Dr.

Jayalaxmi Samal
• The concept of strategic groups in
strategic management  stems from an
observation by Hunt (1972).
• Strategic group is a management concept
which separates companies within the
same industry with similar business
models and or a similar strategy
combination.
• The most commonly used definition
of strategic groups has been that provided
by Porter: A strategic group is the group of
firms in an industry following the same or
a similar strategy along the strategic
dimension. 
Porter suggests the following dimensions to identify
differences in firm strategies within an industry:
• specialization,
• brand identification,
• a push versus pull marketing strategy,
• vertical integration,
• channel selection,
• product quality,
• technological leadership,
• cost position,
• service,
• price policy,
• financial and operating leverage,
• relationship with parent company, and
• relationships with home and host government. 
• Firms in a strategic group resemble each
other in different ways:
• they pursue similar broad strategies.
• they tend to have similar characteristics
(e.g. size, skills).
• they tend to have similar market shares.
• they tend to respond to external events in
similar ways.
• By identifying strategic groups, analysts and
managers are better able to understand the
different types of strategies that multiple
firms are adopting within the same industry. 
• For example, the restaurant industry can be
divided into several strategic groups
including fast-food and fine-dining based on
variables such as preparation time, pricing
and presentation. The number of groups
within an industry and their composition
depends on the dimensions used to define
the groups.
• Strategic Groups within an Industry:
• Proprietary group: The strategic group in this group
are pursuing a high risk and high return strategy. The
companies in this group has very powerful position
as it’s hard to find substitute for their products.
• Generic group: The strategic group in this group are
pursuing a low risk and low return strategy. Here the
companies have weaker position because of more
number of rivalry and availability of close substitutes.
• Example- Companies in Pharmaceutical industry
• Strategic Group Mapping
• A useful tool that can guide the separation of strategic
group in an industry is the so called strategic group
mapping. 
• Purpose:
• Identification of close and distant rivals
• Identification of attractive and unattractive position of
the firms in an industry.
• Useful to identify the suitable strategic group a firm
should enter
• Helps in alaysing the type and level of entry barriers.
 • Strategic Group Mapping
• Procedure:
• Identify key competitive attributes
• Create map based upon two key attribute variables
• Identify strategic groups
• Guideline:
• There should be no correlation between the variables selected as
axes for the map.
• The variables selected should be discrete rather than continuous.
• Different competitive variables should be used as axes for the
map because there is not necessarily one best map.
Variables selected as axes for the map could be product line
breadth (wide, narrow), price (high, medium, low), geographic
coverage (local, regional, national, global)
 Assignment: Construct a strategic
group map of Indian Aviation industry