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Ansoff Matrix
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General paragraphs of how to approach a short question on Ansoff Matrix using a past paper example.
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Ansoff Matrix AnalysisAn Ansoff Matrix is used to make key marketing decisions and this model presents the product and
market growth choices available to the business. Each strategy has a risk associated ranging from
low in market penetration to high risk in diversification. The Ansoff Matrix is composed of 4 key
stages, market penetration, market development, product development and finally diversification.
This strategic tool is applied for growth strategies.
An Ansoff Matrix facilities an analysis of the relevant strategic decisions that Clear View Ltd can take
such as the decision to "diversify from selling to individuals to now concentrating on supplying
construction companies". Clear View Ltd has taken the decision to pursue a market development
strategy which is where they will be selling an existing product e.g. windows and PVCu doors to a
new market segment, the other construction companies. This market development strategy pursued
possess moderate risk as it is mainly the same product but with a few alterations, the main risk that
rises from this strategy comes from entering a new market or a sub-segment of the market e.g. the
construction companies instead of individuals. However, Clear View Ltd new business strategy
represent value for the risk taken as it has experienced "rapid growth and is now... one of the UK
and Ireland's largest manufacturers". This means that the market development strategy taken has
proven to be a success and Clear View has experienced growth and increased sales and profits.
However, in reality the Ansoff Matrix is not without its limitations as each strategy has a main focus
either on the product portfolio or the market potential that Clear View Ltd could pursue rather than
the resources required to support each strategy e.g. the market development strategy taken to
change its focus to construction companies will need an abundance of resources as Clear View Ltd
will need to invest in research into the new market, the possibility of specialist staff to help the
transition into the new market and the likelihood of an increase in staff to help facilitate this change.
This means Clear View Ltd could experience higher costs that the Ansoff Matrix does not illustrate as
it does not refer to any of the cost incurred or the amount of resources needed to make this strategy
of market development work. Overall, this means Clear View Ltd will possibly go into this strategy
with an uncomprehensive view on the strategy followed.
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