The Strategic Group Map as an Analytical Tool
We are now in a position to return to a discussion of the strategic group map as an analytical tool. The map is a very useful way to graphically display competition in an industry and to see how industry changes or how trends might affect it. It is a map of “strategy space,” instead of price and volume.
In mapping strategic groups, the few strategic variables used as axes of the map must be selected by the analyst. In doing so, a number of principles will prove useful. First, the best strategic variables to use as axes are those that determine the key mobility barriers in the industry. For example, in soft drinks the key barriers are brand identification and distribution channels, which thus serve as useful axes in a strategic group map. Second, in mapping groups it is important to select as axes variables that do not move together. For example, if all the firms with high product differentiation also have broad product lines, then both these variables should not serve as axes on the map. Rather, variables that reflect the diversity of strata
gig combinations in the industry should be selected. Third, the axes for a map need not be continuous or monotonic variables. For example, the target channels in the chain saw industry are servicing dealers, mass merchandisers, and sellers of private labels. Some firms focus on one of these, whereas some attempt to span the range. Servicing dealers are most distinct from private label in terms of required strategy, and mass merchandisers are somewhere in between. In mapping the industry, it is perhaps most illuminating to array firms as shown in Figure 7-3. Firms are located to reflect their mix of channels. A final principle is that an industry can be mapped several times, using various combinations of strategic dimensions, to help the analyst see the key competitive issues. Mapping is a tool to help diagnose competitive relationships, and there is no necessarily...
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