Strategy Maps: A Spatial Representation of Intra-Industry Competitive Strategy

We introduce an integrative tool, called a strategy map, for describing the nature of a given competitive environment. The approach can also suggest specific courses of actions for competing businesses in those environments. The strength of the method is its ability to capture and communicate visually through a map the complex relations among competitive strategy variables and performance simultaneously. This article focuses on theory from the strategy field to develop a basic model that ties together the key elements in the development of any competitive strategy map. This theoretical development is followed with an examination of some of the important methodological developments in the field. The article then goes into the statistical development of the methodology. Then the maps are developed through a methodology which captures the simultaneous, multidimensional, and interrelated nature of business strategy and performance for a group of businesses within an industry. Specifically, we (a) present a multidimensional scaling methodology for describing the competitive nature of a given industry, (b) examine the necessary tradeoffs that a competitor must make in targeting its performance goals, and (c) explore the relative importance the different strategy variables have for achieving these performance goals in the given competitive environment. An empirical application using PIMS data is presented---strategy maps are derived for a mature, industrial supplier to illustrate how the method can be employed as a descriptive tool in competitive strategy. The findings are then validated for a randomly selected business.