Strategic Group Mapping

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Strategic Group Mapping is a valuable analytical tool used in strategic management to identify competitive positioning within an industry. It involves grouping companies based on similar strategic characteristics, such as market segment, product quality, pricing strategy, distribution channels, and geographic scope.

Understanding Strategic Group Mapping

  1. Definition: Strategic Group Mapping is a technique that identifies groups of companies within an industry that pursue similar strategies. These groups, known as strategic groups, share common competitive characteristics and face similar opportunities and threats in the marketplace.
  2. Purpose: The primary purpose of Strategic Group Mapping is to provide insights into the competitive dynamics of an industry by identifying key strategic dimensions along which companies compete. It helps firms understand their competitive positioning relative to other players and identify potential areas for strategic advantage.
  3. Methodology: Strategic Group Mapping typically involves two steps: identifying relevant strategic dimensions and plotting competitors on a graphical map based on these dimensions. Common strategic dimensions include price range, product features, distribution channels, geographic scope, and customer segments.

Principles of Strategic Group Mapping

  1. Competitive Convergence and Divergence: Strategic Group Mapping highlights the degree of competitive convergence or divergence within an industry. Companies within the same strategic group tend to compete more directly with each other, while those in different groups pursue distinct strategic paths.
  2. Strategic Positioning: Strategic Group Mapping helps firms understand their strategic positioning relative to competitors. By identifying strategic groups and their characteristics, companies can assess their competitive strengths and weaknesses and formulate effective strategies to gain a competitive edge.
  3. Industry Structure Analysis: Strategic Group Mapping provides insights into the overall structure of an industry by revealing patterns of competition and differentiation. It helps firms identify industry trends, assess competitive intensity, and anticipate strategic moves by competitors.

Methodologies of Strategic Group Mapping

  1. Identifying Strategic Dimensions: The first step in Strategic Group Mapping involves identifying relevant strategic dimensions that define competition within an industry. These dimensions may vary depending on the nature of the industry but often include factors such as product attributes, market segments, and competitive strategies.
  2. Plotting Competitors on a Map: Once strategic dimensions are identified, competitors are plotted on a graphical map based on these dimensions. Each axis of the map represents a different strategic dimension, allowing firms to visualize the competitive landscape and identify strategic groups.
  3. Analyzing Strategic Groups: After plotting competitors on the map, firms analyze the resulting strategic groups to understand their competitive dynamics. This analysis helps firms identify potential threats and opportunities, assess the intensity of competition, and formulate effective strategies.

Applications of Strategic Group Mapping

  1. Competitive Analysis: Strategic Group Mapping helps firms conduct competitive analysis by identifying direct competitors and assessing their strengths and weaknesses. It provides insights into competitive positioning and helps firms develop strategies to differentiate themselves in the marketplace.
  2. Strategic Planning: Strategic Group Mapping informs strategic planning by helping firms identify strategic gaps and opportunities within their industry. It guides decision-making regarding product development, market expansion, pricing strategy, and competitive positioning.
  3. Mergers and Acquisitions: Strategic Group Mapping is used in mergers and acquisitions to assess the strategic fit between potential partners. It helps firms identify complementary strengths and weaknesses and evaluate the potential impact of a merger or acquisition on the competitive landscape.

Real-World Examples

  1. Automotive Industry: In the automotive industry, Strategic Group Mapping can be used to identify strategic groups based on factors such as vehicle type (e.g., luxury, economy) and target market (e.g., consumer, commercial). This analysis helps firms understand their competitive positioning and formulate marketing and product strategies accordingly.
  2. Soft Drink Industry: In the soft drink industry, Strategic Group Mapping can reveal strategic groups based on product attributes (e.g., carbonated vs. non-carbonated, regular vs. diet) and target market (e.g., youth, health-conscious consumers). This analysis helps firms identify competitive threats and opportunities and adjust their product portfolios accordingly.
  3. Technology Industry: In the technology industry, Strategic Group Mapping can identify strategic groups based on factors such as product innovation, pricing strategy, and target market (e.g., enterprise vs. consumer). This analysis helps firms understand competitive dynamics and make strategic decisions regarding product development, partnerships, and market expansion.

Conclusion

Strategic Group Mapping is a valuable tool for analyzing competitive dynamics within an industry by identifying groups of companies that pursue similar strategies. By understanding the principles, methodologies, and applications of Strategic Group Mapping, firms can gain insights into their competitive positioning, assess industry trends, and formulate effective strategies to gain a competitive advantage.

Related FrameworkDescriptionWhen to Apply
SWOT Analysis– SWOT Analysis is a strategic planning tool used to identify the internal Strengths and Weaknesses of an organization and the external Opportunities and Threats it faces. – In SWOT analysis, strengths and weaknesses are typically internal factors such as resources, capabilities, or processes, while opportunities and threats are external factors such as market trends, competition, or regulatory changes. – SWOT analysis helps organizations assess their current position, understand the external environment, and develop strategies to leverage strengths, mitigate weaknesses, capitalize on opportunities, and mitigate threats.– When assessing the internal strengths and weaknesses of an organization and analyzing the external opportunities and threats it faces. – SWOT analysis helps organizations identify strategic priorities, develop action plans, and make informed decisions by aligning internal capabilities with external opportunities and challenges.
PESTEL Analysis– PESTEL Analysis examines the Political, Economic, Social, Technological, Environmental, and Legal factors that may impact an organization’s strategic decisions and operations. – PESTEL analysis helps organizations understand the broader macro-environmental forces shaping their industry, markets, and operating environment. – By analyzing PESTEL factors, organizations can anticipate changes, identify opportunities, and mitigate risks associated with regulatory changes, economic trends, societal shifts, technological advancements, environmental concerns, and legal requirements.– When analyzing the external macro-environmental factors that may impact an organization’s strategic decisions and operations. – PESTEL analysis helps organizations identify emerging trends, anticipate changes, and adapt their strategies to capitalize on opportunities and mitigate risks associated with political, economic, social, technological, environmental, and legal factors.
Balanced Scorecard (BSC)– The Balanced Scorecard (BSC) is a strategic performance management framework that translates an organization’s vision and strategy into a set of balanced performance measures across four perspectives: Financial, Customer, Internal Business Processes, and Learning and Growth. – The BSC helps organizations align strategic objectives with key performance indicators (KPIs) and initiatives, providing a comprehensive view of performance across multiple dimensions. – By using the BSC, organizations can monitor progress, track performance, and adjust strategies to achieve their long-term vision and objectives.– When translating an organization’s vision and strategy into actionable objectives, key performance indicators (KPIs), and initiatives. – The Balanced Scorecard (BSC) provides a structured framework for strategic planning and performance management, enabling organizations to align their activities with strategic objectives, monitor progress, and measure success across financial, customer, internal processes, and learning and growth perspectives.
Porter’s Five Forces– Porter’s Five Forces is a framework for analyzing the competitive dynamics and attractiveness of an industry based on five key factors: the threat of new entrants, the bargaining power of buyers, the bargaining power of suppliers, the threat of substitute products or services, and the intensity of competitive rivalry. – Porter’s Five Forces analysis helps organizations understand the competitive forces shaping their industry structure, profitability, and strategic positioning. – By assessing these forces, organizations can identify competitive threats, assess market attractiveness, and develop strategies to enhance their competitive advantage.– When analyzing the competitive dynamics and attractiveness of an industry and assessing competitive threats and market opportunities. – Porter’s Five Forces analysis helps organizations understand industry structure, competitive forces, and strategic positioning, enabling them to develop effective strategies to enhance their competitive advantage and profitability.
Scenario Planning– Scenario Planning is a strategic foresight technique used to explore alternative future scenarios and their implications for an organization’s strategy and decision-making. – In scenario planning, multiple plausible futures are developed based on different assumptions, trends, and uncertainties. – By considering various scenarios, organizations can anticipate changes, identify risks and opportunities, and develop flexible strategies that are robust across different possible futures.– When exploring alternative future scenarios and assessing their implications for an organization’s strategy and decision-making. – Scenario planning helps organizations anticipate changes, identify risks and opportunities, and develop flexible strategies that are resilient across different possible futures.
Ansoff Matrix– The Ansoff Matrix is a strategic planning tool used to analyze growth strategies based on market penetration, market development, product development, and diversification. – The Ansoff Matrix helps organizations assess the risks and opportunities associated with different growth strategies and select the most appropriate approach based on their objectives and capabilities. – By using the Ansoff Matrix, organizations can expand their market presence, diversify their product portfolio, and capitalize on growth opportunities in existing and new markets.– When analyzing growth strategies and assessing the risks and opportunities associated with market penetration, market development, product development, and diversification. – The Ansoff Matrix provides a structured framework for evaluating growth opportunities and selecting appropriate strategies to expand market presence, diversify product offerings, and drive organizational growth.
Blue Ocean Strategy– Blue Ocean Strategy is a strategic planning approach that focuses on creating uncontested market space by innovating and redefining industry boundaries. – In blue ocean strategy, organizations seek to differentiate themselves from competitors by offering unique value propositions that appeal to non-customers or create new demand. – By pursuing blue ocean strategies, organizations can create new market opportunities, unlock growth potential, and achieve sustainable competitive advantage.– When seeking to create uncontested market space, unlock growth potential, and achieve sustainable competitive advantage through innovation and value creation. – Blue Ocean Strategy offers a systematic approach for organizations to identify new market opportunities, differentiate themselves from competitors, and drive innovation and growth by creating unique value propositions that resonate with customers and non-customers alike.
Resource-Based View (RBV)– The Resource-Based View (RBV) is a strategic management framework that emphasizes the role of internal resources and capabilities in achieving sustainable competitive advantage. – RBV suggests that organizations can gain a competitive edge by leveraging unique, valuable, rare, and non-substitutable resources and capabilities. – By analyzing their resource portfolio, organizations can identify strategic assets, strengths, and weaknesses and develop strategies to enhance resource utilization, build core competencies, and sustain competitive advantage over time.– When assessing an organization’s internal resources and capabilities and identifying sources of sustainable competitive advantage. – The Resource-Based View (RBV) provides insights into how organizations can leverage their unique assets, strengths, and capabilities to gain a competitive edge and sustain superior performance in the long term.
Value Chain Analysis– Value Chain Analysis is a strategic management tool used to analyze the activities and processes that create value for customers and contribute to an organization’s competitive advantage. – In value chain analysis, activities are categorized into primary activities (such as inbound logistics, operations, marketing, and service) and support activities (such as procurement, technology, human resources, and infrastructure). – By analyzing the value chain, organizations can identify opportunities to optimize operations, reduce costs, and enhance value creation at each stage of the value creation process.– When analyzing the activities and processes that create value for customers and assessing opportunities to optimize operations and enhance value creation. – Value Chain Analysis helps organizations understand their competitive advantage by identifying key activities and processes that contribute to value creation, enabling them to optimize their operations, reduce costs, and improve overall performance.
Strategic Group Mapping– Strategic Group Mapping is a strategic management technique used to visualize the competitive landscape of an industry based on similarities and differences in strategic positioning among firms. – In strategic group mapping, organizations are clustered into strategic groups based on common characteristics such as target market, product offerings, pricing strategies, and distribution channels. – By identifying strategic groups, organizations can understand competitive dynamics, benchmark their performance, and develop strategies to differentiate themselves from competitors within their strategic group or target new market segments.– When visualizing the competitive landscape of an industry and identifying strategic groups based on similarities and differences in strategic positioning among firms. – Strategic Group Mapping helps organizations understand competitive dynamics, benchmark performance, and develop differentiation strategies to gain a competitive edge within their strategic group or target new market segments effectively.

Read Next: Porter’s Five Forces, PESTEL Analysis, SWOT, Porter’s Diamond Model, Ansoff, Technology Adoption Curve, TOWS, SOAR, Balanced Scorecard, OKR, Agile Methodology, Value Proposition, VTDF Framework.

Connected Strategy Frameworks

ADKAR Model

adkar-model
The ADKAR model is a management tool designed to assist employees and businesses in transitioning through organizational change. To maximize the chances of employees embracing change, the ADKAR model was developed by author and engineer Jeff Hiatt in 2003. The model seeks to guide people through the change process and importantly, ensure that people do not revert to habitual ways of operating after some time has passed.

Ansoff Matrix

ansoff-matrix
You can use the Ansoff Matrix as a strategic framework to understand what growth strategy is more suited based on the market context. Developed by mathematician and business manager Igor Ansoff, it assumes a growth strategy can be derived from whether the market is new or existing, and whether the product is new or existing.

Business Model Canvas

business-model-canvas
The business model canvas is a framework proposed by Alexander Osterwalder and Yves Pigneur in Busines Model Generation enabling the design of business models through nine building blocks comprising: key partners, key activities, value propositions, customer relationships, customer segments, critical resources, channels, cost structure, and revenue streams.

Lean Startup Canvas

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The lean startup canvas is an adaptation by Ash Maurya of the business model canvas by Alexander Osterwalder, which adds a layer that focuses on problems, solutions, key metrics, unfair advantage based, and a unique value proposition. Thus, starting from mastering the problem rather than the solution.

Blitzscaling Canvas

blitzscaling-business-model-innovation-canvas
The Blitzscaling business model canvas is a model based on the concept of Blitzscaling, which is a particular process of massive growth under uncertainty, and that prioritizes speed over efficiency and focuses on market domination to create a first-scaler advantage in a scenario of uncertainty.

Blue Ocean Strategy

blue-ocean-strategy
A blue ocean is a strategy where the boundaries of existing markets are redefined, and new uncontested markets are created. At its core, there is value innovation, for which uncontested markets are created, where competition is made irrelevant. And the cost-value trade-off is broken. Thus, companies following a blue ocean strategy offer much more value at a lower cost for the end customers.

Business Analysis Framework

business-analysis
Business analysis is a research discipline that helps driving change within an organization by identifying the key elements and processes that drive value. Business analysis can also be used in Identifying new business opportunities or how to take advantage of existing business opportunities to grow your business in the marketplace.

BCG Matrix

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In the 1970s, Bruce D. Henderson, founder of the Boston Consulting Group, came up with The Product Portfolio (aka BCG Matrix, or Growth-share Matrix), which would look at a successful business product portfolio based on potential growth and market shares. It divided products into four main categories: cash cows, pets (dogs), question marks, and stars.

Balanced Scorecard

balanced-scorecard
First proposed by accounting academic Robert Kaplan, the balanced scorecard is a management system that allows an organization to focus on big-picture strategic goals. The four perspectives of the balanced scorecard include financial, customer, business process, and organizational capacity. From there, according to the balanced scorecard, it’s possible to have a holistic view of the business.

Blue Ocean Strategy 

blue-ocean-strategy
A blue ocean is a strategy where the boundaries of existing markets are redefined, and new uncontested markets are created. At its core, there is value innovation, for which uncontested markets are created, where competition is made irrelevant. And the cost-value trade-off is broken. Thus, companies following a blue ocean strategy offer much more value at a lower cost for the end customers.

GAP Analysis

gap-analysis
A gap analysis helps an organization assess its alignment with strategic objectives to determine whether the current execution is in line with the company’s mission and long-term vision. Gap analyses then help reach a target performance by assisting organizations to use their resources better. A good gap analysis is a powerful tool to improve execution.

GE McKinsey Model

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The GE McKinsey Matrix was developed in the 1970s after General Electric asked its consultant McKinsey to develop a portfolio management model. This matrix is a strategy tool that provides guidance on how a corporation should prioritize its investments among its business units, leading to three possible scenarios: invest, protect, harvest, and divest.

McKinsey 7-S Model

mckinsey-7-s-model
The McKinsey 7-S Model was developed in the late 1970s by Robert Waterman and Thomas Peters, who were consultants at McKinsey & Company. Waterman and Peters created seven key internal elements that inform a business of how well positioned it is to achieve its goals, based on three hard elements and four soft elements.

McKinsey’s Seven Degrees

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McKinsey’s Seven Degrees of Freedom for Growth is a strategy tool. Developed by partners at McKinsey and Company, the tool helps businesses understand which opportunities will contribute to expansion, and therefore it helps to prioritize those initiatives.

McKinsey Horizon Model

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The McKinsey Horizon Model helps a business focus on innovation and growth. The model is a strategy framework divided into three broad categories, otherwise known as horizons. Thus, the framework is sometimes referred to as McKinsey’s Three Horizons of Growth.

Porter’s Five Forces

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Porter’s Five Forces is a model that helps organizations to gain a better understanding of their industries and competition. Published for the first time by Professor Michael Porter in his book “Competitive Strategy” in the 1980s. The model breaks down industries and markets by analyzing them through five forces.

Porter’s Generic Strategies

competitive-advantage
According to Michael Porter, a competitive advantage, in a given industry could be pursued in two key ways: low cost (cost leadership), or differentiation. A third generic strategy is focus. According to Porter a failure to do so would end up stuck in the middle scenario, where the company will not retain a long-term competitive advantage.

Porter’s Value Chain Model

porters-value-chain-model
In his 1985 book Competitive Advantage, Porter explains that a value chain is a collection of processes that a company performs to create value for its consumers. As a result, he asserts that value chain analysis is directly linked to competitive advantage. Porter’s Value Chain Model is a strategic management tool developed by Harvard Business School professor Michael Porter. The tool analyses a company’s value chain – defined as the combination of processes that the company uses to make money.

Porter’s Diamond Model

porters-diamond-model
Porter’s Diamond Model is a diamond-shaped framework that explains why specific industries in a nation become internationally competitive while those in other nations do not. The model was first published in Michael Porter’s 1990 book The Competitive Advantage of Nations. This framework looks at the firm strategy, structure/rivalry, factor conditions, demand conditions, related and supporting industries.

SWOT Analysis

swot-analysis
A SWOT Analysis is a framework used for evaluating the business‘s Strengths, Weaknesses, Opportunities, and Threats. It can aid in identifying the problematic areas of your business so that you can maximize your opportunities. It will also alert you to the challenges your organization might face in the future.

PESTEL Analysis

pestel-analysis

Scenario Planning

scenario-planning
Businesses use scenario planning to make assumptions on future events and how their respective business environments may change in response to those future events. Therefore, scenario planning identifies specific uncertainties – or different realities and how they might affect future business operations. Scenario planning attempts at better strategic decision making by avoiding two pitfalls: underprediction, and overprediction.

STEEPLE Analysis

steeple-analysis
The STEEPLE analysis is a variation of the STEEP analysis. Where the step analysis comprises socio-cultural, technological, economic, environmental/ecological, and political factors as the base of the analysis. The STEEPLE analysis adds other two factors such as Legal and Ethical.

SWOT Analysis

swot-analysis
A SWOT Analysis is a framework used for evaluating the business’s Strengths, Weaknesses, Opportunities, and Threats. It can aid in identifying the problematic areas of your business so that you can maximize your opportunities. It will also alert you to the challenges your organization might face in the future.

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