BM Tools - Ansoff's Matrix Flashcards
1
Q
Definition
A
An analytical tool that helps managers choose and devise product and market growth strategies
* choice depends on company’s objectives
2
Q
Description
A
- X axis: Products (existing, new)
- Y axis: Markets (existing, new)
3
Q
Market penetration
A
Business choosing to focus on selling existing products in existing markets
4
Q
Features of market penetration (name 2)
A
- mininal risk
- seeks to maintain or increase market share
- intense competition
5
Q
Product development
A
Involves selling new products in existing markets
6
Q
Features of product development (name 2)
A
- moderate risk
- innovation to replace existing products
- product improvements
7
Q
Market development
A
Selling existing products in new markets
8
Q
Features of market development (name 2)
A
- moderate risk
- entry into overseas markets
- new distribution channels
9
Q
Diversification
A
Selling new products in new markets
10
Q
Features of diversification
A
- high risk
- enables spreading of risk with a balance product portfolio
- use of subsidiaries and strategic units
11
Q
Types of diversification
A
- related diversification: when business caters for customers within the same industry
- unrelated diversification: growth by selling completely new products in untapped markets
12
Q
Benefits of Ansoff’s matrix (2)
A
- simple, straightforward
- enables discussion about potential risks and rewards for reach growth strategy
13
Q
Drawbacks of Ansoff’s matrix (2)
A
- does not quantify the level of risk of each strategy
- does not suggest a particular strategy
