what does this image represent? © apt initiatives limited, 2008
TRANSCRIPT
What does this image represent?
© APT Initiatives Limited, 2008
© APT Initiatives Limited, 2009
TOPIC: Topic 1: Business Organization and EnvironmentLESSON TITLE: Ansoff’s Matrix
COMPETENCY FOCUS:
Entrepreneurship (S4): To develop your entrepreneurial skills in preparing a realistic proposal for a new business start-up. You will understand the process a business will have to go through when starting up, including the underlying principles of starting a business.
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Learning Objectives
By the end of the lesson, you should be able to…
LO1) To list the 4 categories in Ansoff’s Matrix LO2) To explain the value of the Ansoff’s Matrix as a decision-making tool LO3) To apply the Ansoff Matrix growth strategies to a given situation.
SMSC: You will assess the organisational culture of businesses in terms of fundamental structure, purpose and strategy development.
CRITICAL THINKING KEY:
Knowledge Application Analysis Evaluation
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The Ansoff Matrix - Overview
RISK
DiversificationMarket
Development
New Product
Development
Market
Penetration
PRODUCTSExisting New
RIS
K
MA
RK
ET
SN
ew
Ex
isti
ng
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Market Penetration
More of same product to same type ofpeople / present markets
Only possible if:Market growing orFirm has CA to gain share from rivals
Least Risky
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Market Penetration
Achieved by:a) Increasing frequency or Qty purchased amongst
existing customersb) Attracting users of competitors’ brands
Thus, requires: Sound knowledge of customers, competitors Research into opinions of non-users
Emphasis often on promotion eg of: Present product benefits / uses New product uses
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Market Development
Increasing sales of present productsby selling to new markets
Assumes new markets that can beexploited profitably
More risky than penetration:
Involves one unknown Requires more extensive research
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Market Development
Achieved by targeting:
a) New segments in present geographical markets or
b) New geographical markets
Difficult if strong cultural differences exist
Emphasis often on promotion – careful
advertising to effectively position product
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Product Development
Selling new product to present markets
R&D = high cost + risky
However, new does not mean brand newEg could involve:
changing material, ingredients, colour adding new feature introducing new size improving functional performance
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Diversification
Selling new products to new marketsThe most risky – 2 unknowns, often requiresconsiderable research and investment
However, can help spread risk – firm lessvulnerable to changes in one market
Often adopted when: market saturated intense competition falling sales - other factors eg recession
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Diversification
2 Main types:
Related - link with present markets andproducts eg biscuit manufacturer intocereals (food industry)
Unrelated - completely different industry egbiscuit manufacturer into financial services
The more unrelated, the… higher the cost, greater the risk
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Other Strategies
Withdrawal / Retrenchment
Consolidation
Do Nothing – maintain existing operations, products, markets
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Closing Comments
The right strategy? Depends on situation, objectives, resources Takes into account internal / external factors Builds on strengths, explores opportunities Realistic regarding resources + agreed
Eg: Plenty of opportunities in current market - MP Fierce competition - consolidate or DIV Strong in R&D - confidence with NPD
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Group Task
In groups, you will be given a company. You will need to apply that company to the matrix and justify why you think it adopts that particular strategy.
[30mins]