Final answer:
Strategic group members are firms within the same industry that have similar characteristics and compete against each other. External firms can impact the dynamics of a strategic group.
Step-by-step explanation:
Strategic group members are firms within the same industry that have similar characteristics and compete against each other in similar markets. They often offer similar products or services, target the same customer segment, and employ similar business strategies. For example, in the automobile industry, luxury car manufacturers such as BMW, Mercedes-Benz, and Audi are members of a strategic group.
The impact of firms outside a strategic group on those within the group can vary. External firms can influence the competitive dynamics within the group by introducing new innovations, technologies, or business models. They can also affect pricing strategies, advertising campaigns, and overall market conditions. For example, a disruptive new entrant in the smartphone industry, such as a Chinese manufacturer, can impact the traditional strategic group of established smartphone brands like Apple and Samsung.