CA Intermediate · Financial Management and Strategic Management · Strategic Analysis: External Environment
A firm in the Indian online education sector realises that its industry has several strategic groups, with premium live-class providers and low-cost recorded-lecture providers competing differently. Which benefit does identifying strategic groups mainly offer the firm?
Strategic group analysis helps the firm identify its closest competitors and understand the mobility barriers that keep firms from moving between groups. Premium live-class and low-cost recorded providers compete differently, so rivals are mainly within the same group. It is not a tool for internal strengths or policy forecasting.
- AIt helps identify its closest competitors and the mobility barriers between groupsCorrect
- BIt measures the firm's internal resource strengths
- CIt forecasts changes in government policy
- DIt calculates the firm's market share in terms of rupee profit
Explanation
Strategic group analysis clusters firms following similar strategies, so a firm can see who its direct rivals are and what barriers prevent moving between groups. Internal resources belong to internal analysis, policy forecasting to PESTEL, and profit share is not its purpose.
Did you get it right without looking?
One question tells you little. A timed set on Strategic Analysis: External Environment shows your real accuracy, how long you take and where you lose marks.
More Strategic Analysis: External Environment questions
- A firm analysing its external environment lists its main competitors, tracks their pricing, new launches and market share, and studies likel…
- A packaged snacks company, Crunchkart, finds that large retail chains can demand lower prices because they buy in bulk, can easily switch to…
- Several new electric two-wheeler start-ups are entering a market in which Hero-like incumbents have large dealer networks, high brand loyalt…
- A packaged-water company notices that its raw material supplier has merged with its only two rivals' suppliers, leaving one dominant supplie…
- A firm in the Indian two-wheeler industry concludes the following from its external analysis: high number of rivals of similar size, slow in…
- Several steel makers in India face a situation where a new entrant would need very large plants, long-term iron ore access and heavy capital…