ACCA Strategic Professional · Strategic Business Leader · Environmental issues
Mirelle Cosmetics notes that in its sector, premium-priced, innovation-led brands form one cluster, while discount own-label producers form another, and rivalry is far stronger within each cluster than between them. What does this analysis, strategic group mapping, imply for Mirelle?
Mirelle should treat firms in its own strategic group as its closest rivals, since they pursue similar strategies, and recognise that mobility barriers make moving between groups difficult. Clustering does not imply decline, and it does not mean all firms compete equally or that barriers are irrelevant.
- AIts most relevant competitors are the firms in its own cluster, and mobility barriers protect each groupCorrect
- BAll firms in the sector compete equally, so industry averages guide strategy
- CThe industry must be in decline because it has split into clusters
- DMirelle should assume entry barriers are irrelevant to cluster membership
Explanation
Strategic groups contain firms with similar strategies, who therefore compete most directly. Mobility barriers make it hard to move between groups. Treating all firms as equal ignores the groups, and clustering says nothing about decline or about barriers being irrelevant.
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