Himani’s organization was a strong player in the fast-food industry. For years it dominated the market due to its diverse menu and attractive deals. With more organizations stepping in, she needed to keep track of her rivals to maintain position. Himani looked at a strategic group mapping example to understand their rivals’ positions in the industry. She realized they’d benefit from strategy group mapping to stay ahead and gain benefits.
Strategy group mapping is essential to analyze the competitive structure of an industry. A strategic group is a group of organizations that have similar approaches and market positions. Executives can use a strategic group mapping example to gain important insights about rivals in the market.
What Is Strategic Group Mapping?
Strategic group mapping is a method to display the position that rival organizations hold in a competitive industry. In a strategic group mapping example, variables such as price, product-line breadth or area of operations are represented. Strategic group maps are visual representations of the industry that aid in decision making. It’s constructed in the form of a graph, by assigning variables to each axis. Strategic group map analysis reveals the competitive nature of the strategic groups in the industry.
Purpose Of Strategy Group Mapping
It’s important to answer “what is strategic group mapping?”, and understand its purpose. An organization may use it to analyze a rival’s position. They may also use it to identify areas for improving their own systems. Strategic group mapping example can help organizations in the following ways:
- They can better identify barriers to entry and exit
- It can help decide which strategic group an organization should consider entering
- It helps identify strategic areas that can help gain benefits
- It shows the organization’s position in the industry compared to its competitors
- It identifies the best organizations in the industry
- It pinpoints industry rivals
Strategy group mapping allows an organization to deal with the threat of competition as well as use it for its own development.
Strategic Group Map Analysis
We’ve looked at how strategic group map analysis is used to analyze the rivalry and competitive environment among competitors in an industry. Here’s how it helps in dealing with competition:
- It helps in shaping the moves of an organization by identifying the strategic direction of direct rivals in the industry
- It helps an organization find alternate paths or solutions by identifying strategies used by organizations of other strategic groups
- It helps in discovering untapped opportunities in the market by identifying areas with little or no competition.
Now that we know how strategy group mapping can help, let’s look at how it’s done.
How To Construct Strategic Group Maps
Strategy group mapping is the most effective method for analyzing strategic groups and their positions in the market. Here are the ways to construct a strategic group map:
Identify Main Competitors
It’s important to thoroughly analyze the competitors by looking into their objectives, future strategies, products and services, weaknesses, strengths and their impact on the market. Create a competitor’s profile for main competitors to refer to in the future.
Identify Strategic Characteristics
Organizations in the same strategic group can be differentiated based on characteristics such as company size, cost position, brand image, product quality, product diversity and price policy.
Plot The Organizations On The Graph
State the two variables of the axes on the map and assign a position to each organization. The closest organizations will belong to the same strategic group. The size of a group will depend on market share. Plot similar maps using different variables.
Interpret The Map
An analysis will reveal the direct rivals and their positions. Interpreting the map will help improve strategies as well as identify other positions in the market that can provide a competitive advantage.
Strategy group mapping helps create, implement and monitor strategies of an organization. It helps understand the competitive landscape of an industry and develop suitable strategies to attract customers away from the competitors.
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