups. For example, the competition among discount providers is stronger than that between discounters and high-price providers. The size and number of groups must be taken into account. The more groups there are and the smaller these groups are, the lower the overall intensity of competition.
If the industry and its strategic groups are analyzed, three basic cases are conceivable: In the extreme case, the entire industry can only consist of a single strategic group if all companies within the industry follow the same strategy. An analysis of the relevant market would then be sufficient. On the other hand, an industry can consist of as many strategic groups as there are companies. Each provider would then have to pursue a different strategy. In this case, a classic competition analysis would have to be carried out. In the last and far more likely scenario, an industry consists of several strategic groups, each of which includes companies that pursue a similar strategy.
The aim of the concept is to identify strategic behaviors of providers that are as similar as possible in an industry or market and to segment the market on this basis. In this way, individual competitors can be identified as a threat or as potential cooperation partners relative to the other competitors. Since competitors in the relevant market are analyzed here, the concept represents the counterpart to the customer-side market segmentation. In order to identify strategic groups, the cause of the formation of these groups, i.e. generally the cause of different strategic behavior, must be clarified beforehand. Various reasons are conceivable here, the most common being the different risk appetite of the company management, different starting situations, different strengths and weaknesses as well as historical coincidences. On the basis of these reasons, which are often based on strategic decisions in the past, the dimensions that are suitable for separating the groups from one another can then be determined. We are looking for variables that represent so-called mobility barriers. Mobility barriers are group entry and group exit barriers, i.e. factors that inhibit the change of strategic positions and thus a change from one strategic group to another. To change to another strategic group, the mobility barriers must be overcome or dismantled. Depending on the type and height of this barrier, this can be associated with high costs.
Mobility barriers are of great importance to members of a strategic group because they prevent competitors of other groups from becoming direct competitors. They thus represent a "protective wall" against other providers. Since high mobility barriers also result in greater profit potential due to this protective effect, the construction of such barriers is therefore an important investment for many companies. Since there is greater competition in groups with higher mobility barriers, a specific investment in these can also cause greater damage than the entry of a newcomer. When determining strategic groups, many different approaches are discussed in the literature. The simplest and therefore most common procedure in practice is the multivariate analysis method of cluster analysis. The importance of the concept of strategic groups and mobility barriers for strategic analysis should not be underestimated. It supports the analysis of the competitor in an industry, the analysis of the prerequisites for success applicable to this industry and the analysis of the entry barriers. Important conclusions for strategic decisions of a company can be drawn from the analysis of the group itself as well as from the analysis of the mobility barriers. The possible conclusions that result from the concept are obvious: The identification of strategic groups makes the competition analysis much easier, since it structures and delimits the group of competitors. In addition, this enables the strategic capabilities of the competition to be assessed and different strategies within an industry can be assessed. The identification of the mobility barriers and their height enables the recognition of profit potential of the individual groups and facilitates the assessment of the threat posed by new competitors. However, all these advantages should not hide the fact that this concept also has some weaknesses. Companies could be tempted by the static concept to analyze only the competitors of their own strategic group and to ignore the potential competition of other groups. It should be noted that the mobility barriers are subject to a dynamic and so group structures are only temporarily stable. If the company does not take this dynamic into account in the analysis and the focus is limited exclusively to the members of the currently existing group structures, the results can quickly lead to incorrect assessments. If the relevant competitors are now assigned to a strategic group, it is now up to these results to be specified and individual competitors to be subjected to a more detailed analysis.
So far, the concept has been empirically investigated for numerous industries. An overview can be found u. a. at Piepelow.
Social sciences
In the social sciences, strategic groups are called social groupings that develop strategies for appropriating or securing material and immaterial resources. Strategic groups therefore consist of people who are linked by a common interest in maintaining or expanding their common opportunities for appropriation. These opportunities for appropriation are not only directed towards material goods, but can also include knowledge, prestige, power or religious goals. Certain groups or organizations develop a long-term program to maintain or improve the appropriation opportunities, which is then accepted by the active leadership and the members of a strategic group. Communication channels are necessary for this, including U. also chains of interaction that run through the strategic group as a whole. Cohesion of strategic groups does not have to be characterized by intensive interaction, but rather by the acceptance of a common program of uniform strategies. Differences in rank and status within the strategic group are masked by the perception of common interests.
swell
- ^ J. McGee (1985) Strategic Groups: A Bridge between Industry Structure and Strategic Management? , in H. Thomas and D. Gardner (eds.), Strategic Marketing and Management , Chichester, Wiley
- ↑ Michael E. Porter (1980) Competitive Strategy: Techniques for analyzing industries and competitors New York, The Free Press
- ↑ V. Piepelow (1997) The European airlines in competition: Analysis by the concept of strategic groups , Frankfurt / New York, Long