Strategic Groups Analysis

Strategic Group Analysis

  1. List Relevant Companies:

    Use the content from earnings call transcripts, industry reports, analyst reports, and executive interviews to identify a list of companies that operate in your business landscape. Make sure to understand and confirm how these companies relate to yours. Comparing business models, horizontal/vertical integration, product markets and geographic presence often provides a good start.

  2. Identify Key Dimensions:
    • Identify the key dimensions that differentiate firms within your company’s industry.
    • Consider factors such as product/service quality, pricing policies, distribution channels, market segmentation, technological leadership, brand image, degree of vertical and horizontal integration, and geographic scope.
  3. Map Strategic Groups:
    • Create a strategic group map to visually represent the competitive landscape.
    • Select two key dimensions and plot the firms in the industry on the map.
    • Group firms that are located close to each other on the map into strategic groups.
    • See the topic page and activity page for more information and relevant examples.
  4. Analyze Competitive Dynamics:
    • Analyze the competitive dynamics within and between strategic groups.
    • Consider how the different groups compete with each other and how their strategies might evolve.
  5. Integrate Insights:
    • Combine the insights from your Five Forces, PESTLE, and Strategic Group analyses to develop a holistic understanding of the external environment.
    • Consider how the different forces and factors interact and influence each other.
    • Helpful Hints:
      1. The impact of five forces and PESTLE factors on a company often varies depending on the strategic group to which it belongs.
      2. Develop a good sense of your companies customers and suppliers. Don’t overlook the role of key stakeholders such as employees, communities, and regulators as suppliers.
      3. Consider how the external environment might affect your company’s opportunities, threats, and strategic choices.
      4. Reframe the insights from customers’ willingness-to-pay and suppliers’ opportunity cost perspective.

Conclusion

By completing this lesson, you have conducted a comprehensive external analysis of your chosen company’s industry. You have applied the three core frameworks—Five Forces, PESTLE, and Strategic Group Analysis—to gain a deeper understanding of the competitive landscape and its potential impact on your company.

Remember, external analysis is an essential foundation for strategic decision-making. By understanding the external forces at play, you can develop more effective strategies that position your company for success.