Page 258 - (DK) The Business Book
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EXPANDING AWAY FROM
YOUR CORE HAS RISKS;
DIVERSIFICATION
DOUBLES THEM
ANSOFF’S MATRIX
irst published in 1957 in the
IN CONTEXT Harvard Business Review,
F Ansoff’s matrix is a
FOCUS
An organization needs to marketing tool for planning the
Strategic planning
develop and grow... strategic growth of an organization.
KEY DATES Created by mathematician Igor
500 BCE The concept of Ansoff, it is intended for businesses
“strategic planning” is first that are ready to expand and have
used in military campaigns the resources to fund growth. The
in ancient Greece. matrix offers four possible strategies
that a company might adopt,
1920s Harvard Business
...but moving away from depending on the status of its
School develops the Harvard existing products product and the conditions of the
Policy Model, one of the first is risky... market: market penetration, market
strategic planning approaches development, product development,
to private businesses. and diversification. In addition to
presenting these four strategic
1965 Igor Ansoff’s Corporate
options, the matrix also attaches an
strategy: an analytic approach
inherent risk factor to each one. It is
to business policy for growth
crucial for decision makers to take
and expansion is the first book ...and developing the risk factor into consideration,
on corporate strategy. new products to sell
in new markets lest it gamble too heavily with the
1980 Michael Porter doubles that risk. company’s existing resources.
introduces his theory of
competitive strategy. The four strategies
Each approach is differentiated by
1989–90 Concepts of core
whether products or services are
competence and strategic
unchanged or new, and whether
intent are developed by Gary Expanding away from they remain in the existing market
Hamel and C. K. Prahalad. or are entering a new one. The least
your core has risks,
diversification risky of the four strategies is
doubles them. “market penetration”—maximizing
sales of an existing product in an
existing market. In this approach,
