Manufacturer Strategies in the European Food Industry

Abstract

The term barriers to entry is used with reference to the additional costs to be incurred by a new entrant to an industry which provide a measure of protection to incumbent firms. The term mobility barriers is a similar concept used to describe the barriers which protect firms within a particular strategic group in an industry from competition with firms in other strategic groups in the same industry (Caves and Porter, 1977; Newman, 1978; Porter, 1979). Thus a firm within a group makes strategic decisions which cannot readily be imitated by firms outside the group, without substantial costs, implying that performance (in terms of growth, profitability etc.) may vary among groups. Firms within a group are assumed to be relatively homogeneous in terms of their employment of strategic variables (product differentiation, R&D, financial strategies, low cost/economies of scale, private label, market dimension-local, national, international, etc.). Thus Porter (1980: 129) defines a strategic group as ‘a group of firms in an industry following the same or similar strategy along the strategic dimensions’.