Understanding mobility barriers
Mobility barriers are challenges that make it difficult for firms to reposition themselves to a different strategy. They typically derive from past decisions that pose challenges to move to a different approach. Some examples of mobility barriers include:
- Difficulty changing an existing reputation
- Changes that would be needed to machinery or processes to move to a different approach
- The risk of alienating existing customers by adapting the firm’s strategy.
Understanding strategic groups
Strategic groups are firms that compete in similar ways. These are firms that have made similar strategic choices and are the closes competitors to one another. Strategic groups can be thought of as sub-industries – groupings of firms within the same broad product area that have made related choices, and compete most directly with one another.
Why mobility barriers are needed for strategic groups
Mobility barriers are a key part of how strategic groups persist over time. If there were no mobility barriers that make it difficult for firms to change their position, then it would be possible for firms to easily change their strategic position.
What would happen without mobility barriers
If there were no mobility barriers in an industry, strategic groups would not remain persistent; firms would be able to easily move from one strategic approach to another. A strategic position with a higher profit would attract other firms. Companies in a lower profit position would move to the more attractive position.
Final thoughts: Sable strategic groups indicate the presence of mobility barriers
The presence of persistent strategic groups, and especially persistent differences in profit levels between these positions, is an indicator of mobility barriers. Were it not for the mobility barriers the lower profit firms would likely change their approach to move to the higher profit potential strategic position. Mobility barriers make this difficult – helping explain the presence of stable groupings of firm approaches despite differences in profitability levels between groups.