@AMRITA MiSuuaUe eee hitler AHEAD online ST Rear aa en Oona te Pee Ren een Strategic Groups Within Industries + Strategic Groups ~ Groups of companies in which each company follows a strategy that is similar to that pursued by other companies in the group, but different from the strategy pursued by companies in other groups within the same industry (e.g., commercial aerospace industry). + Commercial Aerospace Industry * Regional jets - Less than 100 seats & limited range (e.g., Bombardier & Embraer) * Large commercial jets — 100 to 550 seats & long range (e.g., Boeing & Airbus) * Pharmaceutical Industry + New, proprietary, blockbuster drugs - heavy R&D spending & a decade of research & clinical trials (high risk high return strategy) (e.g., Merck, Eli Li Pfizer) * Generic drugs - low-cost copies of drugs (low R&D spending, production efficiency & low prices) (low risk low return strategy) (e.g., Forest Labs, Mylan, Watson) MARITA|AHEAD Implications of Strategic Groups * All companies in a strategic group are pursuing a similar strategy. + A company’s closest competitors are those in its strategic group. + Example:- * General merchandise discounters like Wal-Mart, K-mart, Target & Fred Meyer. * Different strategic groups can have different relationships to each of the competitive forces. + Each strategic group may face a different set of opportunities & threats. + Example:-+ New drug manufacturing strategic group (patent race) — able to charge high prices & earn high profits. + Generic drug manufacturing strategic group - Many companies are able to produce different versions of the same generic drug after patents expire & lower profits. NSN The Role of Mobility Barriers + Mobility barriers are within-industry factors that inhibit the movement of companies between strategic groups (entry & exit barriers). + Some strategic groups are more desirable than others because competitive forces open up greater opportunities & present fewer threats for those groups. * Taking advantage of such opportunity may be difficult because of mobility barriers between strategic groups. + Example:- * Generic drug manufacturers trying to enter the proprietary drug manufacturers strategic group. + Bombardier & Embraer have started to move into the large commercial jet business with the development of narrow-bodied aircraft in the 100 to 150 seat range. EYE