The Annals of “Dunarea de Jos” University of Galati
Fascicle I – 2010. Economics and Applied Informatics. Years XVI – no 1 - ISSN 1584-0409
Possibilities for Making the Concepts of "Strategic
Segment" and "Strategic Group" Become Operational
- A Case Study in the Clothing Industry in Romania
Alina Florentina AVRIGEANU
alina.avrigeanu@gmail.com
Flavia Gabriela ANGHEL
flavia.anghel@gmail.com
Elena STÂNGĂ
elena.stanga@gmail.com
Bogdan Nicolae GLĂVAN
bogdan.glavan@gmail.com
Romanian - American University
Abstract:
In this paper we formulate possible strategies that may be made to improve the
competitive position of companies must take into account the major strategic stakes,
opportunities and threats in the environment but also their internal potential, and their
ability to respond to challenges posed by change in external environment. By
introducing the concepts of "strategic segmentation" and "strategic group" we develop a
more accurate and realistic analysis of the competitive environment, highlighting the
practical implications of this analysis. Thus, the use of Porter’s competitive forces model
to analyze the competitive environment can be made with reference to competition
within a strategic group.
Keywords: strategic segment, strategic group, clothing industry, strategic map
JEL Code: L16, L24, L67
1. Introduction
Characteristics of the external environment, understood as a product of strategic decisions of
various organizations and groups - competitors, customers, suppliers, government, etc. - as well as
of other factors - physical, political, socio-cultural, etc. – that cannot be assigned usually to some
organizations, set the general coordinates for the future evolution of the company. Possible
strategies that may be made to improve the competitive position of companies must take into
account the major strategic stakes, opportunities and threats in the environment but also their
internal potential, and their ability to respond to challenges posed by change in external
environment.
2. The content and features of the methodological approach
In order to formulate strategies for various the types of companies’ representative of the Romanian
clothing industry, we conducted an investigation designed to study the structure of industry, to
highlight more clearly the elements of its competitive environment, companies’ specific national
environment and their strategic behavior.
The overall objective of this research was to identify:
- the strategic segments of the industry;
- how the Romanian clothing industry enterprises build their competitive advantage;
- distinctive competencies of these enterprises.
The investigative tool developed for this purpose - the questionnaire - was designed to be applied
to persons responsible for these businesses’ strategy (Director General or Production Director /
Director of Economic / Commercial Director).
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The Annals of “Dunarea de Jos” University of Galati
Fascicle I – 2010. Economics and Applied Informatics. Years XVI – no 1 - ISSN 1584-0409
The study was conducted between November 23 to December 11, 2009 on a sample of 204 clothing
enterprises, selected from the member database of the Light Industry Employers' Federation and
the database of the General Directorate of Industrial Policy and Competitiveness within the
Ministry of Economy.
At the end of completing the forms there were collected 68 completed questionnaires, of which 51
were completed in full and are considered valid. Synoptic presentation of the respondents is
presented in Table 1.
Name
Table 1: Synoptic presentation of the respondents
Locality
I1
Slatina
I2
Bacău
I3
Sebiş
I4
Bacău
I5
Brăila
I6
Focşani
I7
Bârlad
I8
Bârlad
I9
Bucureşti
I10
I11
I12
Galaţi
Bucureşti
Galaţi
I13
Satu Mare
I14
Sibiu
I15
Constanţa
I16
Bucureşti
I17
Baia Mare
I19
Cluj
Napoca
Satu Mare
I20
Bucureşti
I18
I21
I22
I23
I24
Odorheiu
Secuiesc
Bucureşti
Cluj
Napoca
Bucureşti
Main Products
Monthly Production
Capacity
(no. pieces per
month)
Număr salariaţi în
anul 2008 Number
of employees in
2008 (pers.)
200000
165
341443991
10000
72
2144378
600
42
2323986
100000
481
13724865
400000
2113
50056040
44000
155
2128360
250000
1235
29555126
4000
60
2509709
28000
90
3414741
100000
200000
100000
336
24
49
14077991
2285935
8319824
2500
53
4496799
40000
538
20243612
12000
26
118
40000
372
14299932
500
23
9912272
5000
9
320239
8000
106
4136892
32000
225
7324586
8000
1428
42681807
10000
60
3236562
70000
335
10303094
300
10
463552
Women clothing,
Children and youth
clothing, ski suits,
beach, etc..
Women clothing,
menswear and casual
sports
Leather products
Women clothing,
menswear
Women shirts, men
shirts
Women apparel,
children and youth
apparel
Men shirts, women
blouses, pajamas
Women clothing
Women clothing
youth and children's
wear
Women clothing
Women clothing
Menswear
Women clothing,
menswear
Women clothing
menswear
Women clothing,
children's wear
Women clothing
menswear
Sports clothing, ski
suits
Women clothing
Women clothing
Women clothing
menswear
Menswear
Women clothing
Women clothing
Children's wear
162
Turnover in
2008
(lei)
Name
The Annals of “Dunarea de Jos” University of Galati
Fascicle I – 2010. Economics and Applied Informatics. Years XVI – no 1 - ISSN 1584-0409
Locality
I25
Braşov
I26
Craiova
Piatra
Neamţ
Satu Mare
Iaşi
Constanţa
Cluj
Napoca
I27
I28
I29
I30
I31
I32
Oradea
I33
Piatra
Neamţ
I34
Buzău
I35
I37
I38
I39
I40
Botoşani
Odorheiu
Secuiesc
Oradea
Roman
Craiova
Bucureşti
I41
Sighişoara
I36
I43
I44
Curtea de
Argeş
Focşani
Bacău
I45
Deva
I46
Târgu
Neamţ
I47
Hunedoara
I48
I49
I50
I51
Urziceni
Constanţa
Târgovişte
Brăila
I42
Monthly Production
Capacity
(no. pieces per
month)
Număr salariaţi în
anul 2008 Number
of employees in
2008 (pers.)
5000
52
2068011
60000
426
9552465
15000
70
1983326
600000
10000
7000
730
93
109
9552465
5669231
5491214
500000
1501
116203136
10000
32
1164085
35000
97
11678238
80000
206
13773944
170000
913
24921544
40000
906
32670559
Fur clothing
Women clothing
Women clothing
Women clothing
Men's shirts, women
blouses, pajamas
Men's shirts
10000
500
100000
40000
42
36
89
757
1470096
1306965
1014292
33825163
160000
567
12836909
25000
76
2453826
Women clothing
Women clothing
Women clothing,
menswear
Pajamas
100000
4000
539
130
42638053
5489820
550000
274
4880435
18000
140
7112424
350000
30
30
134769296
1020118
500
150000
1473
27
14
365
100000
1020118
442788
47463332
1128277181
Main Products
Confecţii femei
Ladieswear
Women clothing
Women clothing
menswear
Women clothing
Women clothing
Women clothing
Women clothing
Bathing suits, fitness,
lingerie
Women clothing
Women clothing,
menswear
Pants
Menswear
Women clothing,
menswear
Women clothing
Children's wear
Women clothing
Women clothing
TOTAL
Turnover in
2008
(lei)
The 51 garment enterprises are distributed in all developing regions, as shown in Table 2.
Table 2: The distribution of the garment enterprises in all developing regions
Development Region
Northwest
Northeast
Southwest
Southeast
South
Center
West
Bucharest-Ilfov
Northwest
Northeast
Number of enterprises
9
11
3
9
3
5
3
8
9
11
163
Share
17,64%
21,56%
5,88%
17,64%
5,88%
9,80%
5,88%
15,68%
17,64%
21,56%
The Annals of “Dunarea de Jos” University of Galati
Fascicle I – 2010. Economics and Applied Informatics. Years XVI – no 1 - ISSN 1584-0409
We should mention that this research has some particular limitations, the most important of which
are the small size of the sample of firms considered in research and the honesty of respondents.
3. Building the strategic segment - strategic group dyad
The strategic approach for improving the competitive position of firms in the clothing industry has
its starting point in a review of these enterprises’ competitive environment, given that success
depends on proper identification and of competitors, customers or area where the firm’s power
and resources can be used in an optimum manner, creating the premises for the adoption of a
rational economic behavior. A more detailed analysis of categories that require differentiated
behaviors should be provided for a more efficient use of resources. More specifically, strategic
intuition urges focus on customers' most important competitors, i.e. on a segment assumed to have
the greatest influence on results.
Strategic segmentation is carried out to obtain a "magnifying effect", i.e. to focus on a part of the
whole analysis. In practical work, competitive relationship in which one’s gain means the other’s
loss are only available for a number of "players", i.e. a firm will be in direct competition with only a
segment or part of all organizations that have a similar activity. If it is accepted that companies
that address the same market segment operate in a zero-sum game, then they are in a stronger
relationship than if they would address different segments. The relationship is one of providerclient, specific to marketing, "referee" in this game is the customer who chooses the product of
either companies that cover the respective segment 1 and the "arena" competition is the strategic
segment.
Strategic analysis of the competitive environment of enterprises in the Romanian clothing industry
is based on structural analysis suggested by Michael Porter, completed, clarified and made
applicable in subsequent professional work of other professionals and researchers in the field of
strategic management. To achieve the strategic segmentation of the clothing industry in our
country will go through an analytical process based on "scheme" proposed by T. Atamer and R.
Calori, in "Diagnostic et strategiques Decisions' published by Dunod, Paris, in 1993, using
segmentation criteria suggested by D.F. Abel and J.S. Hammond in "Strategic Market Planning:
Problems and Analytical Aproaches", Prentice Hall, Upper Saddle River, NJ, 1979. To identify the
basic activities Abel and Hammond propose a division of the industry by three criteria associated
with a clearly defined geographical area:
o technology;
o application, referring to the use or need that the product is intended;
o client / consumer.
Given the specific elements of the garment industry and the homogeneous nature of the
manufacturing technologies from this sector, we will operate the strategic segmentation of the
industry using the criteria "application" and "customer." Since the two companies operating in the
same industry but in different geographical areas may not be in a competitive relationship, we
define strategic segments using a geographical demarcation of the area in which these firms
operate - domestic (national) or foreign (EU).
The analysis of the basic activities of the 51 companies investigated based on the combination
Application - Customer (Tables 3 and 4) leads to the identification of a set of combinations
(Figures 1 and 2) that present technical and economic logic, defining seven strategic sectors for
both domestic and foreign market.
We considered that a company operates domestically if the value of productions sold in this
market in 2008 exceeded 15%, representing the average production for domestic market in 20042008. As shown in the survey, only 20 of the 51 companies surveyed have sold domestically at
least 15% of production achieved in 2008.
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The Annals of “Dunarea de Jos” University of Galati
Fascicle I – 2010. Economics and Applied Informatics. Years XVI – no 1 - ISSN 1584-0409
Table 3: Analysis of basic activities of the 20 companies based on the combination application domestic client
Application
Customer
1. Functional Clothing
1. Final consumer
(standard)
2. Fashin clothing
2. Retailers
(differentiated)
3. Ski equipment
3. Other local clothing
manufacturers
4. Protective clothing
4. Industrial
Figure 1: Sets of combinations application - domestic client
31 E
12 A
32 F
21 B
44 G
22 C
23 D
The investigation carried out in the clothing industry revealed that 37 of the 51 firms in the sample
respondents have sold their products in foreign markets in 2008.
Table 4: Analysis of the 37 basic activities based on the combination of business applications customer for domestic market
Application
Customer
1. Functional Clothing
1. Final consumer
(standard)
2. Fashin clothing
2. Retailers
(differentiated)
3. Other European clothing
manufacturers
4. Brokers
Figure 2: Sets of combinations application - external market
22 E
12 A
23 F
13 B
24 G
14 C
21 D
Tables 5 and 6 shows the position of the various competitors against seven strategic sectors
identified for domestic and external market, respectively.
Table 5 - Industry segments and competitors’ position themselves – domestic
Segmente
de
industrie
I8
I11
I12
I13
I17
I18
I19
I22
I24
I25
Firme
SSA
SSB
SSC
X
X
X
X
SSD
SSE
SSF
SSG
X
X
X
X
X
X
X
X
165
X
X
The Annals of “Dunarea de Jos” University of Galati
Fascicle I – 2010. Economics and Applied Informatics. Years XVI – no 1 - ISSN 1584-0409
Segmente
de
industrie
I29
I30
I31
I32
I37
I38
I44
I46
I49
I50
I1
I2
I3
I4
I5
I6
I7
I9
I10
I14
I15
I16
I20
I21
I22
I23
I25
I26
I27
I28
I29
I30
I31
I32
I33
I34
I35
I36
I39
I40
I41
I42
I43
I45
I47
I48
I51
Firme
SSA
SSB
SSC
X
X
X
X
SSD
SSE
SSF
SSG
X
X
X
X
X
X
X
X
X
X
X
Table 6 - Industry segments and competitors’ position - the foreign market
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
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The Annals of “Dunarea de Jos” University of Galati
Fascicle I – 2010. Economics and Applied Informatics. Years XVI – no 1 - ISSN 1584-0409
Based on their option, reflected in the number of strategic segments addressed, clothing
companies can be divided into:
• specialists, represented in one segment;
• multi-specialists, represented in two or more segments;
Table 5 shows the position of the 20 competitors in relation to the seven segments identified for
domestic industry, allowing us to separate: 13 experts (of which 3 per segment A, one in segment
B, seven in segment C, one in segment E and one in segment F) and 6 multi-specialists (of which 6
are represented by B and C segments and one in segments E and F). The 37 businesses that
address the external market, as can be seen from Table 6, are grouped into: 26 experts (of which
one in segment C, 2 in segment E, in segment F and 20 in G) and 11 multi-specialists (4 of which
are represented by segments F and G, 5 by E and F segments and one by segments D and E,
respectively, A, B and E).
It appears that, of the 51 companies investigated, most engage in strategic segment G, activating on
external market (application: differentiated products, customer: Intermediate, Community market):
21 specialists and 5 multi-specialists. Basic typology illustrates a "primary" strategic option on
specialization, from which those categories appear. A certain segment can be addressed by an
enterprise in any category listed, which is able of achieving a strategic advantage. "Specialists" will
seek superiority through focusing, translated by a better knowledge of the process, so that to
obtain a reduction in costs from this source, while the "generalist" will seek superiority of shared
management, translated into achieving economies of scale.
Each strategic segment comprises several sectors which are not all similarly exposed to the
competitive field and with a coherent set of key success factors. As a consequence, the segment can
integrate different strategies and the analysis of possible behaviors of the main groups proves to be
indispensable. If firms in an industry are perceived as "mechanisms" related to an aggregate
performance results related to how satisfied the customer is and linked to how the available
resources (which can be profitability, economic value, etc.) are managed, then rivalry will exist at
any given time only between organizations which adopt similar behavior. Different behaviors are
the result of different views of stakeholders or of the constraints associated to the mode of
operation at a time dictated by resources, skills, positioning, etc. For this type of competition the
concept that sets the "arena" is the strategic group and "referee" is the main shareholder or owner.
Grouping firms in the clothing industry in our research by similarity of strategies and resources
involves tracking equally the different practices and the main sources of competitive advantage
which manifest themselves within the industry. We will use for this purpose, a refined analysis of
the structure of an industry populated by many groups of competitors, each occupying a distinct
place in a market and having a specific image in the minds of buyers, proposed by Michael Porter mapping strategic groups. The author's conception is that any sector consists of a variety of
segments that are not subject to the same intensity of competitive forces and, consequently, the
strategies that can be applied may vary from segment to segment. Given this, Porter recommends
splitting entity sector more homogenous units of analysis, which he called strategic groups.
Criteria by which to identify firms that operate in a market and are a strategic group approach
resulted from identical behavior of market mechanisms. These criteria relate primarily to: targeting
the same customer groups, customers satisfaction with products / services with the same main
features, providing similar production lines, offering the same services, use the same distribution
channels, using intensity comparable advertising and media advertising, offering products /
services that are at very close levels of price / quality ratio.
Insofar as many strategic dimensions are interdependent, Michael Porter suggests to decide for
two dimensions, namely those which are also the most independent and most explicit about the
soundness of strategic positions in the sector. Such attitude allows the firm to focus its analysis on
several crucial issues which constitute additional protection for an effective and sustainable
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The Annals of “Dunarea de Jos” University of Galati
Fascicle I – 2010. Economics and Applied Informatics. Years XVI – no 1 - ISSN 1584-0409
competitive stance. Different strategic groups within a sector may represent a strategic map of the
scale envisaged, that is, in fact, a chart on the details of which are strategic variables; strategic
groups are represented by circles, their diameters are proportional with companies of each group
share in total market sales.
Thus, we obtain a topography that allows competitive sector to forecast the development and the
risks of destabilization and to identify marginal but profitable groups and the big holes that can
become easily factors for generating profits. In order to make applicable the concept of strategic
group analysis it is needed to use hierarchical techniques and discriminate analysis. In this way it
is possible to see homogeneous groups practice strategies, taking into account the two most
discriminated strategic dimensions. Variables considered in the construction diagram must not be
closely related - in this case circles representing strategic marketing groups will string along a
diagonal, thus making it irrelevant one of the variables. For clothing industry the first two
strategic dimensions are cooperation in production and the degree of product differentiation.
Shaping the strategic map for the 26 industrial enterprises engaged in strategic segment G requires
a number of clarifications on the process of grouping the firms based on the two dimensions listed,
ordered by a qualitative scale with three levels, such as: low differentiation, medium and high / strong
and, respectively, with two - low and high levels of cooperation.
For dividing firms in strategic groups based on product differentiation, given the wide variety of
customization elements related to the supply of various clothing manufacturers, we approximated
the average differentiation if at least one of the following conditions is fulfilled:
— flexibility, meaning the company has the ability to adapt to the needs of specific operational
requirements and wishes to continue diversifying and customizing the customers, by making
the change, offering a variety of types and models of products or different versions of a base
portfolio. Rating firms for flexibility was done aiming at both its manifestations - static and
dynamic - considering companies that offer flexible CAD-CAM systems and highly qualified
human resources;
— Quality, as providing the best products without defects, performed under strict adherence to
design specifications and design technology. In achieving the strategic map, we considered
that a company makes quality products and has quality processes if:
- makes "premium" highly developed products, with cutting edge fashion items made from raw
materials and auxiliary high quality and in small series;
- implements the quality management system ISO 9001;
- implements the quality management system integrated with environmental management and
occupational health and safety in accordance with the requirements of ISO 9001, ISO 14001 and
OHSAS 18001;
- implements the TQM system;
- implements the quality management system standards required by customers from multinational
firms category, holding internationally known trademarks,
- enterprises´ capability to execute and deliver products with outstanding technological features or by
using exclusively more advanced technologies (by innovation), or through a better exploitation of
an existing technology. We considered that a company has this capability if it has CAD - CAM,
sewing equipment with high automation (automatic pocket sewing, etc.), automatic processing
devices (fusing machines and presses, preformed collars, cuffs, pockets, slit, etc.), overhead
transmission systems of individual products or packages, computer equipment and embedded
computing systems, consisting of a series of appropriate sub-functions of the undertaking, each
subsystem comprising in turn a number of applications which use computer and allows makes
possible modeling the production and business processes through: making online connections
with customers and suppliers of systems, orders’ management, planning, scheduling and
production tracking, cost control on the product, order, model, etc.;
— Promptitude, understood as the capacity of the company to meet orders quickly and in time.
Timeliness is focused on compliance and reduction of delivery times set by the beneficiaries
and is based on three essential characteristics of the production management system of the
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enterprise a) the system's ability to establish reasonable delivery times, characterized by a low
risk of failure; for this it is necessary to know precisely the production cycle, the time needed to
carry out administrative work required by a specific order, production resources and existing
manufacturing technologies during production, b) capacity of the system to comply with strict
delivery deadlines established, a requirement that is expressed through the gap between fixed
delivery date and actual date of delivery for every order received by the firm c) system's ability
to reduce the delivery times of orders by reducing cycle times and by accelerating the
production and distribution of products, following the adoption of measures to decrease the
operational times, interruptions and time consumed with the administrative processing of
orders. We considered that a company fulfils this quality if it has the capacity to perform
promptly and observe an order within a maximum of 4 weeks for products intended for
export.
In the category of enterprises characterized by strong differentiation we have included companies
characterized by at least one of the following:
ƒ
they are sensitive, distinguished by their flexibility and timeless, able to discover and
understand the changes occurring in the customer requirements, sometimes even to anticipate
them, and react quickly to meet them through the launch of new offerings;
ƒ
they are safe, differentiated by quality, timeliness and cost, have the ability to meet orders
within a short time, respecting deadlines, quality characteristics and sales prices, with
relatively small additional cost. These companies provide themselves a “shield” in relations
with customers, making the customer "addicted" to the supplier.
The second dimension, cooperation in production, must be considered given the strategic choices
firms need to adjust to the position occupied in clothing production network and the strategies of
other companies, particularly those of the firms governing or coordinating the network.
In building the strategic chart we considered that firms are characterized by high degree of
cooperation in production if they meet at least one of the following features:
ƒ
production is made under sustainable arrangements, contractual or informal, based on trust,
with a minimum term of 2 years;
ƒ
activities of the two entities are closely coordinated through integrated logistics systems;
ƒ
conscious and voluntary exploitation of technology, information and common knowledge;
ƒ
inter-action between individuals working with the two organizations is strong.
Entities involved in a contractual arrangement or informal cooperation aim to meet specific
interests. Thus, the interests of intermediaries as customers of the clothing manufacturers are
mainly: get products as cheap as possible, made by “safe” manufacturers, with the knowledge,
technical expertise, innovative potential and experience necessary for understanding and
compliance with the requirements of large retailers, for fulfilling orders in the amount requested,
observing deadlines and condition of "zero defects", and for coordinating other manufacturers as
subcontractors. Producers' interests converge toward obtaining the best possible prices for their
products, getting regular orders, and using the experience, the relations and the economies of scale
and scope achieved by dealers and intermediaries.
Both intermediaries and producers in partnership pursue their interest in establishing transfer costs
so that any change of partners takes place under conditions as favorable to their own company. To
this end, the costs involved in changing your partner are continuously compared with the price
variation that is associated with continuing the actual business arrangement. When the transfer
cost is less than the variation (increase) the price, then partners will change.
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Degree of
product
differentiation
high
A
B
medium
D
C
small
E
low
high
Degree of
cooperation
in production
Figure 3. Strategic groups of enterprises engaged in strategic segment G, the external market
General characteristics of each group are:
— Group A, consisting of firms I5, I30 and I43 with a turnover in 2008 of 52,801,647 lei, exploits
the potential offered by the industry through increased product differentiation. Firms in this
strategic group are sensitive to customers, reacting quickly to meet them through the launch of
new offerings, providing reliable products, of quality and with relatively low additional cost.
Distinctive competencies of these firms are evident in many directions: the creative potential
allows them to record a very high rate of product innovation; design of highly differentiated
products relative to competitors; high quality products is certified according to ISO. Financial
rate of return of these companies recorded an average of 8.21% in 2008, giving an average
attractiveness to this group;
— Group B, consisting of firms I6 and I35 support a sharp distinction, focusing both on directly, on
the attributes of products, and indirectly, on the relationship with customers, on internal
relations and on links with other companies contributing to the product. These firms pursue
competitive advantages of sensitivity and security in a sustainable perspective, given the
privileged relations they establish with different partners under cooperation agreements,
subcontracting, joint venture, manufacturing licenses, etc. Distinctive competencies of these
firms, their assets in the effort to capitalize on opportunities occurring in their environment
are: very close relationships with all customers in order to identify their needs, to cooperate for
developing and improving the products / services; particularly creative potential, reflected in
the products and technologies high rate of renewal; total quality management system, which
allows to increase quality beyond that achieved by competitors, high productivity
manufacturing equipment capable of significantly lowering the manufacturing costs, the
special design of products, which increases their attractiveness compared to competitors
products, high quality products, certified according to ISO. Turnover of these companies in
2008 was of ROL 27,049,204 and the average financial return was 20.04% - this is the most
attractive strategic group;
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— Group C, consisting of firms I1, I4, I6, I9, I10, I15, I20, I23, I34, I40, I41 and I47, firms
characterized by an average differentiation, competitive advantage of which is flexibility (all 12
business group), with a combined turnover of ROL 466768681 in 2008 and an average rate of
financial return 2.07%;
— Group D consists of I7, I22, I25, I27, I28, I33 and I42, medium firms differentiated, flexible and
aimed to establish sustainable relations, cooperation in production, with a combined turnover
of 63,625,738 lei in 2008 and an average rate of financial return 13.55% - giving an average
attractiveness to this group;
— Group E is composed of I2, I39 and I45, poorly differentiated businesses, with a combined
turnover of 8,038,205 lei in 2008 and an average of 1.69% financial return - which gives a low
attractiveness of the group.
4. Conclusion
The strategic map of industry analysis allows us to distinguish between two levels of competition,
i.e. competition within each group (among firms representing the group) and inter-group
competition, which depends on the strategic moves made by the firms.
A competitor who belongs to a certain strategic group has the following options:
— to improve its position in the existing group to the detriment of other competitors by capturing
a segment of their market, which could lead to increased profitability. Dealing with
competitors that addresses the same market segment will be made through improved
performance relative to products offered, while confrontation involving different market
segments and thus a comparison of aggregate economic performance, requires a proper
management of cost and prices;
— to improve profitability with other competitors in the group, modeling group advantageous
characteristics, modeling that is based on achieving a combination of high profitability,
achieved through actions on the price and / or costs, and "favorable barriers (high at the entry
point in the strategic group and low at the exist point, which would theoretically lead to a
decreased number of competitors and increasing rivalry);
— to achieve an integration movement in another strategic group with more favorable
characteristics, namely improved profitability and lower entry barriers at the moment of
accession, which then become high for others aspiring to enter the group;
— to establish a new strategic group, based on a strategy focused on an innovative element
located in one of the links in the value chain: a technology or new features of an existing
product, a new way of marketing the product or managing the customer relations.
By introducing the concepts of "strategic segmentation" and "strategic group" we develop a more
accurate and realistic analysis of the competitive environment, highlighting the practical
implications of this analysis. Thus, the use of Porter’s competitive forces model to analyze the
competitive environment can be made with reference to competition within a strategic group.
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