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"The SCP approach is a useful taxonomy, but fails to embrace the concepts of competitive strategy and strategic groups", (Kraft, 2000) Discuss.
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"The SCP approach is a useful taxonomy, but fails to embrace the concepts of competitive strategy and strategic groups." (Kraft, 2000) Discuss. Structure Conduct Performance (SCP) approach can be defined as "an approach to economics of industrial organisation in which the structure of the industry - concentration, entry, barriers and product differentiation - are seen as the determinants of performance"1. In the opinion of Kraft, SCP analysis of industry usefulness resides in its "characterisation [of firms] into groups"2, i.e. forming taxonomy, with the drawbacks stemming from its failure to include competitive strategy and strategic groups within its framework. These concepts refer to purposive action concerning resource allocation of the firm's plans and implementation to position themselves in markets and compete with others and to firms within an industry exhibiting similar asset configurations and hence pursuing similar competitive strategies. Whether this is indeed the case requires several factors to be examined. First...
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