Strategic Group Map: Reasons to Use Strategic Group Mapping

A strategic group map, or strategy map, is a visualization tool that incorporates data from industry rivals with similar characteristics and market share to your own company. This tool will help you see how your company stacks up against your competitors. Information you might include on a strategic group map includes company size, product or service pricing, product or service features, target market, and retailers or platforms.

To make an apples-to-apples comparison in your strategic group analysis, you typically want to select businesses with comparable strategic characteristics that are also within the same local geographic coverage area. These rival firms should also have similar external environment factors and an equivalent list of services or product-line breadth.

Consider these primary reasons why your company might benefit from building a strategic group map or model of comparison:

• To illustrate the competitive market: Understanding the strengths and weaknesses of your company’s competitive positions within different market segments can provide your firm with a jumping off point for the development of more successful business strategies.
• To reveal a competitive advantage: By comparing your own company’s strategic template to other business models in a comprehensive competitor analysis, you can determine what differentiates you from your competition.
• To reveal untapped opportunities: After analyzing your industry’s competitive environment using a strategic group map, you might uncover where you have room for diversification in your company’s products and services. Trailblazing a unique strategy in a saturated market could increase your differentiation and increase profitability.

Strategic group maps require you to collect data on your company’s own efforts as well as others in the competitive landscape. By visualizing this information, you will be better equipped to develop a strategic direction for organizational improvement and profitability. Here are three different types of strategic group maps to consider using:

1. 1. Industry life cycle model: This modeling theory describes how a company must adapt its competitive strategy to its relative maturity in the industry life cycle, which comprises four phases: introduction, growth, maturity, and decline.
2. 2. Macro-environmental analysis model: As the name suggests, macro-environmental analysis takes stock of the broad, overarching elements of a company’s external environment. These factors include politics, economics, and technology. By mapping how your company and your direct competitors relate to macro-environmental factors, you might be able to forecast potential windfalls and challenges.
3. 3. Porter’s five forces model: Harvard University professor Michael Porter developed this model to describe the factors that shape profitability in an industry. The forces are: industry competition, potential for newcomers, power of suppliers, power of customers, and the threat of substitute goods or services. By locking down figures related to each of these forces, a business will be able to visualize its potential for profitability in comparison to other businesses in their given industry.

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