The analysis of strategic groups of firms
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Competitive behaviour exhibited by firms operating in the same industry can differ greatly. There are some strategic conceptions, according to which it may be possible to differentiate different strategic groups ofFirms from each other in any industry. The fundamental strategic conceptions are cost leadership and product differentiation. Firms in competition with each other handle the competitive aspects of their activities in two ways, first by competing with firms which belong to the same strategic group, and second by competing, together with the competitors in their own groups, with firms whose identity lies in other strategic groups.The success of a businesses strategy, therefore, depends on the ability of a firm to protect its strategic business unit from both sorts of competition as appropriate. The study on which mis paper is based aims to demonstrate a method whereby an analysis of strategic groups of firms can be built.The applicability of mis methodology has been tested by empirical research in the Tyrolean building industry. The paper shows the consequences of analysing strategic groups as a means of formulating competitive strategy. It concludes with some ideas for future research.

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