CS Professional · Strategic Management and Corporate Finance · Competitive Positioning
A strategy analyst plots Indian two-wheeler makers on a map with price positioning on one axis and geographic reach on the other, then draws circles around clusters of similar firms. What is the main purpose of this strategic group map?
The purpose of a strategic group map is to show which firms follow similar strategies and therefore compete most directly, and to reveal unoccupied positions and the barriers that stop firms moving between groups. It is a positioning tool, not a financial valuation tool.
- ATo compute each firm's weighted average cost of capital
- BTo identify direct rivals and spot gaps or movement barriers between clustersCorrect
- CTo determine the face value of each firm's shares
- DTo rank firms by number of employees
Explanation
Strategic group mapping uses two key strategic dimensions to show who competes most closely and which positions are vacant. It also highlights mobility barriers. It does not compute cost of capital, share value or headcount.
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