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diff --git a/blog/the-ansoff-matrix/index.org b/blog/the-ansoff-matrix/index.org deleted file mode 100644 index 8910f22..0000000 --- a/blog/the-ansoff-matrix/index.org +++ /dev/null @@ -1,140 +0,0 @@ -#+title: The Ansoff Matrix -#+date: 2019-12-03 -#+description: Learn about the Ansoff Matrix, a strategic management tool. -#+filetags: :business: - -* Overview -As the world of business evolves, managers must approach business -planning and strategy with a contemporary mindset. According to Dess, -McNamara, Eisner, and Lee, managers must be willing to adapt to the -modern business environment by going beyond "'incremental management', -whereby they view their job as making a series of small, minor changes -to improve the efficiency of the firm's operations"[fn:1]. - -One reason that strategic management is crucial is because most -businesses that fail in the United States each year fail due to a lack -of strategic focus or direction[fn:2]. The rate of failure for -businesses with poor strategies shows that strategic planning and -management are crucial to a business's strength and longevity, injecting -the critical factors of growth and direction into a company's business -plan. - -One of the most significant strategic planning and management frameworks -that companies can use is the -[[https://en.wikipedia.org/wiki/Ansoff_matrix][Ansoff Matrix]]. While -this framework has unique purposes and use-cases, it can effectively -help an organization grow and compete. Specifically, the Ansoff matrix -is one of the most effective frameworks for companies who want to focus -on increasing sales revenue or profitability[fn:3]. - -This framework uses a two-by-two figure to show the four strategic -options for companies to use in this framework: market penetration, -market development, product development, and diversification (see -*Figure 1*). The x-axis of the matrix focuses on the firm's markets and -also determines if the firm is looking to enter new markets or innovate -in its current markets. The y-axis of the matrix focuses on the firm's -products and determines if the firm wants to pursue strategies around -their existing products or explore new products. - -#+caption: The Ansoff Matrix by JaisonAbeySabu, Own work, CC BY-SA 3.0 -[[https://img.cleberg.net/blog/20191203-the-ansoff-matrix/ansoff_matrix-min.png]] - -* Strategic Options -** Market Penetration -The most straightforward strategy in the Ansoff matrix is to focus on -existing products in existing markets, also known as market -penetration[fn:4]. Companies such as Coca-Cola have used market -penetration successfully by investing a lot of money to get further -value out of their current markets. Coca-Cola does this by introducing -new features such as Christmas-themed bottles, personal names on the -bottles, and other marketing schemes. - -** Market Development -Market development extends existing products into new markets in an -attempt to increase the number of buyers. One interesting way that -Coca-Cola used this strategy comes from the stigma that Diet Coke is a -woman's drink[fn:5]. Coca-Cola introduced Coca-Cola Zero, which -contained the same nutritional content as Diet Coke, but was packaged in -a dark black can to appear more "manly"[fn:6]. - -** Product Development -Product development uses existing markets to introduce new products so -that the firm can better meet customer needs[fn:7]. The extreme end of -diversification is home to companies such as Johnson & Johnson, a -healthcare company that has developed a business portfolio of more than -60,000 different products[fn:8]. Johnson & Johnson's dedication to -continuous diversification has led them to a balance sheet rating of -"AAA", industry recognition for diversification, and increases in their -investor dividends for 57 consecutive years[fn:9]. - -** Related Diversification -Diversification, the final strategy of the Ansoff Matrix, is more -difficult than the others since it involves exploring both new markets -and new products. Related diversification is a diversification strategy -that closely relates to the firm's core business. Coca-Cola's best -example of related diversification is its acquisition of Glaceau and -Vitamin Water, which expanded their drinking lines of business[fn:10]. - -** Unrelated Diversification -Unrelated diversification is a diversification strategy that does not -really relate to the firm's core business but still diversifies their -business portfolio. A good example of this would be a coffee company who -has decided to enter the market for bicycle sales. The main purpose of -this strategy is to an extremely diverse company that will not go -bankrupt if one market goes through difficult times. However, this -requires a lot of independent skills and heavy investments since the -company most likely cannot easily transfer knowledge between the markets -they compete in. - -* Requirements for Success -To use the Ansoff Matrix framework, managers need to formulate corporate -goals and objectives. Without goals and direction, management frameworks -do not present much practical utility. Further, the Ansoff Matrix -requires the managers involved to make tactical decisions and create a -path for the company to take toward their goals. Lastly, both the Ansoff -Matrix needs to consider both internal and external perspectives -throughout the strategy formulation process. - -One interesting probability is that companies will be using multiple -strategic planning and management frameworks at the same time. While -this may sound like it could crowd the management process, there are -numerous reasons to do so. For example, the Ansoff Matrix and the -Balanced Scorecard are relatively popular, and they cover entirely -different parts of a company's strategy. Using the results from the -Balanced Scorecard could inform a company of the potential product and -market demands, such as from customer or supplier survey results, to -help the company determine which Ansoff Matrix strategy to pursue. -However, a combined approach at this level would require mature -frameworks and focused managers who are able to strategize at a high -level. - -Lastly, it should be noted that the author of the Ansoff matrix, Igor -Ansoff, often used the term -[[https://en.wikipedia.org/wiki/Analysis_paralysis][paralysis by -analysis]] to explain the mistake of companies who overuse analysis and -spend too much time planning. Companies need to understand the utility -of a strategic management framework while ensuring that the company is -poised to execute as efficiently as they have planned. - -* Footnotes - -[fn:1] Dess, G. G., McNamara, G., Eisner, A. B., Lee, S. H. (2019). Strategic management: Text & cases, ninth edition. New York, NY: McGraw-Hill Education. - -[fn:2] Juneja, P. (n.d.). Benefits of strategic management. Management Study Guide. Retrieved from [[https://www.managementstudyguide.com/strategic-management-benefits.htm]]. - -[fn:3] Meldrum M., McDonald M. (1995) The Ansoff matrix. In: Key Marketing Concepts. London: Palgrave. - -[fn:4] Meldrum M., McDonald M. (1995) The Ansoff matrix. In: Key Marketing Concepts. London: Palgrave. - -[fn:5] Oakley, T. (2015). Coca-Cola: The Ansoff matrix. The Marketing Agenda. Retrieved from [[https://themarketingagenda.com/2015/03/28/coca-cola-ansoff-matrix/]]. - -[fn:6] Oakley, T. (2015). Coca-Cola: The Ansoff matrix. The Marketing Agenda. Retrieved from [[https://themarketingagenda.com/2015/03/28/coca-cola-ansoff-matrix/]]. - -[fn:7] Oakley, T. (2015). Coca-Cola: The Ansoff matrix. The Marketing Agenda. Retrieved from [[https://themarketingagenda.com/2015/03/28/coca-cola-ansoff-matrix/]]. - -[fn:8] Lemke, T. (2019). The most diversified companies in the stock market. The balance. Retrieved from [[https://www.thebalance.com/the-most-diversified-companies-in-the-stock-market-4169730]]. - -[fn:9] Johnson & Johnson. (2018). 2018 Investor Fact Sheet. [PDF file]. Retrieved from [[http://www.investor.jnj.com/_document/2018-investor-fact-sheet-4-19'id=0000016a-5681-d475-a17f-d78db54a0000][http://www.investor.jnj.com/_document/2018-investor-fact-sheet-4-19'id=0000016a-5681-d475-a17f-d78db54a0000]]. - -[fn:10] Oakley, T. (2015). Coca-Cola: The Ansoff matrix. The Marketing Agenda. Retrieved from [[https://themarketingagenda.com/2015/03/28/coca-cola-ansoff-matrix/]]. - |