Ansoff Matrix 5

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Ansoff Matrix was first published in the Harvard Business Review in 1957, is a tool that helps businesses decide their product and market growth strategy. Ansoff Matrix suggests that a business’ attempts to grow depend on whether it markets new or existing products in new or existing markets. The four different growth strategies which are market penetration, product development, market development and diversification set the direction for the business strategy.

There are three types of strategies which are corporate level strategy, business unit strategy and operational strategy. Corporate level strategy the decisions made at the top level and normally is long term decision (5 years or more). The decisions made will affect the whole company. Decisions made are related to geographic coverage. For example, Starbucks, the number of product lines should have and how the resources are to be allocated between different parts of the company.

Business unit strategy the decisions made by middle level managers or divisional managers. These types of decisions only affect one particular part of the company. Decisions are medium terms (1-3 years). Business unit strategy will decide how to compete successfully in a particular market and which product to develop for which market and how to obtain competitive advantage in different market.

Operational strategy the decisions made by department managers. This level is the lowest level in a company. They made day to day decisions and help to implement high level strategies. They also channeling of resources to achieve higher level objectives. Without them higher level objectives will not be achieved. They made short term decisions normally 1 year or less.

Market penetration is a growth strategy where the business focuses on selling existing products into existing markets, aiming to increase revenue. For example, company promoting the product, repositioning the brand, and so on. However, the...
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