Ansoff's Matrix

Question 1

How many options did Ansoff suggest for a business to achieve strategic growth?

Answer 1

4; Market penetration, New product development, Market development, and diversification.

Question 2

What is market penetration in relation to Ansoff’s matrix? How can it be achieved and where is it most suitable?

Answer 2

Trying to increase your market share in your existing market. Usually achieved through lowering prices to increase demand if it is elastic, promotion and advertising.
It works best in growing markets where there is little saturation and opportunities for growth.

Question 3

What is new product development in relation to Ansoff’s matrix? How can it be achieved and where is it most suitable?

Answer 3

Selling new products in your existing market. Suits a growth potential market, where a business has a CA (brand etc) and good R&D

Question 4

What is market development in relation to Ansoff’s matrix? How can it be achieved and where is it most suitable?

Answer 4

Selling existing products to new markets. Can be done through repositioning (new segment - should be done after sufficient MR to work out how to adapt to new customers.) Can also be done by businesses changing distribution methods to sell to new audiences where products are more accessible.

Question 5

What is diversification in relation to Ansoff’s matrix? How can it be achieved and where is it most suitable?

Answer 5

New products – New markets. Risky but used when a business needs to reduce their dependence on a limited product range (Risk bearing EOS), or if profits are likely.

Question 6

What is this matrix?

Answer 6

Ansoffs matrix

Question 7

What is Ansoffs matrix used for?

Answer 7

To measure the levels of risk involved in different growth strategies. It can help mangers decide a direction for growth.

Question 8

Advantages of Ansoffs?

Answer 8

Forces managers to think about the risks of their decisions.

Question 9

Disadvantage of the matrix

Answer 9

Doesn’t emphasise how entering new markets can significantly change the tactics and day to day workings of a business.
- oversimplifies the growth options, could have takeovers or mergers etc. .
Not dynamic and doesn’t consider how competitors will react to businesses decisions.
Not useful for TNCs as they will probably be in all 4 quadrants already.