MGMT 495 Ch. 3
Strategic group model
To explain differences in firm performance within the same industry, the strategic group model clusters different firms into groups based on a few key strategic dimensions.
Co-opetition
cooperation by competitors to achieve a strategic objective Example: Samsung and Google cooperate as complementors to compete against Apple
Entry barriers
obstacles that determine how easily a firm can enter an industry
Strategic position
relates to its ability to create value for customers while containing the cost to do so
Mobility barriers
restrict movement between groups
Complementor
A company is a complementor to your company if customers value your product or service offering more when they are able to combine it with the other company's product or service.
Industry
A group of incumbent companies facing more or less the same set of suppliers and buyers
Industry convergence
A process whereby formerly unrelated industries begin to satisfy the same customer need. Often brought on by technological advances.
Complement
A product, service, or competency that adds value to the original product offering when the two are used in tandem
Strategic group
A set of companies that pursue a similar strategy within within a specific industry in their quest for competitive advantage
Network effects
Describe the positive effect that one user of a product or service has on the value of that product or service for other users.
Threat of entry
Describes the risk that potential competitors will enter the industry
Five forces model
Help managers understand the profit potential of different industries and how they can position their respective firms to gain and sustain competitive advantage
Industry analysis
Provides a more rigorous basis not only to identify an industry's profit potential but also to derive implications for one firm's strategic position within an industry
PESTEL model
Provides a way to scan, monitor, and evaluate the important external factors and trends that might impinge upon a firm Political Economic Sociocultural Technological Ecological Legal
Competitive Industry structure
Refers to elements and features common to all industries. The structure of an industry is: 1. The number and size of its competitors. 2. The firms' degree of pricing power. 3. The type of product or service. 4. The height of entry barriers.
Exit barriers
The obstacles that determine how easily a firm can leave that industry. Exit barriers comprise both economic and social factors. Low exit barriers are more attractive.