A strategic group analysis is used to analyse competition within an industry. It is based on the assumption that some organisations are more significant, from a competitive point of view, to a particular organisation than others.

The strategic group analysis should be carried out as follows:

• Identify the two major competitive characteristics that differentiate organisations in the industry.
• Plot individual organisations on a two-dimensional graph by using the two variables as the vertical and horizontal axes.
• Vary the size of the circle for each organisation in proportion to the group’s share of the total industry revenue.

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