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identify strategic options for an organisation using the Ansoff matrix,…

- - - - It is important that an organisation has a clear understanding of its existing position, identifies its desired position and accurately determines its ability to reach the desired position through the implementation of strategy, taking into account any strategic capabilities it may possess, or need to acquire.
      - In general firms should always exhaust all the possibilities for growth with
        existing products and markets first and those for new products and markets at the same time, last.
        The choice as to whether an organisation attempts new product development and/or new market
        development generally links back to its capabilities.
      - Generic strategies
        Step 1. organisation needs to clearly identify its current position and concentrate on its existing products and markets, leveraging its existing capabilities as much as possible, until it obtains its maximum market position and penetration – Market penetration
        
        Step 2. Once it has reached maximum penetration), it will need to expand out of the current product-market set if it wants to grow – Product/Market Development (The decision as to whether the organisation should develop its product range or markets as the first step depends on its strengths, experience and capabilities  strong skill in product skill but little market experience, then product dev first)
        i. Product Development: i.e. banks adding financial services and wealth management products and offering them to existing customers
        ii. Market Development: i.e. banks expanding into other countries (new geographic markets); or banks expanding from retail banking to merchant banking (new customer markets)
        
        Step 3. Diversification: This is higher risk because the organisation has no previous experience. It should only be done where all other related product-market options are exhausted or under below circumstances:
        i. The business is seasonal/cyclical and diversification is into a product-market area that is counter seasonal/cyclical
        ii. There are limited future prospects for the industry and its products/markets.
        
        The decision as to whether the organisation should develop its product range or markets as the first step depends on its strengths, experience and capabilities.
        
        The growth
        opportunities will be effected by:
        The size of the business
        The life cycle stage of the business
        Its current activities
        Current performance
        Track record of achievement
        Leadership team
        Geographic location
        SLAPGLT
- - - - Market Penetration – Growth in Existing product and markets
        
        Increases market share from the organisation’s current position
        
        A low-risk strategy, since customer base is known and has experience in market.
        
        Appropriate for relatively new and small businesses with scope to expand in their existing markets
        
        Normally requires incremental investment, which may be financed from retained profits
        LIMN
      - To increase the share of existing customers and markets:
        
        Customers in the existing market: are there any that we have not yet targeted?
        
        Can the product be used in a different way by existing customers?
        
        Do we have spare capacity to increase output?
        
        What will it take to persuade customers to switch from competitors?
        
        Is a change in pricing, marketing or distribution required? If so, what might be the effect of the change?
        
        Responding to customer complaints  A good resolution can lead to increased business with existing customers, while potentially obtaining a higher market share through word of mouth from positive experiences
        
        CCCPDT
      - Ways to achieve greater penetration of existing markets:
        
        Increasing the frequency of usage
        
        Increasing the quantity of product used
        
        Finding new applications for current users
        
        Attracting new customers to gain greater market share of existing customer segments
        
        FQNNa
      - As a first step, the organisation needs to clearly identify its current position and concentrate on its existing products and markets, leveraging its existing capabilities as much as possible, until it obtains its maximum market position and penetration
        Companies should focus on a strategy of market penetration until opportunities for further growth
        become more limited.
- - - - • Organisation aims to modify and develop products which closely relate to existing products and then attempt to sell them to the already existing market.
        • The customer base is known and familiar, and target customers can more be involved in product specification
      - New or existing product?
        There is no ‘correct’ way of classifying a particular product in this situation. Both alternatives are valid as long as there is clear logic and reasoning provided for the classification. The important thing to remember is that the tool is designed to help an organisation classify and analyse its growth strategies—so, the choice made should be the one that best supports this analysis.
  - - - • The more aspects that one product has in common with another (i.e. the more related it is), the more likely it is that the product development will succeed
        • Where related products are available, the benefits of purchasing the suite of products need to be clear to the consumer. (Complementary to each other - Bundle)
        • Cross-selling selling more products to existing customers is more cost efficient than selling to new customers, given the high cost of winning new customers
    - - The service sector is increasing in importance and the growth of a national service market is believed to track or indicate the economic growth of a country. Significant growth in service markets is expected in the future, especially in Asia
- - - - Related market development can occur in two ways:
        targeting new customer segments in the same geographic region; and
        expanding geographically.
- - - - related diversification,
        is when new products that are linked to existing products are created. The new products are then marketed and sold to new customer markets. For example, an organisation may choose to redevelop an existing product to suit it to the conditions and tastes of a different country and culture.
      - unrelated diversification’.
        On the occasions where an organisation has exhausted all other growth opportunities
        
        Unrelated diversification cannot be recommended, unless it is based on some related capability that can somehow be applied. For instance, an organisation might argue that it has a capability in managing manufacturing operations which it could apply to produce different products.
        
        Unrelated diversification cannot be recommended, unless it is based on some related capability that can somehow be applied.
        
        Despite the inherent risks involved, there are some situations where unrelated diversification may be appropriate, for example:
        
        counter-seasonal diversification—wherein businesses dependent on a seasonal market could diversify into products that require resources to be used in the ‘off season’;
        
        counter-cyclical diversification