The strategic group map provides insight into the largest competitors with the corresponding strategy . These competitors are divided into strategic groups . This article explains which quadrants the organization can be in.
Do I need the strategic group card?
You need the strategic group card if you want to change the position of strategy within an organization. The aim is to know why one group of companies makes more profit in the same market than the other group. This is about competitiveness and not for financial reasons.
Which variables do I need?
The strategic focus is depicted on the horizontal axis . The strategic focus is weighted from low to high. This indicates what kind of strategy the competitor is following. The focus is on price (operational excellence) or on value (product leadership).
The vertical axis shows the complexity . The complexity is weighted from:
- narrow to a wide product range;
- non-complex to complex product.
The strategic group map is depicted in four quadrants:
Death zone | Group card
In this quadrant, the organization has high complexity and the costs of producing the products are high. An organization in the death zone is expected to change its portfolio.
Only a number of companies are able to achieve profitability from this quadrant. These are often organizations that can apply economies of scale, so that the costs can still be reduced.High complexity and costs.
Budget | Group card
In this quadrant, the organization has – low complexity and low cost. These companies focus on cost reduction. These “price fighters” have a product offering that is equal to the competition.
Me-too | Group card
In this quadrant, the organization has low complexity and high value. The aim of this organization is to continue to differentiate itself from the competition. An organization with low complexity is easy to copy.
That is why these organizations offer more value to their customers. The image, for example, is difficult to copy. This is the value that these organizations therefore give.
Low complexity with the emphasis on value.
Innovative companies Group card
In this quadrant, the organization has high complexity and high value. These organizations are often market leaders. The product range of these organizations is difficult to copy as well as the image.
High complexity with the emphasis on value.
How can I apply the analysis?
- Listing your direct competitors is the first step.
- The second step is to name the variables. In section “which variables do you need?” complexity and focus are often done to make the analysis. Other practitioners use other variables, such as product portfolio and brand image. It depends on your industry which variables you want to set against each other.
- In this step you place the competitors in the appropriate quadrant. Discuss with your organization whether your competitor is in the matrix at the top, bottom, left or right.
What can I get from the group card?
You can see at a glance whether the characteristics that your organization finds unique are still unique. The main reason is that organizations copy each other’s strategies. Patterns quickly emerge.
You will place a number of competitors close together, so these competitors have strategies of the same name and form strategic groups.