Strategic Groups and Strategic Space (session 4, unit 2)

Today I have been...

Reading about Strategic Groups and Strategic Space (u2s4, p49)

Why?

Required Reading

So What?

Definition: Strategic Group - cluster of firms within an industry following the same or similar strategy.

EG. Porsche & Mazda - same industry but different strategic groups as they do not compete directly with each other. Members of the same group are not equally capable and so there will be differing levels of performance within those groups (Toyota vs Rover, for example).

Porter (1979) said firms in a strategic group have similar:-

• cost structures
• degrees of product diversification
• formal organisation
• resource profiles

Cool & Schendel add that the groups must be aligned to markets served and resources committed in pursuit of those markets. (scope of activity and resources committed in pursuit of scope).

Effectively, membership of the group rests on configuration of resources common to members. These configurations act as mobility barriers, similar to entry barriers, limiting entry into the group or movement between groups. They do this by retarding imitation.

Height of these barriers is determined by the extent in tangible and intangible assets, and ability to copy competitors.


How will I use it?

Bear in mind while I read case study.