Development of Corporate Strategy
- Ansoff’s Matrix is a tool for businesses who have a growth objective
- It is used to identify an appropriate corporate strategy and understand the level of risk associated with the chosen strategy
- The model considers four elements, which are broken down into two categories
- The market - existing and new markets
- The product - existing and new products
Diagram of the Ansoff Matrix
Ansoff’s Strategic Matrix
Market penetration
- The least risky strategy to achieve growth is to pursue a strategy of market penetration
- This involves selling more products to existing customers by encouraging
- More regular use of the product
- Increased usage of the product
- Brand loyalty of customers
- This involves selling more products to existing customers by encouraging
Market development
- Market development involves finding and exploiting new market opportunities for existing products by
- Entering new markets abroad
- Repositioning the product by selling to different customer profiles (selling to other businesses as well as direct to consumers)
- Seeking complementary locations
- E.g. M&S Food has achieved significant growth since teaming up with fuel retailers such as BP and Applegreen and providing express retail outlets
- E.g. M&S Food has achieved significant growth since teaming up with fuel retailers such as BP and Applegreen and providing express retail outlets
Product development
- Product Development involves selling new or improved products to existing customers by
- Developing new versions or upgrades of existing successful products
- Redesigning packaging and aesthetic features
- Relaunching heritage products at commercially convenient intervals
- E.g. Lindt relaunches Christmas-themed products each year, often with a subtle design change, to recapture the interest of customers
- E.g. Lindt relaunches Christmas-themed products each year, often with a subtle design change, to recapture the interest of customers
Diversification
- Diversification is the most risky growth strategy as it involves targeting new customers with entirely new or redeveloped products
- Examples of diversification include
- UK supermarket Tesco launching a range of financial products including current accounts and credit cards
- Café chain Greggs launching a range of themed clothing products
- Examples of diversification include