Business is the study of how organisations function, how they are managed, and how external factors impact upon how they operate. This is one of our biggest free essays sections which reflects the popularity of Business degrees and courses with students. With so many business degrees available, you will find work reflecting multiple specialisms such as commerce and retail, to tourism and international business. You will come across examples of work which reflect the core modules of almost any business degree —markets, finance and managing people, to operations, information systems, policy and strategy.
Successful leaders understand that if their organization is to grow in the long term, they can't stick with a "business as usual" mindset, even when things are going well. They need to find new ways to increase profits and reach new customers.
There are numerous options available, such as developing new products or opening up new markets, but how do you know which one will work best for your organization? This is where you can use an approach like the Ansoff Matrix to think about the potential risks of each option, and to help you devise the most suitable plan for your situation.
Igor Ansoff and first published in the Harvard Business Review inin an article titled " Strategies for Diversification. It also helps you analyze the risks associated with each one.
The idea is that each time you move into a new quadrant horizontally or verticallyrisk increases. The Ansoff Matrix Tip: You can also use the Ansoff Matrix as a personal career planning tool. It can help you weigh up the risks of your career decisions, and choose the best option as a result.
Market penetration, in the lower left quadrant, is the safest of the four options. Here, you focus on expanding sales of your existing product in your existing market: Product development, in the lower right quadrant, is slightly more risky, because you're introducing a new product into your existing market.
With market development, in the upper left quadrant, you're putting an existing product into an entirely new market.
You can do this by finding a new use for the product, or by adding new features or benefits to it. Diversification, in the upper right quadrant, is the riskiest of the four options, because you're introducing a new, unproven product into an entirely new market that you may not fully understand.
How to Use the Tool It's fairly straightforward to use the Ansoff Matrix to weigh up the risks associated with a number of strategic options.
Then plot the approaches you're considering on the Matrix. The table below helps you think about how you might classify different approaches. Market Development Diversification Here, you're targeting new markets, or new areas of your existing market.
You're trying to sell more of the same things to different people. Target different geographical markets at home or abroad. Use different sales channels, such as online or direct sales, if you are currently selling through agents or intermediaries. Use Market Segmentation to target different groups of people, perhaps with different age, gender or demographic profiles from your usual customers.
This strategy is risky: Market Penetration Product Development With this approach, you're trying to sell more of the same things to the same market. Develop a new marketing strategy to encourage more people to choose your product, or to use more of it.
Introduce a loyalty scheme. Launch price or other special offer promotions. Increase your sales force's activities.Consequently, Lego lost market share, as well as its competitive advantages.
From a marketing perspective, Lego’s over-expansion ignored products’ law of development. Introducing new products to the market every year is not necessarily a bad thing, but Lego did not align its value chain with that strategy.
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Strategic Organization 13(2) One illustration of this is LEGO’s outsourcing of some of its product development. The processes of emergent strategy development. Print Reference this. Disclaimer: If you are the original writer of this essay and no longer wish to have the essay published on the UK Essays website then please click on the link below to request removal: Request the removal of this essay.
Core Competency Theory The core competency theory is the theory of strategy that prescribes actions to be taken by firms to achieve competitive advantage in the marketplace. The concept of core competency states that firms must play to their strengths or .