SANTANDER

Strategic Group Analysis of Santander

Strategic Group Analysis of Santander

Introduction

Strategic group is a concept in which groups are made of companies which are from same industries. All the companies of that industry have same business models and are using similar strategies. The example of strategic group is that if restaurant industry is taken then it can be divided into many groups like fast food and fine dining. It also depends upon some variables like pricing, preparation and presentation.

Composition of these groups depends on their dimensions. The professors of strategic management usually make two dimensions for positioning a firm. The first dimension is to to distinguish it from their direct rival's means that have same business models and strategies. Another dimension is of indirect rivals. The reason behind the formation of these groups on the basis of business models and strategies is that strategies helps the organization in giving directions and scope of the business on the other hand business models define that how firms are going to achieve their targets and earn revenue by making large profits.

Hunt (1972) found the term strategic group when he was conducting the analysis on appliance industry. In that research he found out that high degree of competitive rivalry exist which are not even shown in concentrated ratios. The subgroups of the industry which are working in the same direction make the competition very tuff. Due to which firms have to bring rapid changes like innovation, reducing of prices, improving quality and keeping low profit margins.

Michael Porter (1980) developed this concept of strategic group and applied it in the system of strategic analysis. Porter explained the strategic groups in terms of mobility barriers. Mobility barriers are like entry barriers for companies entering in industries. Due to mobility barriers a company can come under one strategic group of the industry. Strategic groups are different from the generic strategies given by porter because they are internal strategies and they do not show the diversity of strategic style in an industry.

Originally the analysis of the companies where done on the basis for their financial and accounting data. In the later years the competitive behavior and performance of groups in an industry where done from cognitive perspective (Hodgkinson 1997).

Benefits of Strategic Group Analysis

The aims and purpose of strategic group analysis is to identify those organizations which have almost same characteristics of the strategies or they must be following same strategies and giving competition to each other on same basis. Mostly these groups are formed on the basis of two or three characteristics. Example of these characteristics are the extend of diversified products and services offered by the company, their geographic coverage, market segments, numbers of distribution channels, efforts in marketing, quality of their products and pricing policies are some major characteristics.

Strategic groups analysis are useful in many ways like they help in identifying the direct competitors of the company and their basis on which they are competing, shows that how one company can move in another strategic group ...