What is a strategic group?

The strategic group includes businesses in one industry that work with similar models. For example, one group may include a number of software providers who charge users access similar programs from their website. They sell similar products, offer similar prices and use similar models of marketing and services. Other factors such as geographical location and branding can place businesses in the same strategic group. Business managers use group analysis to monitor the behavior of competitors and finding opportunities for expansion.

businesses that are classified in the same strategic group are often competitors. In other words, these businesses are likely to compete for the same customer base. The price and quality of their goods and services and demography of their clients can be similar.

Managers must monitor the behavior of competition. When a competing enterprise reduces product prices, the manager can also decide to reduce prices and change marketing strategies. GrAfyilustration of strategic groups can act as valuable tools for a manager who wants to know who his business is competing with. Understanding which services are provided to by which demography the manager can discover unsaturated markets. This can provide instructions for business models and strategies regarding prices and marketing.

Analysis

The group also allows managers to find out when new companies enter the groups with which they are aligned. When a new enterprise enters the market, the manager usually has to restore marketing campaigns. Can introduce a new product or new price models.

For many managers, the analysis of the strategic group is an essential part of strategic management processes. Important strategic questions, such as whether the thrust is feasible or whether there is a demand for a product, can be answered using this type of analysis.

Some commercial analysts believe that understanding his statusIn a strategic group, it can allow a more efficient long -term strategy. At the same time, many experts believe that groups can act as obstacles to new businesses that want to spread. The profitability tends to be low for new companies in groups that are already introduced.

Ideally, a new company might want to enter industry by offering original grouping. The company could contain an unusual combination of price, quality and service model. This could allow business to avoid shading established businesses in a similar group.