Abstract:
Strategic group research originated in the 1970s and a number of notable studies
centered on the US pharmaceutical industry. Results were however, conflicting. This
thesis explores the nature of strategic groups and the related concept of competitive
groups in the UK pharmaceutical industry during the period 1993 to 2002. The research
follows three related themes. The first research theme identifies two stable strategic
time periods each of five years duration across the period studied. Within each of these
time periods strategic groups were identified using a combination of Ward's method
and aK means clustering algorithm and the presence of a relatively stable strategic
group structure was confirmed. A statistically significant relationship between these
strategic groups and performance is demonstrated using three performance measures.
The second research theme then explores the movement of firms between strategic
groups and finds some support for the proposition that firms moving between strategic
groups move to more advantageousp ositions. The relationship between strategicg roups
and mergers is also investigated and this research finds that mergers between firms
occur preferentially across strategic groups rather than within strategic groups. This
relationship is confirmed as highly statistically significant. Finally in the third research
theme the relationship between strategic groups, how firms compete and competitive
groups, where firms compete, are investigated. Six different competitive groups are
identified, all but one of which is concentrated around a dominant therapeutic area. This
finding suggests that direct competition between firms is reduced by market
segmentation. A weak relationship was found between competitive groups and
performance but when competitive groups (where firms compete) and strategic groups
how firms compete) are examined in combination a strong statistically significant
relationship with performance was found.