Ansoff’s Matrix
   • This matrix was developed by Igor Ansoff
   • It is a framework for identifying corporate growth 
     opportunities
   • Two dimensions determine the scope of 
     options,namely products and markets
   • Four generic growth strategies are identified:
      – Market penetration: more of the same to the same 
        customers
      – Market development: new customers for existing 
        products
      – Product development: new products for existing 
        customers
      – Diversification: new products and new customers
 Strategy – Ansoff’s Matrix
                           Ansoff’s Matrix
                    Existing product             New product
    Existing        Market penetration           Product development
    market          Increase sales to the        New product developed for 
                    existing market              existing markets
                    Penetrate more deeply 
                    into the existing market
    New market      Market development           Diversification
                    Existing products sold to    New products sold in new 
                    new markets                  markets
  Strategy – Ansoff’s Matrix
            Ansoff’s matrix and risk
   • The greater the degree of newness the 
     greater the risk
   • Hence:
   • Market penetration - little risk involved
   • Market development - moderate risk
   • Product development - moderate risk
   • Diversification - high risk because both 
     product and market are new and unknown
 Strategy – Ansoff’s Matrix
              Example 1 - Growth of Tesco
    •  Market penetration
        – Increase in its share of the grocery business at the expense of 
           Sainsbury’s and Asda
    •  Market development
        – Movement into the convenience store market 
        – Expansion abroad
    •  Product development
        – Expansion into petrol sales
        – Development of financial services
    •  Diversification
        – Today Tesco is so all embracing that diversification would have to 
           involve something entirely outside Tesco’s current range of 
           activities and sold in foreign markets or to business customers
  Strategy – Ansoff’s Matrix
     Example 2: Growth of Scottish Banks
    •  In recent years both Royal Bank of Scotland and Bank of 
       Scotland have grown rapidly through:
    •  Market penetration
        – Increased sales of banking financial services in Scotland
    •  Market development
        – Growing presence south of the border following acquisitions.
        – Bank of Scotland and the Halifax Bank merge to create HBOS
        – RBS took over Williams and Glyn in 1970 and also runs Tesco’s 
           banking operation
    •  Product development
        – Growing involvement in insurance 
        – RBS subsidiary Direct line revolutionised motor insurance
    •  Diversification
        – Selling insurance in England might be seen as new markets and 
           new products
  Strategy – Ansoff’s Matrix