A Strategic Group (SG) is a concept used in strategic management that groups companies within an industry that have similar business models or similar combinations of strategies. For the airline industry, they can be divided in to three SG’s: • Low Cost Carriers (Cost Level Strategic Group) • Regional and Intercontinental Carriers (Geographical Strategic Group) • Business and Frequent Carriers (Customer Strategic Group) Those airlines which can be classified as any one of the SG’s can form an alliance within their SG. For example, the Sky Team alliance is composed of low cost carriers such as Air France, Delta, Aeromexico, Korean and COPA which are basically competing for the Cost Level SG, but not competing against each other. An alliance of this SG is strategic in nature based on the following five criteria: 1. Critical to the success of a core business goal or objective 2. Critical to the development or maintenance of a core competency or other source of competitive advantage
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low cost carriers, strategic group, Level Strategic Group