Abstract: Comprehensive strategic environment analysis and efficient strategic management are the foundation of privately operated small and micro theatre groups. However, the majority of the privately operated small and micro theatre groups today have unclear strategic environment analysis, vague strategic positioning, and poor strategic management ability, which limits the formation and improvement of its competitive advantage. In light of this, this paper constructs the competitive strategy model of privately operated theatre groups in combination with its basics. Taking children's theatre groups that account for the largest percentage among privately operated theatre groups as an example and using Shanghai where the market competition for children's play is relatively fierce as a regional representative, this paper conducts a thorough analysis of the strategic environment and management of privately operated small and micro theatre groups. As the study shows, to keep its place in the competitive performance market, privately operated small and micro theatre groups should thoroughly analyze their strategic environment from six dimensions including art supply factors, art demand factors, industry competition factors, relevant supporting factors, government environment, and industry environment to form its core competitiveness by fostering strengths and circumventing weaknesses and achieve the closed-loop of strategic management from strategic analysis, positioning, implementation, evaluation, to control on this basis.