Question
A strategic group analysis map is a tool used in strategic management to visualize and analyze the competitive positions of firms in an industry. It helps identify who the direct competitors are and on what basis they compete. The map is created by plotting firms on a two-dimensional grid using strategic dimensions, such as price, quality, target market, etc. Firms that fall in the same area on the map are in the same strategic group and are direct competitors. This tool helps firms understand their competitive landscape and formulate strategies accordingly.
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In his book , Michael Porter wrote that the competition in an industry and the ultimate profitability of a firm depend on five fundamental competitive forces: ease of entry, threat of substitution, bargaining power of buyers, bargaining power of suppliers, and rivalry among competitors. Competitive strategy aims to create a defensible position for the firm against these five competitive forces with offensive or defensive tactics.
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