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Microsofts ANSOFF Matrix - Coggle Diagram
Microsofts ANSOFF Matrix
Market development
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Microsoft has introduced its operating systems and electronics to different markets, including businesses with its cloud computing services, and students with its compact laptops. Additionally, they tend to many international markets as well.
Pros
Microsoft is familiar with the product that is being sold so there is less chance of product failure, or a short product lifecycle.
Microsoft has a diversified customer base which allows it to reduce its risk as it is not depending on just one market.
Cons
Microsoft is faced by alot more competition by entering new markets, some of whom who have local knowledge. This decreases their market share.
Due to lack of knowledge of entering new markets, Microsoft is prone to making poor decisions that can lead to increased liabilities and costs.
Product development
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Microsoft continuously launches new products into its existing markets, such as Microsoft Teams, newer laptops, etc. to meet the change in demand and trends in the market.
Pros
With new products, Microsoft has the opportunity of utilizing premium pricing in order to maximize the profit margin
With new and innovate products, Microsoft gains a competitive advantage over its competitors, which allows them to attract more of the market towards them, increasing market share
Cons
The development of a new product can be expensive for Microsoft, which will decrease its profits.
There is no guarantee that the new product would be successful in the existing markets which can possibly lead to a bad brand reputation for Microsoft.
Market penetration
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Microsoft consistently provides updates and re releases of its core products, such as Windows operating systems and Office softwares. They use improved advertising and better loyalty schemes for the same.
Pros
It is a low risk strategy. Even though Microsoft is a huge MNC with diversified business activity, market penetration strategies allows them avert losses.
Since microsoft is operating with its own products, and in a market it is familiar with. This will reduce research and development costs for Microsoft.
Cons
There could be high competitive pressure if Microsoft purses alternative marketing strategies or competitive pricing. This can lead to price wars or rivalry.
Limited growth potential as if the market reaches saturation, or the customers are not reacting to changes in prices or advertising, it can lead to lesser revenue.
Diversification
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Microsoft has expanded into multiple markets with new products. Its acquisition of LinkedIn is a prime example as it expands into the social media market with a new product. Additionally, they are also in the gaming market with XBox.
Pros
Tapping into new markets with new products creates opportunities to capture a wider customer base and spread risks
Brand synergy can be created (where the success of one product leads to the overall increase in reputation of a company)
Cons
It is a very risky strategy as you are experimenting with new markets with new products with no prior experience
It would be very complex and difficult to manage operations in such diverse product and market avenues, potentially increasing diseconomies of scale.