2.3.2 Why use Strategic Group Analysis instead of Porter´s Five Forces?

The concept of strategic groups affects sector analysis in various ways:

  • The influence of Porter´s Five Forces loses importance as strategic groups can have very different characteristics within an industry (e.g. big businesses have a much higher bargaining power with their suppliers when compared to small businesses, as they have a much higher quantity of orders).
  • The concept of strategic groups is more focused on the competition within a group. In these strategic groups decisive competition takes place, as the competition with other groups is of minor importance. For example luxury restaurants do not compete with fast food chains, tough they both belong to the same sector.