The competition between firms within a strategic group is:
Strategic Groups in Business Show
You do not currently have access to this article LoginPlease login to access the full content. SubscribeAccess to the full content requires a subscription journal article Exploring the Linkage between Strategic Groups and Competitive StrategyInternational Studies of Management & Organization Vol. 18, No. 1, Strategic Management Research: I. Strategy Content: Firm, Industry and International Environments (Spring, 1988) , pp. 6-25 (20 pages) Published By: Taylor & Francis, Ltd. https://www.jstor.org/stable/40397085 This is a preview. Log in to get access Journal Information International Studies of Management & Organization publishes original research articles from around the world on significant topics in the field of management and organization theory. Issues of the journal are thematic. Each issue is planned and introduced by a specialist guest-editor with particular expertise on the subject. Publisher Information Building on two centuries' experience, Taylor & Francis has grown rapidlyover the last two decades to become a leading international academic publisher.The Group publishes over 800 journals and over 1,800 new books each year, coveringa wide variety of subject areas and incorporating the journal imprints of Routledge,Carfax, Spon Press, Psychology Press, Martin Dunitz, and Taylor & Francis.Taylor & Francis is fully committed to the publication and dissemination of scholarly information of the highest quality, and today this remains the primary goal. Rights & Usage This item is part of a JSTOR
Collection. Chapter 3: Evaluating the External Environment
The analysis of the in an industry can offer important insights to executives. Strategic groups are sets of firms that follow similar strategies (Hunt, 1972; Short et al., 2007). More specifically, a strategic group consists of a set of industry competitors that have similar characteristics to one another but differ in important ways from the members of other groups (Figure 3.25 “Strategic Groups”). Figure 3.25 Strategic Groups [Image description]Understanding the nature of strategic groups within an industry is important for at least three reasons. First, emphasizing the members of a firm’s group is helpful because these firms are usually its closest rivals. When assessing their firms’ performance and considering strategic moves, the other members of a group are often the best referents for executives to consider. In some cases, one or more strategic groups in the industry are irrelevant. Subway, for example, does not need to worry about competing for customers with the likes of The Keg and Earls. This is partly because firms confront : factors that make it unlikely or illogical for a firm to change strategic groups over time. Because Subway is unlikely to offer a gourmet steak as well as the experience offered by 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 borrow an idea from another strategic group and use this idea to improve its situation. 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 budget-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, there is no tipping expected at the former restaurants, but there is at the latter. It must have been tempting to executives at Mr. Mike’s and Swiss Chalet to try to expand their appeal to budget-conscious consumers by experimenting with operating formats that do not involve tipping. Third, the analysis of strategic groups can reveal gaps in the industry that represent untapped opportunities. Within the restaurant business, for example, it appears that no national chain offers both very high-quality meals and a very diverse menu. Perhaps the firm that comes the closest to filling this niche is the Cheesecake Factory, a chain of approximately 150 outlets in the United States and one location in Canada (Toronto), whose menu includes more than 200 lunch, dinner, and dessert items. The Keg already offers very high quality food; its executives could consider moving the firm toward offering a very diverse menu as well. This would involve considerable risk, however. Perhaps no national chain offers both very high quality meals and a very diverse menu because doing so is extremely difficult. Nevertheless, examining the strategic groups in an industry with an eye toward untapped opportunities offers executives a chance to consider novel ideas. Examination of the strategic groups in an industry provides a firm’s executives with a better understanding of their closest rivals, reveals alternative paths to success, and highlights untapped opportunities.
ReferencesHunt, M. S. (1972). Competition in the major home appliance industry 1960–1970. (Unpublished doctoral dissertation). Harvard University, Cambridge, MA Short, J. C., Ketchen, D. J., Palmer, T., & Hult, G. T. (2007). Firm, strategic group, and industry influences on performance. Strategic Management Journal, 28, 147–167. Image descriptionsFigure 3.25 image description: 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’s group are usually that firm’s closest rivals. Below we illustrate several strategic groups in the restaurant industry The perceived quality and breadth of menu of different restaurants
[Return to Figure 3.25] What is a strategic group of competitors?A strategic group consists of those rival firms with similar competitive approaches and positions in the market. The identification of strategic groups within an industry enables the competitive structure of the industry to be redefined to compare strategies of various competitors for similarities and differences.
What is competitive in strategic management?In other words, competitive strategy means to define how the firm intends to create and maintain a competitive advantage with respect to competitors. Holding a competitive advantage over competitors means to be more profitable than competitors over the long term.
What is a competitive strategy quizlet?Corporate strategy is concerned with the firm's choice of business, markets and activities. Competitive strategy is concerned with the firm's position relative to its competitors in the market. Porter (1979)
What is a strategic group quizlet?A strategic group is a group of firms within an industry that generally follow the same (or a similar) strategy, competing along the same strategic dimensions (such as product quality, pricing policy, distribution channels, or level of customer service).
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