Strategic group

The term Strategic group referred to in the business administration, a group of companies within an industry that pursue a similar competitive strategy or a similar organization structure ( eg all suppliers of niche products).

Thanks to these common business a strategic group in a similar manner by external factors ( changes in market conditions, government intervention, etc.) are affected and have similar potential returns.

A strategic group in a market has a homogeneous strategic behavior, which can be checked in the expression of certain strategic dimensions according to Michael Porter. These criteria are:

• Degree of specialization by product line, customer segment, Regional coverage (see competition matrix );
• Brand identification - the extent to which the company preferred brand differentiation from other strategies.
• "Push" Vs. " Pull" - the extent to which the company encourages customers to demand (pull ) or distribution channels for sale stimulates (Push )
• Choice of distribution channel - from its own sales channels to sell by generalists
• Product quality - concerning raw material specifications, allowable tolerances, features etc.
• Technology leadership
• Vertical Integration
• Cost position
• Service
• Pricing policy
• Leverage
• Relationships with parents company
• Relationships with home and host governments

The general rule is that competition within the strategic group is more pronounced than the competition between the different strategic groups. For instance, the competition among discount providers stronger than that between discounters and high-priced providers. The size and number of groups is taken into account. The more groups that exist and the smaller these groups, the lower the intensity of competition overall.

If the industry and its strategic groups analyzed, three basic cases are conceivable: In extreme cases, the entire industry consist of a single strategic group when all companies follow the same strategy within the industry. Here is an analysis of the relevant market would be sufficient. On the other hand, an industry consist of just as many strategic groups as there are companies. Here then would each provider to pursue a different strategy. In this case, a classical competitive analysis should be performed. In the last and far more likely scenario is one of several strategic industry groups, which belong to each company, which follow a similar strategy.

The aim of the concept is to identify in an industry or a market as similar as possible strategic behaviors of providers and to segment the market on this basis. Thus, individual competitors can be identified as a threat or as a potential partner relative to the other competitors. Here, since competitors are analyzed in the relevant market, introduces the concept of the counterpart to the customer's market segmentation dar. To identify strategic groups must first be the cause of the formation of these groups, that is generally the cause of different strategic behavior, be clarified. Here are many reasons imaginable, most often different risk appetite of corporate governance, different starting points, different strengths and weaknesses as well as historical coincidences are called. Based on these reasons, often based on the strategic decisions in the past, can also the dimensions of which are suitable for distinguishing the groups among themselves, are determined. Thus a need variables, which represent the so-called mobility barriers. Mobility barriers are group entry and exit barriers group, ie factors that change the strategic positions and therefore a change from a strategic group to another inhibit. To change to a different strategic group ie mobility barriers must be overcome or eliminated. Depending on the type and height of this barrier, this may be associated with high costs.

Mobility barriers for members of a strategic group of great importance, because they prevent competitors from other groups from becoming direct competitors. They thus represent a " bulwark " against other providers dar. Since high mobility barriers due to this protective action, a bigger profit potential result in the construction of such barriers is therefore an important investment for many businesses. As in groups with higher mobility barriers is greater competition exists, a specific investment in this but also a more damaging than the entrance of a newcomer. In determining strategic groups in the literature many different approaches are discussed, the simplest and therefore most common in practice approach is the multivariate analysis method of cluster analysis. The importance of the concept of strategic groups and mobility barriers for strategic analysis is not to be underestimated. It supports analysis of the competitor in an industry, the analysis of the existing conditions for success for this industry and the analysis of barriers to entry. Important conclusions for strategic decisions of a company can be drawn from both the analysis of the group itself as well as from the analysis of mobility barriers. The possible consequences arising from the concept are obvious: For the identification of strategic groups facilitates the competitive analysis immensely, since they structured and narrows the circle of competitors. In addition, as the assessment of the strategic capabilities of the competition is possible and it can be different strategies within an industry review. The identification of barriers to mobility and their height enables the recognition of profit potentials of the individual groups and facilitates the estimation of the threat of new competitors. However, should not obscure the fact that this concept has some weaknesses all these benefits. Companies could be enticed by the static concept to only the competitors of their own strategic group to analyze and let the potential competition from other groups in mind. It should be noted that the mobility barriers of a dynamic subject and are only temporarily stable group structures. If this momentum is not observed by the companies in the analysis and the focus is restricted to the members of the currently existing group structures, so results can quickly lead to misperceptions. Now now are the relevant competitors a strategic group is assigned, it is at these results to specify and to undergo individual competitors further analysis.

The concept has been studied empirically for numerous industries. An overview is given, inter alia, to at Piepelow.

Social sciences

In the social sciences strategic groups are referred to as social groups, develop strategies for acquiring or securing of tangible and intangible resources. So Strategic groups consist of individuals who are united by a common interest in maintaining or expanding their joint acquisition opportunities. This appropriation opportunities are geared not only to material goods, but can also knowledge, prestige, power, or religious objectives include. Certain groups or organizations develop a long-term program to maintain or improve the mastery opportunities, which is then accepted by the active acting leadership and the members of a strategic group. For communication channels are necessary u.U. also interaction chains that run through the strategic group as a whole. Cohesion of strategic groups does not have to be characterized by intensive interaction, but by acceptance of a joint program of uniform strategies. Differences in rank and status within the strategic group are thereby transferred from the pursuit of common interests.

Swell

• Business Administration
• Management
• Marketing