Topic 1 Strategic choice - StudyOnline.iestudyonline.ie/.../09/Topic-17a...Growth-Options-Ansoffs-Matrix-1.pdfAnsoff’s Matrix Merger Acquisitions Licence ... 2015 2020 Strategic

Topic 1Strategic choice

Growth Options

Ansoffs matrix (1)

William Meaney MBA BSc. ACMA 1

Strategic Choice Growth options

Porters

Generic

Strategies

Ansoff’s

Matrix

Merger

Acquisitions Licence

Franchise

Joint Ventures

Strategic Alliances

Divestment

Sub contracting

Contract Manufacture.

Outsourcing

MBO etc.

Suitable

Appropriate

Feasibility

Financial

Decisional

Models• Pro forma

accounts

• Capital budgeting

• Capital

Investment

appraisal

• NPV etc.

• Decision trees

• (EMV) Expected

Monetary Values

Basis Means Options

Generation of Options Evaluation of

optionsSelection of Strategy

Own and

control

Shared

ownership

and control

Have use of


Learning outcomes

After completing this topic you should be able to:

• Understand the purpose of strategic choice and the elements required to make suitable strategic choices

• Know where strategic choice fits on the JSW model

• Understand the different types of growth

• Understand and be able to apply Ansoffs Product Market Growth matrix

• Understand the concept of ‘Gap Analysis’ and its relationship with Ansoffs Matrix.


Strategic Choice

Setting the scene


Johnson Scholes and Whittington – new model


JSW a variation


Johnson Scholes and Whittington


Strategic Choice


Basis Means Options

Value

Chain

Generation of Options

Strategic Choice

Cost

Leader

Diff.

Focus

Diff.

Cost

Focus

Mkt.

PenNPD

Mkt

Dev.Div

Related Unrelated

Merger

Takeover

Licence

Franchise

Joint venture

Strategic

alliance

MBO

Divestment

Outsource etc.

Evaluation

of

Options

Suitable

Appropriate

Feasible

‘Strategic fit’

Selection of Strategy

Financial decisional

Models Pro forma income

statements

Budgeting

Capital investment

appraisal

Breakeven analysis

Sensitivity analysis

EMV

Etc.


Achieving growthThe holy grail of strategy!


Steps in the strategic process

.Where we are now Where we want to be

Environment

Resources

2015

2020

Strategic Goals ‘BHAGS’

• Do more

• Do better

• New activities

• Strengthen position

• Improve facilities

• Any other as appropriate

A

N

A

L

Y

S

I

S

SWOT

C

h

o

i

c

e

A

c

t

i

o

n


12

ABC

Ltd

2015

ABC Ltd 2020• Increase market share to 40%

• Have 30% of sales from new

products

• Have implemented CRM system in

all stores

Environment

Resources

The purpose of strategy is to enhance the long term profitability of an organisation.

Profit

€15m

Profit

€35mProfit

€18m

2017 2019

Profit

€28m

William Meaney MBA BSc. ACMA





BCG tell you where you are… Ansoff tells you where to go..


Achieving growth – key component of strategic choice

Internal/Organic growth

• Single product, market, technology

• Based on known skills and capabilities

• Low risk (possibly low growth also!)

• Controlled growth

• Financed internally

• Builds on existing strengths

• Involves no formal arrangements with other

organisations

• Market or product development

• Innovation (new product development)

• Combination of above

External growth

• Acquisition/ Take-over

• Merger

• Joint venture

• Licensing

• Franchising

• Strategic alliances


Ansoff’s Product market growth matrix – Strategic options

Present

MARKETS

New

New Product development Market Penetration

Do nothing

Consolidation

Withdrawal

Demerger

Market Development DiversificationAcquisition

Franchise

Joint ventures

Products/Services

Present New

O O

O E


Ansoff’s Product market growth matrix – application

Present

MARKETS

New

New Product development

• Stages as per Booz Allen and

Hamilton model

Market Penetration• Reduce price

• Advertising

• Sales promotion

• Free trial

• Branding

• Build customer loyalty

Market Development• New Segments

• New channels of distribution

• New capabilities

• New markets regionally,

nationally, internationally

• New methods - internet

Diversification• Acquisition/Merger

• Licence

• Franchise

• Joint ventures

• Strategic Alliances

Products/Services

Present New


Ansoff’s Product market growth matrix – Options

Present

MARKETS

New

New Product developmentMarket Penetration• Reduce price

• Advertising

• Sales promotion

• Free trial

• Branding

• Build customer loyalty

Market Development• New Segments

• New channels of distribution

• New markets regionally,

nationally, internationally

• New methods – internet

Diversification• Acquisition/Merger

• Licence

• Franchise

• Joint ventures

• Strategic Alliances

Products/Services

Present New Booz

Allen

Hamilton


Ansoff’s Product market growth matrix – Risk?

Present

MARKETS

New

New Product development

Present products to new

customers

Market Penetration

Present products to

existing customer

Market Development

Present products to

new markets

Diversification

New products and new markets

Products/Services

Present New

2

648

16


Ansoffs matrix for Coco Cola


Ansoffs matrix for McDonalds – ignoring the spelling errors!


Ansoff’s Product market growth matrix – Cenit College?

Present

MARKETS

New

New Product developmentMarket Penetration

Market Development Diversification

Products/Services

Present New


Ansoff’s Product market growth matrix – Your employer?

Present

MARKETS

New

New Product developmentMarket Penetration

Market Development Diversification

Products/Services

Present New


Gap analysis - Ansoff’s matrix in drag!

Time (years)

Developments :existing products/services

Market Penetration

Market

development

NPD

Diversification

unrelated or

related

Sales

or

Profits

ROI

£ %

Current strategy with no changes

P

l

a

n

n

i

n

g

G

a

p

Risk Return


How will this be helpful for your exam?

• Understand the importance of growth in sales, profits and market share as a key to strategic success

• In Q1 a common feature of the exam is to develop a future strategy for the organisation in question – Ansoffs matrix provides the key to this process

• Being able to identify, recommend and set out the appropriate actions to achieve the required outcomes of future strategy is a key exam skill

• Understand the concept of gap analysis and how it is similar to Ansoffs matrix.


Documents

Topic 1 Strategic choice - StudyOnline.iestudyonline.ie/.../09/Topic-17a...Growth-Options-Ansoffs-Matrix-1.pdfAnsoff’s Matrix Merger Acquisitions Licence ... 2015 2020 Strategic