Essay On Strategic Market Groups

Essay on strategic market groups

INTRODUCTION

The essay is a wording that is characterized by the development of a topic, based on reflections, is commonly expressed freely and personal to manifest an opinion or idea. Usually the essay is a text that explains, interprets and evaluates a specific topic. Its characterization is to summarize and inform about a certain matter but in addition to including personal opinions argued.

Actually, the investigation of any competitive process requires rivalry factors that in turn allows to know the competitive advantage.

This document illustrates strategic groups for the managerial strategy course in the postgraduate curricula of the Faculty of Science of the Administration, with the application of the business administration specialty.

It presents everything related to the strategic groups that exist in the country as well as globally;Strategic groups is a group that is formed by companies that even being rivals has the same competitive approach and position in the market.

The essay presents opinions, evidence and personal interpretations, of what you learn and know how to do about strategic groups. For this it is necessary to investigate and analyze the content.

Strategic groups

Strategic groups is a group that is formed by companies that even being rivals has the same approach and competitive position in the market, they can also become an analytical tool and tend to remain stable over time due to mobility barriers alreadythat this limits the movement of companies between strategic groups.

These groups help us to understand the strategies that companies use to obtain a competitive advantage, it is very important since with this we can identify the success key of the companies, which factors have led to success, the positioning they have in themarket and strategies they handle to achieve their growth.

A competitive advantage: it refers to the creation of a unique advantage over competitors. The idea is to create value towards the client efficiently and sustainable.

The fame that each company uses to use strategies will help choose the necessary decisions obtaining as results that others are highlighted in prices and quality of their products or services to be able to convince its clientele.

In order to understand how the strategies used by companies in strategic groups, it is necessarythe percentage of success to the market that can aspire as well as market trends.

The objective of each company is to achieve customer satisfaction and for this they need to develop different strategies, to carry out what is intended to be achieved, it can be chosen to be assigned to a strategic group, the goal of these groups is to unite knowledge to study the marketand achieve success thus achieving satisfactory positioning, and it is necessary to compete with companies that have the same products so as not to conflict.

It also allows to achieve the goals raised in order to facilitate the understanding and behavior of the organization and therefore the development of the strategies in a precise, clear and measurable way.

Characteristics of strategic groups:

• It allows to investigate the different strategies and operational of the companies.
• Deepens the analysis of competition between signatures of the same industry
• Allows you to identify strong and weak groups

Advantage:

• There is the understanding that there are competitive advantages, that is, there is a wide way to compete without having a rose even is the same article that is sold.
• It is possible to make a strategic group map, where the groups do not indicate the groups on a series of variables and where to evolve
• It is a potential contribution in strategic decision making.

Disadvantages:

• Difficulty of finding a variable agreement, with socio -economic, legal and environmental tendencies
• It is a topic centered on supply than on demand
• It is not always possible to access the sales, profitability and performance information of the group companies

Profit taking into account strategic groups

The way of presenting the profits for the companies in the different strategic groups vary from good to bad in consideration of the percentage of growth of the buyers segments that serve each group, at the levels of competitive rivalry, the pressures of new income from participants to the participantsstrategic group, the income of substitute products outside companies.

Strategic groups is a valuable tool since its location is important to understand the similarities, differences, strengths and weaknesses of the organization as well to know how the operation of rival companies is;In the company often the driving forces and competitive pressures of the companies are very benefit for some and harm others.

Strategic groups by countries

In the global expansion of strategic groups, a limitation that causes failure is that organizations have a clear inability to know what are the differences that exist in the different groups that act in each country.

Implications:

• Direct competitors are those that are within the same strategic group.
• The degree of intensity can vary by the intensity of strategic groups.
• It follows that it is better to choose the best strategic group that has the best position, so managers should assess whether the company would be better in another different group.
• The evolution of business sectors follows structural changes that affect the strategic planning of the institutions and carried out the rivalries of strategic groups.
• Evolution will affect investments and the effort that acts in it.

There are three main theoretical perspectives and are:

• The positioning approach is the one that is most accepted and is based on the product and market
• The appeal and capacities approach in the set of companies that compete in an industry that has similar resource and capacities configurations
• The cognitive psychology approach focuses on the perception of competitors.

What is the use of determining strategic groups?

• Strategic groups: they exist because they are useful when there are many competitors, it allows to extract information in the analysis:
• Industrial sectors: to know where the competitors are going
• Scenarios: To know where the different strategic groups are located and what the way is going to go to reach a stable position.
• Profitability difference: companies that make up the same strategic group have similar profitability. The difference is that the strategy that remains in evidence through the analysis can allow us to understand how some companies have profitability other than others.
• Four corners: this serves to predict the behavior of competition to synthesize them.

Strategic Group Maps

It is a graph where the habit of locating the positions of the rival groups of an organization is acquired and they reveal that companies are close competitors and which distant.

Steps to make a strategic group map:

• Identify competitive characteristics
• Place companies in two different variables according to their distinctive characteristics.
• Assign companies in the same strategic space to the same strategic group.
• Lush in a circle by size proportional to participation in each strategic group in the total sales of the company.

Strategic groups have transcendental implications in business management, for this purpose an objective point is highlighted by identifying the competitive position of an organization;The purpose of creating groups is to facilitate the analysis of the strategic groups that exist, there is a study to understand the success key on a market and verify if other companies could use the same strategy.

In my personal criteria, strategic groups arise because they have similar objectives, they resemble their activities and market coverage where they compete with each other to satisfy their customers.

The objectives of this analysis will be varied since it will depend on the different characteristics of the strategic groups: such as market size, the wide variety of goods, cost, etc. With this, companies can have help to know what is the price of their products achieved and establish quality controls, therefore a good strategic analysis becomes a tool for any company that seeks to stand out in the strategic group that is located and powerCompete with their rivals, because companies can have similar strategies, but each of these strategies will have a different weight and result for each company.

They also follow very similar strategies and compete more intensely with each other, they are useful to identify competitive land but it should be taken into account that it is very dangerous that the current strategies of the groups are fixed.

It is important to have good reasons and act at the time the strategies can change;This helps that the companies that make up a strategic group are neutralized and the other companies that belong to another group are not considered.

In general, a small number of strategic factors can opt for the different business models used and changes should be taken into account with the passage of time since companies are going through stages from their growth, maturity and decline.

The stage that passes the company determines its competitive structure, the manager’s work is to anticipate in the sense of how the company can evolve

At the Mariano Gálvez University of Guatemala Villanueva headquarters in the Master of Business Administration It is essential.

Companies today face very different environments so that they must constantly monitor their environment, in advance their effects that can cause, as well as analyzing their competitors and generating strategies that allow them to have a competitive advantage over their group rivalsWhich belongs.

It is clear that the effects can be direct and indirect in the administration of the company, as well as business opportunities and its strongest basis in its market-product positioning can be generated

As administrators it is considerable that we contribute how the company is currently and forecast the environment generated possible projections to achieve success, and allows to excel on the competition that has similar products.

The factors must always be analyzing in the function, the objectives and goals that lead the company to be at its maximum profitability, it is usually considered that the competition that exists between one company or another which belong to the same groupStrategic is higher, to companies that belong to a specific group and a company that is outside it.

The rivalry occurs due to another company or another feel the pressure or opportunity to improve its position this generates competitive movement such as price competition, the introduction of new products or improvements in the service, it must be taken into account that the greater the rivalryAmong the competitors minor is the possibility of profits to obtain above the average industry and therefore less attractive becomes the market in question.

You must always take into account the factors that determine the rivalries of the competitors, which are:

The large number of competitors in the industry, balanced participation, the slow growth of the industry that makes new customers enter the market therefore a war is generated to capture the customers of our competitor.

When there is little product differentiation, it leads to the customer having a low cost of exchange for choosing a supplier or another;When there are large volumes of stocks that force competitive companies to have greater market share and be able to place these products.

Output barriers are economic, strategic factors, which keep companies competing even when they are gaining low yields or null income according to the investment that is available.

When the exits barriers are high, companies are captive in a certain market, the accumulated stocks can cause extreme tactics as for examples of the price war, if we stick to the results obtained in the study will depend on the analyzed sector

On the other hand, given the changes that currently exist, it is necessary for companies to study, analyze competitors to know and understand them to achieve and sustain a stable strategy.

• Example 1: A pharmaceutical industry

The owners of the patents, adopt high -risk and performance strategies, because it is difficult and expensive;Because by launching a new market medicine, it can cost 800 million dollars in research and development resources, and a decade of research and clinical tests. The risks are high because the failure rate of a new medicine is very high.

However, a success of a new medicine can be patented and can be lucrative and gives the producer 20 years of production and sale.

• Examples 2: convenience stores

They are companies that are dedicated to the sale of similar products or services using identical strategies to obtain a competitive advantage over their rivals, these stores are visited by customers that have the need for groceries, groceries, fuels and ATMs;It can be seen in recent years that convenience stores have shown growth in Guatemala.

These groups are businesses that offer the convenience of time, to remain at long schedules since it is a small fast service establishment that is close to home or work

In Guatemala the first convenience store launch was prone s.A. which established the “Super 24” convenience store, then a convenience store was established in a fuel service station that was launched in the market by the Texaco company and was called Texaco Star Mart Mart.

• Examples 3: Tail sales

Being a massive product, the need must be satisfied, which is to satisfy thirst and is intended for all ages.

It is distributed mainly to food, service, restaurant, dining room stores. The profitability of each of these sectors, demonstrates the high negotiation power, each one has their own strategic to be able to distribute their products.

• Example 4: Hotel sector

The group of hotels for tourists who are going to visit different tourist places for conforms, it is considered that it has success factors such as skills that cause the company to prosper and have higher level of performance than its competitors. Therefore there are many hotels today, and there is rivalry of competitors for the same service.

Conclusions

A strategic group is a group of rivals of an industry with competitive approaches and similar market positions.

It should be concluded that strategic groups acquire their own and different entity from the different companies that comprise it, for this it is necessary to have a range of strategic similarities among companies.

In addition to this, groups must show clear information by the key strategic decisions of companies, given the existing rivalry, competitive and cooperative behavior must be adopted.

It is suggested that strategic groups analysis can help researchers to classify companies according to reasonable criteria and to isolate, empirically, attributes that do not help companies reach their successful key before their rivals and fail to have acompetitive advantage. It is important to add value that can be used to alert us about the identity of companies that we can easily imitate, as well as attract our attention to those that are different and whose success can threaten our own existence.

We continually point out that the different similarities of the group, previously defined, should be considered consecutively if it is intended to decipher what are the keys that explain the differences in the behaviors and results of the different companies in the analyzed sector analyzed

Finally future research can be oriented in the modeling of competitive rivalry, making predictions responding similar to the opportunities and threats of the environment.

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