Why are highly correlated variables often discouraged when creating a strategic group map?

Highly correlated variables are often discouraged when creating a strategic group map because they do not showcase differences in market positioning. In strategic management, the purpose of a strategic group map is to visually represent how different competitors in a market are positioned in relation to one another based on key strategic dimensions. When variables are highly correlated, they tend to convey similar information and do not effectively distinguish between the different strategic behaviors or positions of companies. This lack of differentiation can lead to a less insightful analysis, making it difficult to identify which companies are truly competing with each other and how they can be strategically differentiated.

When constructing a strategic group map, it is essential to utilize dimensions that highlight the unique aspects of each competitor's strategy, allowing for a clearer understanding of competitive dynamics within the market. Thus, the emphasis on avoiding highly correlated variables supports a more nuanced and comprehensive analysis that outlines distinct competitive positions and strategic choices.