strategic planning tools
TRANSCRIPT
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01 – Boston Consulting Group Matrix02 – General Electric / McKinsey Matrix03 – SWOT / TOWS Analysis Matrix04 – Porter’s Generic Competitive Strategies05 – Porter’s Five Forces Model06 – Ansoff Matrix
Contents
Strategic Planning Tools
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Boston Consulting Group MatrixThe Growth Share Matrix
01
Strategic Planning Tools
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4
THE GROWTH SHARE MATRIX
BOSTON CONSULTING GROUP MATRIX
GRO
WTH
SHARE
Stars
Dogs
QuestionMarks
CashCows
To be successful, a company should have a
portfolio of products with different growth rates and
different market shares.
“
”-- Bruce Henderson, BCG’s founder
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5
THE GROWTH SHARE MATRIX
BOSTON CONSULTING GROUP MATRIX
GROWTH
SHARE
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THE GROWTH SHARE MATRIX
BOSTON CONSULTING GROUP MATRIX
GROWTH
SHARE
STARS
DOGS
QUESTION MARKS
CASH COW
High Low
Low
High
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THE GROWTH SHARE MATRIX
BOSTON CONSULTING GROUP MATRIX
7
GROWTH
SHARE
STARS
DOGS
QUESTION MARKS
CASH COW
High Low
Low
High
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8
THE GROWTH SHARE MATRIX
BOSTON CONSULTING GROUP MATRIX
GROWTH
SHARE
Stars QuestionMarks
CashCows Dogs
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THE GROWTH SHARE MATRIX
BOSTON CONSULTING GROUP MATRIX
HOLD BUILD
HARVEST DIVEST
Continue doing the same things to
maintain the status quo
Utilize the cash flow from a Star or
Cash Cow to reduce the burden of investment and maximize profits
Make further investments, either
to maintain the market share of Star, or make a
Question Mark into a Star
Sell off or withdraw Dogs so that HR
and financial capital can be
invested in Star and Question Mark
products and business units
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10
THE GROWTH SHARE MATRIX
BOSTON CONSULTING GROUP MATRIX
GRO
WTH
SHARE
Stars
Dogs
QuestionMarks
CashCows
Insert any title here
Insert any title here
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THE GROWTH SHARE MATRIX
BOSTON CONSULTING GROUP MATRIX
GRO
WTH
SHARE
Stars
Dogs
QuestionMarks
CashCows
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THE GROWTH SHARE MATRIX
BOSTON CONSULTING GROUP MATRIX
Low
High
Cash Cows
Stars
High
Dogs
Question Marks
LowSHARE
GROWTH
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THE GROWTH SHARE MATRIX
BOSTON CONSULTING GROUP MATRIX
CASH
USE
CASH GENERATION
Stars
Dogs
QuestionMarks
CashCows
Many “businesses” require
far more cash input than
they can ever generate.
“
”Source: The Boston Consulting Group, “The Experience Curve – Reviewed”, from www.bcg.com/accessed at http://www.bcg.com/documents/file13904.pdf
GRO
WTH
SHARE -- Bruce Henderson, BCG’s founder
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THE GROWTH SHARE MATRIX
BOSTON CONSULTING GROUP MATRIX
Stars
Dogs
QuestionMarks
CashCows
A few businesses generate
far more cash than they
can profitably reinvest.
“
”Source: The Boston Consulting Group, “The Experience Curve – Reviewed”, from www.bcg.com/accessed at http://www.bcg.com/documents/file13904.pdf
CASH
USE
CASH GENERATION
GRO
WTH
SHARE -- Bruce Henderson, BCG’s founder
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THE GROWTH SHARE MATRIX
BOSTON CONSULTING GROUP MATRIX
Stars
Dogs
QuestionMarks
CashCows
A few businesses are self-sufficient in cash flow. Over
time they will become much larger and also large
net generators of cash.
“
”Source: The Boston Consulting Group, “The Experience Curve – Reviewed”, from www.bcg.com/accessed at http://www.bcg.com/documents/file13904.pdf
CASH
USE
CASH GENERATION
GRO
WTH
SHARE -- Bruce Henderson, BCG’s founder
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THE GROWTH SHARE MATRIX
BOSTON CONSULTING GROUP MATRIX
Stars
Dogs
QuestionMarks
CashCows
Most businesses, however, generate very little cash even
thought they use little. The reported earnings must be
reinvested and probably always will. These businesses
are “cash traps”.
“
”Source: The Boston Consulting Group, “The Experience Curve – Reviewed”, from www.bcg.com/accessed at http://www.bcg.com/documents/file13904.pdf
CASH
USE
CASH GENERATION
GRO
WTH
SHARE -- Bruce Henderson, BCG’s founder
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THE GROWTH SHARE MATRIX
BOSTON CONSULTING GROUP MATRIX
GRO
WTH
SHARE
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THE GROWTH SHARE MATRIX
BOSTON CONSULTING GROUP MATRIX
GRO
WTH
SHARE
HIGH MARKET SHARE
FAST GROWTH MARKET
LOW MARKET SHARE
SLOW SHRINKING MARKET
LOW MARKET SHARE
FAST GROWING MARKET
HIGH MARKET SHARE
SLOW MARKET GROWTH
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THE GROWTH SHARE MATRIX
BOSTON CONSULTING GROUP MATRIX
GRO
WTH
SHARE
BU #1
BU #6
BU #4
BU #2
BU #9
BU #10
BU #7
BU #5
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WORKSHEET 1
BOSTON CONSULTING GROUP MATRIX
GRO
WTH
SHARE
Stars
Cash Cows
Question Marks
Dogs
High Low
LowHigh
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Relative Market Share
Market Growth Risk Level
STARS
• Entry 1• Entry 2• Entry 3• Entry 4• Entry 5
CASH COWS
• Entry 1• Entry 2• Entry 3• Entry 4• Entry 5
WORKSHEET 2 – 1/3
BOSTON CONSULTING GROUP MATRIX
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Relative Market Share
Market Growth Risk Level
QUESTION MARKS
• Entry 1• Entry 2• Entry 3• Entry 4• Entry 5
DOGS
• Entry 1• Entry 2• Entry 3• Entry 4• Entry 5
WORKSHEET 2 – 2/3
BOSTON CONSULTING GROUP MATRIX
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WORKSHEET 2 – 3/3
BOSTON CONSULTING GROUP MATRIX
Relative Market ShareHigh Low
Market
Growth
High STARS• Entry 1• Entry 2• Entry 3• Entry 4• Entry 5• Entry 6• Entry 7• Entry 8• Entry 9
QUESTION MARKS• Entry 1• Entry 2• Entry 3• Entry 4• Entry 5• Entry 6• Entry 7• Entry 8• Entry 9
Low CASH COWS• Entry 1• Entry 2• Entry 3• Entry 4• Entry 5• Entry 6• Entry 7• Entry 8• Entry 9
DOGS• Entry 1• Entry 2• Entry 3• Entry 4• Entry 5• Entry 6• Entry 7• Entry 8• Entry 9
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Harvest
Invest
Protect
Divest
Protect
Harvest
Protect
Invest
Invest
General Electric / McKinsey MatrixThe Multifactor Portfolio Matrix
02
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THE MULTIFACTOR PORTFOLIO MATRIX
GE / MCKINSEY MATRIX
BUSINESS STRENGTH
Selectivity / Earnings
Harvest / Divest
Invest / Grow
Strong
High
Medium Low
Med
ium
Low
MAR
KET
ATTR
ACTI
VEN
ESS This matrix provides a
systematic approach for the multi-business
corporation to prioritize investments among its
business units.
“
”Source: McKinsey, “Enduring Ideas: The GE–McKinsey nine-box matrix”, from www.mckinsey.com/accessed at http://www.mckinsey.com/insights/strategy/enduring_ideas_the_ge_and_mckinsey_nine-box_matrix
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THE MULTIFACTOR PORTFOLIO MATRIX
GE / MCKINSEY MATRIX
BUSINESS STRENGTH
Selectivity / Earnings
Harvest / Divest
Invest / Grow
Strong
High
Medium Low
Med
ium
Low
MAR
KET
ATTR
ACTI
VEN
ESS
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THE MULTIFACTOR PORTFOLIO MATRIX
GE / MCKINSEY MATRIX
MARKETATTRACTIVENESS
BUSINESS STRENGTH
Harvest
Invest
Protect
Divest
Protect
Harvest
Protect
Invest
Invest
Strong
High
Medium Low
Med
ium
Low
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THE MULTIFACTOR PORTFOLIO MATRIX
GE / MCKINSEY MATRIX
28
MARKETATTRACTIVENESS
BUSINESS STRENGTH
Harvest
Invest
Protect
Divest
Protect
Harvest
Protect
Invest
Invest
Strong
High
Medium Low
Med
ium
Low
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29
THE MULTIFACTOR PORTFOLIO MATRIX
GE / MCKINSEY MATRIX
MARKETATTRACTIVENESS
BUSINESS STRENGTH
Strong
High
Medium Low
Med
ium
Low
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30
THE MULTIFACTOR PORTFOLIO MATRIX
GE / MCKINSEY MATRIX
MARKETATTRACTIVENESS
BUSINESS STRENGTH
Protect
Harvest / Divest
Invest / Grow
Strong
High
Medium Low
Med
ium
Low
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THE MULTIFACTOR PORTFOLIO MATRIX
GE / MCKINSEY MATRIX
MAR
KET
ATTR
ACTI
VEN
ESS
BUSINESS STRENGTHHigh Low
Low
High
Harvest
Invest
Protect
Divest
Protect
Harvest
Protect
Invest
Invest
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WORKSHEET 1
GE / MCKINSEY MATRIX
MAR
KET
ATTR
ACTI
VEN
ESS
BUSINESS STRENGTHHigh Low
Low
High
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WORKSHEET 2
GE / MCKINSEY MATRIX
Business StrengthHigh Medium Low
Market Attractiveness
High • Entry 1• Entry 2• Entry 3• Entry 4• Entry 5• Entry 6
• Entry 1• Entry 2• Entry 3• Entry 4• Entry 5• Entry 6
• Entry 1• Entry 2• Entry 3• Entry 4• Entry 5• Entry 6
Medium • Entry 1• Entry 2• Entry 3• Entry 4• Entry 5• Entry 6
• Entry 1• Entry 2• Entry 3• Entry 4• Entry 5• Entry 6
• Entry 1• Entry 2• Entry 3• Entry 4• Entry 5• Entry 6
Low • Entry 1• Entry 2• Entry 3• Entry 4• Entry 5• Entry 6
• Entry 1• Entry 2• Entry 3• Entry 4• Entry 5• Entry 6
• Entry 1• Entry 2• Entry 3• Entry 4• Entry 5• Entry 6
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SWOT / TOWS Analysis MatrixThe Competitive Analysis Matrix
03
Strategic Planning Tools
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THE COMPETITIVE ANALYSIS MATRIX
SWOT / TOWS ANALYSIS MATRIX
Strengths
Threats
Weaknesses
Opportunities
SWOT analysis entails a distillation of the findings of an internal and
external audit that draws attention, from a strategic perspective, to the critical organizational strengths and weaknesses and the opportunities and threats facing the organization
“
”-- Kotler and Armstrong, 2011Positive NegativeEx
tern
alIn
tern
al
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THE COMPETITIVE ANALYSIS MATRIX
SWOT / TOWS ANALYSIS MATRIX
Positive Negative
Exte
rnal
Inte
rnal
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STRENGTHS
THREATS
WEAKNESSES
OPPORTUNITIES
THE COMPETITIVE ANALYSIS MATRIX
SWOT / TOWS ANALYSIS MATRIX
Positive Negative
Exte
rnal
Inte
rnal
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THE COMPETITIVE ANALYSIS MATRIX
SWOT / TOWS ANALYSIS MATRIX
Positive Negative
Exte
rnal
Inte
rnal
Strengths Weaknesses
Opportunities Threats
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THE COMPETITIVE ANALYSIS MATRIX
SWOT / TOWS ANALYSIS MATRIX
Positive Negative
Exte
rnal
Inte
rnal
Strengths Weaknesses
Opportunities Threats
S
O
W
T
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THE COMPETITIVE ANALYSIS MATRIX
SWOT / TOWS ANALYSIS MATRIX
40Positive Negative
Exte
rnal
Inte
rnal
Strengths Weaknesses
Opportunities Threats
S
O
W
T
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THE COMPETITIVE ANALYSIS MATRIX
SWOT / TOWS ANALYSIS MATRIX
Positive Negative
Exte
rnal
Inte
rnal
Strengths Weaknesses
Opportunities Threats
SO
WT
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THE COMPETITIVE ANALYSIS MATRIX
SWOT / TOWS ANALYSIS MATRIX
Positive Negative
Exte
rnal
Inte
rnal
Strengths Weaknesses
Opportunities Threats
SO
WT
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THE COMPETITIVE ANALYSIS MATRIX
SWOT / TOWS ANALYSIS MATRIX
Characteristics of the business or
project that give it an advantage
over others
Elements that the project could
exploit to its advantage
Characteristics that place the
business or project at a
disadvantage relative to others
Elements in the environment that
could cause trouble for the
business or project
Positive Negative
Exte
rnal
Inte
rnal
Strengths Weaknesses
Opportunities Threats
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THE COMPETITIVE ANALYSIS MATRIX
SWOT / TOWS ANALYSIS MATRIX
• What advantages do we have?• What do we do better than anyone else?• What unique or lowest-cost resources can we
draw upon that others can't?• What do people in our market see as our
strengths?• What factors mean that you "get the sale"?• What connections and alliances do we have?
• What good opportunities can we spot?• What interesting trends are we aware of?• What weaknesses in our competitors can we
attacks?• Useful opportunities can come from such
things as: Changes in technology and markets on
both a broad and narrow scale Changes in government policy related to
your field. Changes in social patterns, population
profiles, lifestyle changes, etc.
• What could we improve?• What should we avoid?• What are people in our market likely to see as
weaknesses?• Is our intellectual property outdated?• What connections and alliances should we
have, but don’t?
• What obstacles do we face?• What are our competitors doing / could do to
hurt us?• Are quality standards or specifications for our
job, products or services changing?• Is changing technology threatening our
position?• Do we have bad debt or cash-flow problems?• Could any of our weaknesses seriously
threaten our business?
Positive Negative
Exte
rnal
Inte
rnal
Strengths Weaknesses
Opportunities Threats
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THE COMPETITIVE ANALYSIS MATRIX
SWOT / TOWS ANALYSIS MATRIX
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Positive NegativeEx
tern
alIn
tern
al
Strengths Weaknesses
Opportunities Threats
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THE COMPETITIVE ANALYSIS MATRIX
SWOT / TOWS ANALYSIS MATRIX
Positive NegativeEx
tern
alIn
tern
al
Strengths Weaknesses
Opportunities Threats
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47
THE COMPETITIVE ANALYSIS MATRIX
SWOT / TOWS ANALYSIS MATRIX
External
Internal
Opportunities
Strengths
Positive
Threats
Weaknesses
Negative
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48
THE COMPETITIVE ANALYSIS MATRIX
SWOT / TOWS ANALYSIS MATRIX
Strengthsinternal capabilities thatmay help the company
reach its objectives.
“
”Positive NegativeEx
tern
alIn
tern
al
Strengths Weaknesses
Opportunities Threats
-- Kotler and Armstrong, 2011
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49
THE COMPETITIVE ANALYSIS MATRIX
SWOT / TOWS ANALYSIS MATRIX
Internal limitations that may interfere with the
company’s ability to achieve its objectives.
“
”Positive NegativeEx
tern
alIn
tern
al
Strengths Weaknesses
Opportunities Threats
-- Kotler and Armstrong, 2011
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50
THE COMPETITIVE ANALYSIS MATRIX
SWOT / TOWS ANALYSIS MATRIX
External factors that the
company may be able to
exploit to its advantage.
“
”Positive NegativeEx
tern
alIn
tern
al
Strengths Weaknesses
Opportunities Threats
-- Kotler and Armstrong, 2011
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51
THE COMPETITIVE ANALYSIS MATRIX
SWOT / TOWS ANALYSIS MATRIX
Current and emerging
external factors that may
challenge the company’s
performance.
“
”Positive NegativeEx
tern
alIn
tern
al
Strengths Weaknesses
Opportunities Threats
-- Kotler and Armstrong, 2011
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52
THE COMPETITIVE ANALYSIS MATRIX
SWOT / TOWS ANALYSIS MATRIX
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Lorem ipsum dolor sit amet, has meis dicta eloquentiam at. Eius forensibus usu cu impetus tamquam te cum, eu eam
Lorem ipsum dolor sit amet, has meis dicta eloquentiam at. Eius forensibus usu cu impetus tamquam te cum, eu
Lorem ipsum dolor sit amet, has meis dicta eloquentiam at. Eius forensibus usu cu impetus tamquam te cum, eu eam
Lorem ipsum dolor sit amet, has meis dicta eloquentiam at. Eius forensibuscu impetus tamquam te cum, eu eam
Lorem ipsum dolor sit amet, has meis dicta eloquentiam at. Eius forensibus usu cu impetus tamquam te cum, eu eam
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Positive Negative
Exte
rnal
Inte
rnal
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53
WORKSHEET
SWOT / TOWS ANALYSIS MATRIX
Positive Negative
Internal• Entry 1• Entry 2• Entry 3• Entry 4• Entry 5• Entry 6• Entry 7• Entry 8• Entry 9
• Entry 1• Entry 2• Entry 3• Entry 4• Entry 5• Entry 6• Entry 7• Entry 8• Entry 9
External• Entry 1• Entry 2• Entry 3• Entry 4• Entry 5• Entry 6• Entry 7• Entry 8• Entry 9
• Entry 1• Entry 2• Entry 3• Entry 4• Entry 5• Entry 6• Entry 7• Entry 8• Entry 9
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Porter’s Generic Competitive StrategiesThe Competitive Advantage Matrix
04
Strategic Planning Tools
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55
THE COMPETITIVE ADVANTAGE MATRIX (ORIGINAL MATRIX)
PORTER’S GENERIC COMPETITIVE STRATEGIES
Differentiation Overall Cost Leadership
Focus
The generic strategies are approaches to outperforming
competitors in the industry; in some industries structure will mean that all firms can earn high returns, whereas
in others, success with one of the generic strategies may be necessary
just to obtain acceptable returns in an absolute sense.
“
”-- Michael E. Porter, 1980Uniqueness Perceived by the Customer
Low Cost PositionPa
rticu
lar
Segm
ent O
nly
Indu
stry
wid
e
Strategic AdvantageSt
rate
gic
Targ
et
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56
Differentiation Overall Cost Leadership
THE COMPETITIVE ADVANTAGE MATRIX (ORIGINAL MATRIX)
PORTER’S GENERIC COMPETITIVE STRATEGIES
Focus
The firm failing to develop its strategy in at least one of the three directions - a firm that is "stuck in the middle" - is in an extremely poor strategic
situation.
“
”-- Michael E. Porter, 1980
Stuck in the Middle
Uniqueness Perceived by the Customer
Low Cost PositionPa
rticu
lar
Segm
ent O
nly
Indu
stry
wid
e
Strategic AdvantageSt
rate
gic
Targ
et
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57
THE COMPETITIVE ADVANTAGE MATRIX
PORTER’S GENERIC COMPETITIVE STRATEGIES
Cost Leadership
Differentiation Focus
Differentiation
Cost Focus
Low Cost DifferentiationN
arro
wBr
oad
Com
petiti
ve S
cope
Source of Competitive Advantage
The generic strategies are approaches to outperforming
competitors in the industry; in some industries structure will mean that all firms can earn high returns, whereas
in others, success with one of the generic strategies may be necessary
just to obtain acceptable returns in an absolute sense.
“
”-- Michael E. Porter, 1980
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58
THE COMPETITIVE ADVANTAGE MATRIX
PORTER’S GENERIC COMPETITIVE STRATEGIES
Low Cost Differentiation
Nar
row
Broa
d
Com
petiti
ve S
cope
Source of Competitive Advantage
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THE COMPETITIVE ADVANTAGE MATRIX
PORTER’S GENERIC COMPETITIVE STRATEGIES
59Low Cost Differentiation
Nar
row
Broa
d
Com
petiti
ve S
cope
Source of Competitive Advantage
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60
THE COMPETITIVE ADVANTAGE MATRIX
PORTER’S GENERIC COMPETITIVE STRATEGIES
DIFFERENTIATIONCOST LEADERSHIP
COST FOCUS DIFFERENTIATION FOCUS
Low Cost Differentiation
Nar
row
Broa
d
Com
petiti
ve S
cope
Source of Competitive Advantage
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61
THE COMPETITIVE ADVANTAGE MATRIX
PORTER’S GENERIC COMPETITIVE STRATEGIES
Low Cost Differentiation
Nar
row
Broa
d
Com
petiti
ve S
cope
Source of Competitive Advantage
Cost Leadership Differentiation
Cost Focus Differentiation Focus
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62
THE COMPETITIVE ADVANTAGE MATRIX
PORTER’S GENERIC COMPETITIVE STRATEGIES
Low Cost Differentiation
Nar
row
Broa
d
Com
petiti
ve S
cope
Source of Competitive Advantage
Cost Leadership Differentiation
Cost Focus Differentiation Focus
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63
THE COMPETITIVE ADVANTAGE MATRIX
PORTER’S GENERIC COMPETITIVE STRATEGIES
Narrow
Broad
Cost Focus
Cost Leadership
Low Cost
Differentiation Focus
Differentiation
DifferentiationSOURCE
SCOPE
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64
THE COMPETITIVE ADVANTAGE MATRIX
PORTER’S GENERIC COMPETITIVE STRATEGIES
Cost Leadership Differentiation
Cost Focus Differentiation Focus
Low Cost Differentiation
Nar
row
Broa
d
Com
petiti
ve S
cope
Source of Competitive Advantage
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65
THE COMPETITIVE ADVANTAGE MATRIX
PORTER’S GENERIC COMPETITIVE STRATEGIES
Cost Leadership Differentiation
Cost Focus Differentiation Focus
Low Cost Differentiation
Nar
row
Broa
d
Com
petiti
ve S
cope
Source of Competitive Advantage
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66
THE COMPETITIVE ADVANTAGE MATRIX
PORTER’S GENERIC COMPETITIVE STRATEGIES
Lower costs across a broad
range of product offerings
Competitive cost leadership
in a small cluster of target
segments
Distinctly recognizable
positions across a whole range
of offerings
Unique and distinct position
in specific target
segments
Low Cost Differentiation
Nar
row
Broa
d
Com
petiti
ve S
cope
Source of Competitive Advantage
Cost Leadership Differentiation
Cost Focus Differentiation Focus
Source: LaChapelle, Neil (2008) “The Structure of Concern: A Challenge for Thinkers”
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67
THE COMPETITIVE ADVANTAGE MATRIX
PORTER’S GENERIC COMPETITIVE STRATEGIES
Insert any title here
Insert any title here
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Cost Leadership
Differentiation Focus
Differentiation
Cost Focus
Low Cost DifferentiationN
arro
wBr
oad
Com
petiti
ve S
cope
Source of Competitive Advantage
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68
THE COMPETITIVE ADVANTAGE MATRIX
PORTER’S GENERIC COMPETITIVE STRATEGIES
Cost Leadership
Differentiation Focus
Differentiation
Cost Focus
Low Cost DifferentiationN
arro
wBr
oad
Com
petiti
ve S
cope
Source of Competitive Advantage
Lorem ipsum dolor sit amet, has meis dicta eloquentiam at. Eius forensibus usu cu impetus tamquam te cum, eu eam
Lorem ipsum dolor sit amet, has meis dicta eloquentiam at. Eius forensibus usu cu impetus tamquam te cum, eu eam
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69
THE COMPETITIVE ADVANTAGE MATRIX
PORTER’S GENERIC COMPETITIVE STRATEGIES
Cost leadership requires aggressive construction of efficient-scale facilities, vigorous pursuit of cost reductions from
experience, tight cost and overhead control, avoidance of marginal customer accounts, and cost minimization in areas
like R&D, service, sales force, advertising, and so on.
“
”-- Michael E. Porter, 1980
Cost Leadership Differentiation
Focus
Uniqueness Perceived by the Customer
Low Cost PositionPa
rticu
lar
Segm
ent O
nly
Indu
stry
wid
e
Strategic AdvantageSt
rate
gic
Targ
et
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70
THE COMPETITIVE ADVANTAGE MATRIX
PORTER’S GENERIC COMPETITIVE STRATEGIES
Approaches to differentiating can take many forms : design or
brand image, technology, features ; customer
service, dealer network, or other dimensions.
“
”-- Michael E. Porter, 1980
Cost Leadership Differentiation
Focus
Uniqueness Perceived by the Customer
Low Cost PositionPa
rticu
lar
Segm
ent O
nly
Indu
stry
wid
e
Strategic AdvantageSt
rate
gic
Targ
et
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71
THE COMPETITIVE ADVANTAGE MATRIX
PORTER’S GENERIC COMPETITIVE STRATEGIES
The entire focus strategy is built around serving a
particular target very well, and each functional policy is developed with this in
mind.
“
”-- Michael E. Porter, 1980
Cost Leadership Differentiation
Focus
Uniqueness Perceived by the Customer
Low Cost PositionPa
rticu
lar
Segm
ent O
nly
Indu
stry
wid
e
Strategic AdvantageSt
rate
gic
Targ
et
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72
THE COMPETITIVE ADVANTAGE MATRIX
PORTER’S GENERIC COMPETITIVE STRATEGIES
The firm failing to develop its strategy in at least one of the three directions-a firm
that is "stuck in the middle" - is in an extremely poor
strategic situation.
“
”-- Michael E. Porter, 1980
Cost Leadership Differentiation
Focus
Stuck in the Middle
Uniqueness Perceived by the Customer
Low Cost PositionPa
rticu
lar
Segm
ent O
nly
Indu
stry
wid
e
Strategic AdvantageSt
rate
gic
Targ
et
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73
THE COMPETITIVE ADVANTAGE MATRIX
PORTER’S GENERIC COMPETITIVE STRATEGIES
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Lorem ipsum dolor sit amet, has meis dicta eloquentiam at. Eius forensibus usu cu impetus tamquam te cum, eu eam
Lorem ipsum dolor sit amet, has meis dicta eloquentiam at. Eius forensibuscu impetus tamquam te cum, eu eam
Low Cost Differentiation
Nar
row
Broa
d
Com
petiti
ve S
cope
Source of Competitive Advantage
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Industry Competitors
Rivalry Among Existing Firms
Suppliers Buyers
Potential
Entrants
Substitutes
Porter’s Five Forces ModelEvaluating The Environment
05
Strategic Planning Tools
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75
FORCES DRIVING INDUSTRY COMPETITION – THE ORIGINAL MODEL
PORTER’S FIVE FORCES MODEL
Source: Porter, M.E., "Competitive Strategy" (1980)
Suppliers BuyersIndustry
Competitors
Substitutes
Potential Entrants
Rivalry Among Existing Firms
Threat of new entrants
Bargaining power of buyers
Threat of substitute products or services
Bargaining power of suppliers
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76
FORCES DRIVING INDUSTRY COMPETITION – THE ORIGINAL MODEL
PORTER’S FIVE FORCES MODEL
Source: Porter, M.E., "Competitive Strategy" (1980)
Suppliers BuyersIndustry
Competitors
Substitutes
Potential Entrants
Rivalry Among Existing Firms
Threat of new entrants
Bargaining power of buyers
Threat of substitute products or services
Bargaining power of suppliers
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77
FORCES DRIVING INDUSTRY COMPETITION
PORTER’S FIVE FORCES MODEL
Source: Porter, M.E., "Competitive Strategy" (1980)
Industry Competitors
Rivalry Among Existing Firms
Suppliers Buyers
Potential Entrants
Substitutes
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78
FORCES DRIVING INDUSTRY COMPETITION
PORTER’S FIVE FORCES MODEL
Source: Porter, M.E., "Competitive Strategy" (1980)
Suppliers Buyers
Potential Entrants
Substitutes
Industry Competitors
Rivalry Among Existing Firms
Threat
of substi
tute
products or s
ervice
s
Threat
of new
entrants
Bargaining power
of buyers
Bargaining power
of suppliers
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79
FORCES DRIVING INDUSTRY COMPETITION
PORTER’S FIVE FORCES MODEL
Industry Rivalry
Suppliers Buyers
Potential Entrants
Substitutes
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FORCES DRIVING INDUSTRY COMPETITION
PORTER’S FIVE FORCES MODEL
80
Industry Rivalry
Suppliers Buyers
Potential Entrants
Substitutes
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81
FORCES DRIVING INDUSTRY COMPETITION
PORTER’S FIVE FORCES MODEL
Suppliers BuyersIndustry
Competitors
Substitutes
Potential Entrants
Rivalry Among Existing Firms
Threat of new entrants
Bargaining power of buyers
Threat of substitute products or services
Bargaining power of suppliers
The collective strength of these forces determines the
ultimate profit potential in the industry, where profit potential
is measured in terms of long run return on invested capital.
“
”-- Michael E. Porter, 1980
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82
FORCES DRIVING INDUSTRY COMPETITION
PORTER’S FIVE FORCES MODEL
The collective strength of these forces determines the
ultimate profit potential in the industry, where profit potential
is measured in terms of long run return on invested capital.
“
”
Industry Competitors
Rivalry Among Existing Firms
Suppliers Buyers
Potential Entrants
Substitutes
-- Michael E. Porter, 1980
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83
FORCES DRIVING INDUSTRY COMPETITION
PORTER’S FIVE FORCES MODEL
An assessment of how
easy it is for suppliers to
drive up prices
Where close substitute products exist in a
market, it increases the likelihood of customers
switching to alternatives in response to price
increases
Profitable markets
attract new entrants,
which erodes
profitability
An assessment of how
easy it is for buyers to
drive prices down
Industry Competitors
Rivalry Among Existing Firms
Suppliers Buyers
Potential Entrants
Substitutes
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84
FORCES DRIVING INDUSTRY COMPETITION
PORTER’S FIVE FORCES MODEL
Insert any title here
Insert any title here
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• Lorem ipsum dolor sit amet, has meis dicta eloquentiam at. Eius forensibus usu cu impetus tamquam te cum, eu eam
Industry Competitors
Rivalry Among Existing Firms
Suppliers Buyers
Potential Entrants
Substitutes
![Page 85: Strategic Planning Tools](https://reader035.vdocuments.site/reader035/viewer/2022062522/58a7b0651a28ab70368b4bc5/html5/thumbnails/85.jpg)
85
FORCES DRIVING INDUSTRY COMPETITION
PORTER’S FIVE FORCES MODEL
Industry Competitors
Rivalry Among Existing Firms
Suppliers Buyers
Potential Entrants
Substitutes
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Lorem ipsum dolor sit amet, has meis dicta eloquentiam at. Eius forensibus usu cu impetus tamquam te cum, eu eam
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86
FORCES DRIVING INDUSTRY COMPETITION
PORTER’S FIVE FORCES MODEL
New entrants to an industry bring new
capacity, the desire to gain market share, and often
substantial resources.
“
”
Industry Competitors
Rivalry Among Existing Firms
Suppliers Buyers
Potential Entrants
Substitutes
-- Michael E. Porter, 1980
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87
FORCES DRIVING INDUSTRY COMPETITION
PORTER’S FIVE FORCES MODEL
Buyers compete with the industry by forcing down
prices, bargaining for higher quality or more services, and playing competitors against
each other -all at the expense of industry profitability.
“
”
Industry Competitors
Rivalry Among Existing Firms
Suppliers Buyers
Potential Entrants
Substitutes
-- Michael E. Porter, 1980
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88
FORCES DRIVING INDUSTRY COMPETITION
PORTER’S FIVE FORCES MODEL
Substitutes limit the potential returns of an
industry by placing a ceiling on the prices firms in the
industry can profitably charge.
“
”
Industry Competitors
Rivalry Among Existing Firms
Suppliers Buyers
Potential Entrants
Substitutes
-- Michael E. Porter, 1980
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89
FORCES DRIVING INDUSTRY COMPETITION
PORTER’S FIVE FORCES MODEL
Suppliers can exert bargaining power over
participants in an industry by threatening to raise
prices or reduce the quality of purchased goods and
services.
“
”
Industry Competitors
Rivalry Among Existing Firms
Suppliers Buyers
Potential Entrants
Substitutes
-- Michael E. Porter, 1980
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90
FORCES DRIVING INDUSTRY COMPETITION
PORTER’S FIVE FORCES MODEL
Rivalry among existing competitors takes the familiar form of jockeying for position -
using tactics like price competition, advertising
battles, product introductions, and increased customer
service or warranties.
“
”
Industry Competitors
Rivalry Among Existing Firms
Suppliers Buyers
Potential Entrants
Substitutes
-- Michael E. Porter, 1980
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91
WORKSHEET 1
PORTER’S FIVE FORCES
COMPETITIVE RIVALRY
• Entry 1• Entry 2• Entry 3• Entry 4• Entry 5
THREAT OF NEW ENTRY
• Entry 1• Entry 2• Entry 3• Entry 4• Entry 5
SUPPLIER POWER
• Entry 1• Entry 2• Entry 3• Entry 4• Entry 5
BUYER POWER
• Entry 1• Entry 2• Entry 3• Entry 4• Entry 5
THREAT OF SUBSTITUTION
• Entry 1• Entry 2• Entry 3• Entry 4• Entry 5
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92
WORKSHEET 2
PORTER’S FIVE FORCES
THREAT OF NEW ENTRY – Low / Medium / High• Entry 1• Entry 2• Entry 3• Entry 4• Entry 5
COMPETITIVE RIVALRY – Low / Medium / High• Entry 1• Entry 2• Entry 3• Entry 4• Entry 5
SUPPLIER POWER – Low / Medium / High
• Entry 1• Entry 2• Entry 3• Entry 4• Entry 5
THREAT OF SUBSTITUTION – Low / Medium / High• Entry 1• Entry 2• Entry 3• Entry 4• Entry 5
BUYER POWER – Low / Medium / High• Entry 1• Entry 2• Entry 3• Entry 4• Entry 5
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93
Ability to control Impact Level Risk Level
COMPETITIVE RIVALRY
• Entry 1• Entry 2• Entry 3• Entry 4• Entry 5
WORKSHEET 3 – 1/3
PORTER’S FIVE FORCES
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94
Ability to control Impact Level Risk Level
THREAT OF NEW ENTRY
• Entry 1• Entry 2• Entry 3• Entry 4• Entry 5
THREAT OF SUBSTITUTION
• Entry 1• Entry 2• Entry 3• Entry 4• Entry 5
WORKSHEET 3 – 2/3
PORTER’S FIVE FORCES
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95
Ability to control Impact Level Risk Level
SUPPLIER POWER
• Entry 1• Entry 2• Entry 3• Entry 4• Entry 5
BUYER POWER
• Entry 1• Entry 2• Entry 3• Entry 4• Entry 5
WORKSHEET 3 – 3/3
PORTER’S FIVE FORCES
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Market Penetration
Diversification
Product Development
Market Development
Ansoff MatrixThe Product-Market Growth Matrix
06
Strategic Planning Tools
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97
THE PRODUCT-MARKET GROWTH MATRIX
ANSOFF MATRIX
Market Penetration
Diversification
Product Development
Market Development
Existing NewN
ewEx
isting
Mar
ket
Products
There are four basic growth alternatives open to a business. It can
grow through increased market penetration, through market
development, through product development, or through
diversification.
“
”-- H. Igor Ansoff, 1957
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98
THE PRODUCT-MARKET GROWTH MATRIX
ANSOFF MATRIX
Market Penetration
Diversification
Product Development
Market Development
Existing New
New
Existi
ng
Mar
ket
Products
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THE PRODUCT-MARKET GROWTH MATRIX
ANSOFF MATRIX
99
Market Penetration
Diversification
Product Development
Market Development
Existing New
New
Existi
ng
Mar
ket
Products
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100
THE PRODUCT-MARKET GROWTH MATRIX
ANSOFF MATRIX
Existing New
New
Existi
ng
Mar
ket
Products
Market Penetration
Product Development
Market Development Diversification
Low Risk
High Risk Medium Risk
Moderate Risk
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101
THE PRODUCT-MARKET GROWTH MATRIX
ANSOFF MATRIX
New
Existing
Market Development
Market Penetration
Existing
Diversification
Product Development
NewPRODUCTS
MARKET
Low Risk
High Risk Medium Risk
Moderate Risk
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102
THE PRODUCT-MARKET GROWTH MATRIX
ANSOFF MATRIX
Trying to take a greater share of
an existing market with an existing product
Finding or creating new markets for
existing products
Extending existing
products with existing markets
Creating new product lines or ranges for sale in new markets
Source: LaChapelle, Neil (2008) “The Structure of Concern: A Challenge for Thinkers”
Market Penetration
Diversification
Product Development
Market Development
Existing New
New
Existi
ng
Mar
ket
Products
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103
THE PRODUCT-MARKET GROWTH MATRIX
ANSOFF MATRIX
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Market Penetration
Diversification
Product Development
Market Development
Existing NewN
ewEx
isting
Mar
ket
Products
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104
THE PRODUCT-MARKET GROWTH MATRIX
ANSOFF MATRIX
Market Penetration
Diversification
Product Development
Market Development
Existing NewN
ewEx
isting
Mar
ket
Products
Lorem ipsum dolor sit amet, has meis dicta eloquentiam at. Eius forensibus usu cu impetus tamquam te cum, eu eam
Lorem ipsum dolor sit amet, has meis dicta eloquentiam at. Eius forensibus usu cu impetus tamquam te cum, eu eam
Lorem ipsum dolor sit amet, has meis dicta eloquentiam at. Eius forensibus usu cu impetus tamquam te cum, eu eam
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105
THE PRODUCT-MARKET GROWTH MATRIX
ANSOFF MATRIX
Market penetration is an effort to increase company sales without
departing from an original product-market strategy. The company seeks to improve business performance either
by increasing the volume of sales to its present customers or by finding new
customers for present products.
“
”
Market Penetration
Diversification
Product Development
Market Development
Existing NewN
ewEx
isting
Mar
ket
Products
-- H. Igor Ansoff, 1957
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106
THE PRODUCT-MARKET GROWTH MATRIX
ANSOFF MATRIX
A product development strategy, retains the present
mission and develops products that have new and different characteristics such as will
improve the performance of the mission.
“
”
Market Penetration
Diversification
Product Development
Market Development
Existing NewN
ewEx
isting
Mar
ket
Products
-- H. Igor Ansoff, 1957
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107
THE PRODUCT-MARKET GROWTH MATRIX
ANSOFF MATRIX
Market development is a strategy in which the company attempts to adapt its present product line (generally with
some modification in the product characteristics) to new
missions.
“
”
Market Penetration
Diversification
Product Development
Market Development
Existing NewN
ewEx
isting
Mar
ket
Products
-- H. Igor Ansoff, 1957
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108
THE PRODUCT-MARKET GROWTH MATRIX
ANSOFF MATRIX
Diversification is the final alternative. It calls for a
simultaneous departure from the present product line and the present market structure.
“
”
Market Penetration
Diversification
Product Development
Market Development
Existing NewN
ewEx
isting
Mar
ket
Products
-- H. Igor Ansoff, 1957
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109
WORKSHEET 1
ANSOFF MATRIX
ProductsExisting New
Market
Existing MARKET PENETRATION• Entry 1• Entry 2• Entry 3• Entry 4• Entry 5• Entry 6• Entry 7• Entry 8• Entry 9
PRODUCT DEVELOPMENT• Entry 1• Entry 2• Entry 3• Entry 4• Entry 5• Entry 6• Entry 7• Entry 8• Entry 9
New MARKET DEVELOPMENT• Entry 1• Entry 2• Entry 3• Entry 4• Entry 5• Entry 6• Entry 7• Entry 8• Entry 9
DIVERSIFICATION• Entry 1• Entry 2• Entry 3• Entry 4• Entry 5• Entry 6• Entry 7• Entry 8• Entry 9
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110
EXISTING PRODUCTS Risk Level InvestmentMARKET PENETRATION
• Entry 1• Entry 2• Entry 3• Entry 4• Entry 5
MARKET DEVELOPMENT
• Entry 1• Entry 2• Entry 3• Entry 4• Entry 5
WORKSHEET 2 – 1/2
ANSOFF MATRIX
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111
NEW PRODUCTS Risk Level InvestmentPRODUCT DEVELOPMENT
• Entry 1• Entry 2• Entry 3• Entry 4• Entry 5
DIVERSIFICATION
• Entry 1• Entry 2• Entry 3• Entry 4• Entry 5
WORKSHEET 2 – 2/2
ANSOFF MATRIX
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