A strategic group will typically include: firms within the same industry. customers belonging to a particular socioeconomic class. firms employing similar number of employees, irrespective of their industries. firms that are direct competitors to each other.
The correct answer and explanation is:
Correct Answer: Firms that are direct competitors to each other.
Explanation:
A strategic group consists of firms within the same industry that adopt similar business models and competitive strategies. These companies directly compete against each other by targeting the same customer base, offering similar products or services, and employing comparable pricing, marketing, and operational tactics.
Key Characteristics of Strategic Groups:
- Industry-Based Competition: Strategic groups exist within a single industry, where firms follow similar strategies to differentiate themselves from other clusters of businesses.
- Similar Competitive Strategies: Companies within a strategic group may compete on factors such as pricing, innovation, product quality, customer service, or distribution channels.
- Market Positioning: These firms target similar market segments, making their rivalry more intense compared to businesses outside the group.
- Barriers to Mobility: Firms within a strategic group face mobility barriers, meaning it is difficult for them to switch strategies without incurring significant costs.
Examples of Strategic Groups:
- Automobile Industry: Luxury car brands like BMW, Mercedes-Benz, and Audi form a strategic group because they compete directly in the high-end automobile market.
- Fast-Food Industry: McDonald’s, Burger King, and Wendy’s are in the same strategic group, offering similar menus, pricing strategies, and service models.
- Airline Industry: Low-cost carriers like Southwest Airlines and Ryanair form a strategic group separate from premium airlines like Emirates and Singapore Airlines.
Understanding strategic groups helps businesses identify their direct competitors, anticipate market shifts, and formulate better competitive strategies. By analyzing the behaviors of firms within a strategic group, companies can refine their approaches to gain a stronger market position.
Now, I’ll generate an image representing competition among firms within a strategic group.
Here is the generated image illustrating direct competition among firms within a strategic group. Let me know if you need any modifications!
