What is a strategic group map, and why is it useful?

• A. A diagram of firms placed in strategic groups based on key dimensions; reveals mobility barriers and competitors’ behavior.
• B. A graph of stock prices.
• C. A map of corporate offices by region.
• D. A chart of internal workflows.

Answer: (A)

A strategic group map is a diagram that places firms into groups based on the main ways they compete in the industry, using key dimensions like price versus quality, breadth of product lines, geographic scope, or distribution channels. It makes visible how firms cluster into different strategic spaces and where the entry barriers between those spaces are—showing why it’s hard to jump from one group to another and what kinds of commitments or changes that would require. This helps you anticipate rivals’ actions because firms within the same group tend to pursue similar strategies and serve similar customers, so their moves often mirror each other. The map also highlights where competition is fiercest, where there are gaps or under-served niches, and how differences in strategy translate into different levels of profitability. It’s about competitive positions and strategic choices in the market, not about stock prices, regional office locations, or internal workflows.