Global Strategy and Leadership
Clarification to the Ansoff product-market matrix Ford Falcon example The Ansoff product-market matrix shows different ways organisations can achieve growth. Some of the important messages from this model are that:
Market penetration should be the main initial focus for all organisations, that is, making sure that current resources are being most effectively employed and ensuring that the organisation is doing the best it possibly can with its current products/services and customers. Once market penetration is achieved, then product development and/or market development follows, depending on the capabilities of the organisation (i.e. some organisations are strong at product/service development, some at market development and some at both).
Diversification should only be attempted once the other quadrants are addressed, as this option represents the highest risk for organisations, typically requiring new capabilities. Many organisations achieve this through acquisition (of for example, brands, know-how, plant and infrastructure, and other assets) rather than building their own capabilities themselves from scratch. Of course, organisational reality is not so black and white, and there are overlaps between the quadrants. Indeed, the purpose of the Ansoff matrix is not to be able to classify options, but rather to present a framework that enables thoughtful consideration of the options available to an organisation in the context of the likely risks and capabilities based on its "newness" to the organisation. In market penetration, the aim is to increase market share with existing products and markets. This can be a done in a variety of ways, such as through greater marketing efforts, buying competitors in the same products and markets, and making simple, low risk product enhancements to make the product more attractive or to make the product purchased more often. Activities over time to...