Why is it difficult for a company in one strategic group to change to a different strategic group?

Answer 1

When choosing a generic strategy for a business to follow, a company must look far into the future to see what the future of the market might be. A successful competitive advantage requires that a company make consistent product, market, and distinctive competency choices. After a company has chosen a strategy it can be very expensive to change their strategies. Generic competitive advantage strategies provide competitive advantages, but they are expensive to develop and maintain. For example, a simultaneous differentiation/cost-leadership strategy is the most expensive, because it requires that a company invest resources not only in functions such as R&D, sales, and marketing to develop distinctive competencies but also in functions such as manufacturing and materials management to find ways to reduce costs. In deciding on an investment strategy a company must evaluate the potential return from investing in a particular generic strategy. In this way it can determine whether pursuing a certain strategy is likely to be profitable and how profitability will change as competition within the industry changes. The industry life cycle also affects how strategies are chosen. Each stage of the life cycle has different implications for the investment of resources needed to gain a competitive advantage (Hill and Jones, 174).

Tapasya Sharma

Student of IMT

Answer 2

Changing to a different strategic group can be difficult for a company due to various factors such as established industry norms, different customer expectations, unique capabilities required, and a shift in competitive dynamics. Companies may face challenges in adapting their business model, resources, and competencies to align with the new strategic group, making the transition complex and risky.