Strategic groups: Strategic groups are conceptually defined clusters of competitors that share similar strategies and therefore compete more directly with each other than other firms in the same industry. It refers to a group of companies who follow the same strategy within a particular industry. It can be from any type of business and depending on the industry, are defined within a dimensional construct.
The term was coined by Michael S. Hunt, a Harvard Professor in his 1972 Doctoral Thesis report. He was studying the appliances industry and discovered ‘sub-groups’ within the industry that showed high competition.
There are some objectives/reasons for the strategic group analysis. These are as follows:
- To provide similar emphasis upon all the fines in the same cluster.
- To take ideas regarding the strategies of all firms in a group.
- To minimizes the costs of analyzing all the firms separately.
- To develop strategy easily and quickly relatively at a lower cost.
- To identify the key points of competition.
- To compare with other strategic groups.