PULL-OUT SECTION

ADVISOR

A message fromSteve Peet

HELLO again, and welcome to another edition of Student Advisor. In this issue, we are presenting you with the first in a

series of articles on applying strategic fools of management. Mark Richardson's and Carl Evans's article on Applying

Ansoff's Matrix is a thorough and succinct guide to this essential tool. They then provide us with a Case History of the

matrix in action through their own professional experiences of using it at the University of Worcester Business School.

The correspondence I have received from you, and the many conversations I have enjoyed with our readers, have

confirmed something that 1 have always known - namely that there is a great thirst for knowledge out there, and that

this continues long after you have ceased to be students and gained your lAM qualifications.

In a sense, we never stop learning and with this thought in mind, the article which follows (as weli as later ones in the

series) will seek to inform not only students of the Institute, but also the many qualified lAM professionals who ai •.

committed to Continuous Professional Development and best practice in the field of Administrative Management.

Don't forget. If you have any thoughts or feedback, or if you would like to make any contributions to Stud&it Advisor, please contact me through

Roy Bass on royb®wamersgraup.co.uk

Strategy in ActionApplying Ansoffs Matrix

by Mark Richardson and Carl Evans

Despite being 50 years old, Ansoff's Matrix still provides a

valuable analytical tool to help inform strategic direction. This

article reminds you of the matrix, demonstrates how it can be

applied in a contemporary setting, and challenges you to apply

the matrix to your own organisation.

What is Ansoff's Matrix?Ansoff (1957) developed a framework to generate alternative

strategic directions for an organisation, through considering its

product-market options. The options generated support corporate

growth objectives, which for this model, are deemed a priority-

Possible growth opportunities are found by combining existing

and new products/services, and existing and new markets. The

options are then presented in a matrix to reveal four distinct

strategic alternatives.

Figure 1

r

Existing Market

,ew Market

Existing Product New Produc

Development

MarketDevelopment

Diversification

About the AuthorsMark Richardson is Head of

University of Worcester

Business School. Before

entering academia, Mark was

a marketing manager for Bass

Taverns, with significant

managerial experience of key

marketing functions: market

analysis, merchandising

opera t ions and re ta i l

promotions, ' "

Carl Evans is a Senior Lectu

in the Business School 6.

University of Worcester. Carl has

a long association with the lAM.

Having completed the Diploma

(now Advanced Diploma) in

1986, he then became a

Member of the lAM Council

and a Chief Examiner, HP nnw

sitsonthelAMQualU

(Ansoff. 1957)

» Continued on page ii

Market PenetrationThrough this route, an organisation will seek to increase its

share of an existing market with its current products. This may

Involve persuading existing users to use more, persuading non-

users to use, or attracting users from competitors. In this case,

there will be an emphasis on competitive pricing, more effective

use of marketing communication, or trying to encourage

increased usage by existing customers, possibly through a

loyalty or reward scheme.

Market DevelopmentIn this case, an organisation will seek to identify or create new

market segments for its current product offer. The challenge

here is to identify genuine and sustainable market segments.

Product DeveiopmentThis involves the development of new products to sell in current

markets. This activity could include enhancements to existing

products, extensions to the existing product range, or genuine

product innovation. However, the risks associated with new

product development are well known.

DiversificationDiversification involves producing entirely new product

propositions for new markets. This is the riskiest of the four

strategic approaches, especially, as Jobber (2006) notes, if it is

not built upon existing core competences of the business.

Figure 2: Ansoff's Matrix - Risk Analysis

in target student numbers of 50%, to be achieved over four

years. It was apparent that if the Business School were to

continue with its existing course offer and stance to the

market, there would be a large gap between organisational

growth requirements and the Business School's capacity to

deliver growth.

Figure 3: The Strategic Planning Gap

Objective

StrategicPlanning

GAP

Forecast

Time (Years)

It was apparent that the Strategic Planning Gap identified above

could only be filled by a combination of:

1, Market Penetration Strategies

2. Market Development Strategies

3, Product Development Strategies

4. Diversification Strategies

Figure 4: Closing the Strategic Planning Gap

(Figures indicate notional levels of risk)

Ansoff's matrix therefore offers a useful tool for organisations to

consider a range of strategic options for growth. This was the

scenario faced by the University of Worcester Business School.

The Matrix in Action. A Case HistoryThe University of Worcester Business 5chool had, for several

years, consistently recruited over 100 undergraduate students

onto the BA (Hons) Business Management programme.

However, with full university status (secured in 2005), and a

highly ambitious growth agenda, came a significant increase

Objective

Strategic2 Planning

GAP

Forecast

Time (Years)

Using Ansoff's Matrix to inform StrategicDirectionWhile Ansoff's matrix separates the potential strategic directions

into four boxes, Johnson et al (2006) recognise that in practice,

a combination of approaches are typically followed, and here

the Business School has pursued various alternatives since

January 2006,

There are encouraging signs to date, with an increase of over 200%

in student applications to the Business School for the year 2006/07,

against the previous academic year.

lit

Figure 5: Ansoff's Matrix in Action

IMarket Penetration• Improved marketing communications' notably

enhancements to content and navigability of UCAS andUniversity Websites and enhancements to the Universityprospectus,

• The development of a Business School prospectus andintroduction of newsletters distributed to prospectivestudents.

• Increased the number of open days.

Market Development• The newly gained University status was felt to broaden

appeal across the UK and in overseas markets.

Product Development• The development of a new portfolio of undergraduate

programmes: comprising 32 named awards, including 9specialist pathways,

• The launch of an optional 1 -year business placement scheme

Diversification• The launch of four international "top-up" awards aimed at

international markets,• Entering into an agreement with the Anglo-Italian Institute

(Ail) for the University of Worcester BA (Hons) BusinessManagement degree to be delivered in English at the All inRome,

Applying Ansoff's MatrixUsing Ansoff's matrix as a framework, consider

possible directions for your own organisation or

business unit: How can you get more out of existing

customers? What segments/markets could you

investigate? How can you enhance your product

proposition? Into which other profitable business

areas could you transfer knowledge, skills or your

corporate brand?

Be aware of the models limitations though. The four

options should only give a broad indication of possible

strategies to pursue; further research and analysis is still

required since each will have its own issues, opportunities

and resource implications. Moreover, the matrix does not

reveal how to achieve the respective strategy (for example,

should diversification be achieved through merger, takeover

or alliance?). It also emphasises growth, which may not be

an appropriate objective for the organisation at that time.

Nonetheless, Ansoff's Matrix provides a unique,

practical framework to consider how growth objectives

can be achieved through marketing strategy.

ReferencesAnsoff, H, 1.09S7) Strategies for Diversification, Harvard

Business Review, 25(5), pp, 113-125,

Jobber, D, (2006) Principles and Practice of Marketing.

5th Ed. Berks, McGraw-Hill,

Johnson, G, Scholes, K, and Whittington, R, (2006)

Exploring Corporate Strategy. Text and Cases. Harlow, FT

Prentice Hall,

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