SV matrix: strategic competitive analysis tool based on the dominance level

Abstract

This article addresses current tools for assessing the level of dominance in industries (Concentration Index (CR), Lind Index (L), Hall-Tideman Index (HT), Herfindahl–Hirschman Index (HHI)), identifies the limitations of the existing toolkit, and proposes its modification based on the developed SV Matrix, which allows analyzing the competitive situation on different markets. Drawing on the RAEX ranking of 2020 for four industries (consulting, audit, outsourcing, information technology), the authors propose classical indices modification algorithms to conduct a comparative analysis of the dominant level on different markets. To conduct a strategic competitive analysis based on modified indices, the article proposes to use the SV Matrix, allowing to reflect the comparative dominant level for different markets, as well as market shares controlled by leading companies. The technique is tested on the sample of 90 Russian industries (according to 2020 official reports) and allows to identify the presence of dominant groups in 31 sectors, assess their size and inner differentiation that resulted in comparative analysis of industries. The SV Matrix expands the toolkit for strategic analysis, allowing to assess not only the competition level in the market and the presence of dominant players in the industry, but also the differentiation level for companies within the dominant group. Applying this matrix help analyze the characteristics of the market (both for the companies already in the market and those just planning to enter it) and draw conclusions regarding the strategic behavior of companies.