A strategic group is a concept used in strategic management that groups companies within an industry that have similar business models or similar combinations of strategies. Michael Porter: “A strategic group is the group of firms in an industry following the same or a similar strategy along the strategic dimensions”. The implication is that firms in a strategic group compete by adopting similar strategies and resources, leading to segmentation of an industry into clearly distinguishable strategic parts. The number of groups within an industry and their composition depends on the dimensions used to define the groups. Two dimensional grid is usually used to position firms along an industry's two most important dimensions in order to distinguish direct rivals (those with similar strategies or business models) from indirect rivals. Strategy is the direction and scope of an organization over the long term which achieves advantages for the organization while business model refers to how the firm will generate revenues or make money.
These asymmetrical strategic groups can cause the industry to have more rapid innovation, lower prices, higher quality and lower profitability than traditional economic models would predict
Michael Porter (1980) developed the concept and applied it within his overall system of strategic analysis. He explained strategic groups in terms of what he called "mobility barriers". These are similar to the entry barriers that exist in industries, except they apply to groups