The second step in driving-forces analysis is to determine whether the prevailing

change drivers, on the whole, are acting to make the industry environment more or less

attractive. Three questions need to be answered:

The real payoff of driving forces analysis is to help

managers understand

what strategy changes

are needed to prepare for

the impacts of the driving

forces.

• LO 3-3

Map the market

positions of key groups

of industry rivals.

STRATEGIC GROUP ANALYSIS

Within an industry, companies commonly sell in different price/quality ranges, appeal

to different types of buyers, have different geographic coverage, and so on. Some are

more attractively positioned than others. Understanding which companies are strongly

positioned and which are weakly positioned is an integral part of analyzing an industry’s competitive structure. The best technique for revealing the market positions of

industry competitors is strategic group mapping.

Using Strategic Group Maps to Assess the Market

Positions of Key Competitors

A strategic group consists of those industry members with similar competitive

approaches and positions in the market. Companies in the same strategic group can

1. Are the driving forces, on balance, acting to cause demand for the industry’s

product to increase or decrease?

2. Is the collective impact of the driving forces making competition more or less

intense?

3. Will the combined impacts of the driving forces lead to higher or lower industry

profitability?