ansoff’s matrix

Question 1

what is ansoff’s matrix a tool for?

Answer 1

• ansoff’s matrix is a tool for comparing the level of risk involved with the different growth strategies.
• it helps managers to decide on a direction for strategic growth

Question 2

what do the 4 strategies that ansoff came up with do?

Answer 2

these strategies set the direction for business growth and strategy development

Question 3

what is market penetration?

Answer 3

• trying to increase your market share in your existing market
• a business may try to increase market share by using sales promotions, pricing strategies and advertising.
• this strategy works best in a growth market. it doesn’t work well in saturated markets, where demand for the product has stopped growing

Question 4

what is new product development?

Answer 4

• selling new products in your existing markets
• it’s best when the market has good growth potential and the business has high market share, strong research and development and a good competitive advantage

Question 5

what is market development?

Answer 5

• selling existing products to new markets
• it can be done through repositioning - this means that a business focuses on a different segment of the market. they need to research the target market segment and work out how they can adapt their product or promotion to suit the needs of a different set of consumers. this might involve creating a new advertising campaign or promotion which targets a different audience.
• businesses can also target different market segments by using new channels of distribution e.g using e-commerce to sell directly to consumers rather than selling through a retailer or agent

Question 6

what is another way market development can be done?

Answer 6

• by expanding into new geographical markets to exploit the same market segments ( e.g in a different country )

Question 7

what is diversification?

Answer 7

• selling new products to new markets.
• diversification is a very risky strategy as it involves moving into markets that the business may have no experience of.
• its used when a business really needs to reduce their dependence on a limited product range or if high profits are likely which reduces the risk

Question 8

advantage of ansoff’s matrix

Answer 8

• it doesn’t just lay out potential strategies for growth - it also forces managers to think about the expected risks of moving in a certain direction

Question 9

disadvantage of ansoff’s matrix

Answer 9

• it fails to show that market development and diversification strategies also tend to require significant change in the day-to-day workings of the company

Question 10

product development is ….. risky than diversification but it works best for firms that already have a strong competitive advantage

Answer 10

product development is less risky than diversification but it works best for firms that already have a strong competitive advantage

Question 11

market penetration is the ….. risky strategy of all - so most firms opt for this approach to start with

Answer 11

market penetration is the least risky strategy of all - so most firms opt for this approach to start with

Question 12

why do some people believe that ansoff’s matrix oversimplifies the options available for growth?

Answer 12

• for example, diversification doesn’t have to be completely unrelated to what the business does currently.
• it might be a safe option to diversify by moving into your supplier’s business as you know there’s a guaranteed market for that product