This document discusses corporate growth strategies using Ansoff's Matrix. It outlines the four growth strategies in the matrix: market penetration, product development, market development, and diversification. Market penetration involves increasing market share with existing products. Product development introduces new products to existing markets. Market development sells existing products in new markets. Diversification involves new products and markets, which is the riskiest strategy. The document provides examples and considerations for each strategy.

1. CORPORATE STRATEGY
GROWTH STRATEGIES
K. MULENGA
JULY 2014
TVTC, LUANSHYA

2. Introduction
• Before, the firm embarks on
implementing growth strategies it must
consolidate its current position in the
market.
• Embarking on growth before
consolidation of the current business will
expose the firm to competitors’ attacks.

3. ANSOFF MATRIX
• The Ansoff Matrix was developed by
Russian American Mathematician and
Business Manager Igor Ansoff in the
1970s.
• It guides managers when considering
growth in existing and new markets as
well as utilising existing or new products.

4. Ansoff Matrix
Markets
Products
Existing New
Existing Market
Penetration
Product
Development
New Market
Development
Diversification

5. Market Penetration
• This strategy involves increasing market
share in the existing market using an
existing product.
• Market penetration is achieved by
increasing usage by current customers
and wooing non-users and rivals’
customers through price reductions,
advertising and sales promotion.

6. Market Penetration Cont.
• Market penetration makes business
sense when:
–The market is not saturated
–The market is experiencing growth
–Rival firms are exiting the market.
–The firm has strong brands with renowned
reputation
–The firm has strong marketing acumen.

7. Market Penetration Cont.
• Market penetration is less risky because
the firm has experience with the market
and product.
• As the market reaches its saturation
point, the scope for market penetration
diminishes.

8. Product Development
• Product development is favoured by
firms that have strong research and
development capabilities.
• It involves introducing a new product in
an existing market.
• The introduction of mineral water by
Zambeef was a case in point.

9. Product Development Cont.
• The film industry is often cited as an industry
good at product development e.g.
Transporter I and Transporter II.
• Product development strategy aims at
introducing new product features, different
quality versions and new product extensions.
• Product development calls for
innovativeness and strength in R & D as well
as reliable marketing database.

10. Market Development
• This strategy is likely to succeed for a firm
with strong marketing capabilities.
• It involves the selling of an existing
product in a new market, e.g. the selling
maize meal by Antelope Milling of
Zambia in the Democratic Republic of
Congo is a classic example of market
development.

11. Market Development Cont.
• Market development is looked at in terms of
geographical areas and demographic factors
such as age and sex.
• It is incumbent upon the firm pursuing
market development to consider altering
product features, advertising strategy to suit
the existing environment of the new market..
• For example MacDonald altered its burger in
France by fish instead of beef.

12. Diversification
• This is the riskiest strategy as the both
the product and market are unknown to
the firm since they are new.
• Diversification aims at spreading risks,
making use of surplus cash and capacity,
stretching the brand (e.g. Virgin) and
spreading costs.

13. Types of Diversification
• Diversification comes in two types
namely:
• Related (concentric) Diversification;
• and Unrelated (Conglomerate)
Diversification.

14. Related diversification
• This is where the firm ventures into areas
that related or linked to its current
business.
• Related diversification can be in form of
vertical integration and horizontal
integration.

15. Vertical Integration (VI)
• VI involves either the firm becoming its own
supplier (Backward or upstream) integration
or becoming its own distributor (Forward or
Downstream ) integration.
• The setting of a Novatek to produce stock
feed by Zambeef is a classic example of
backward integration.
• While the setting up of a bakery is an
example of forward integration.

16. Horizontal Integration (HI)
• HI involves a firm acquiring or merging
with another firm selling complementary
or substitute products.
• The acquisition of Masterpork and
Zamanita by Zambeef is a good example
of horizontal integration.

17. Unrelated diversification
• This entails a firm entering into a market
which is not in any way linked to its
current line of business.
• The setting up of Universal Steel by Trade
Kings and the entry of Japanese firms
into personal computers are classic
examples of unrelated diversification.

18. Unrelated Diversification Cont.
• Unrelated diversification is not common.
• Korean firms like Hyundai and Daewoo
are famous for unrelated diversification.

19. Conclusion
• The Ansoff Matrix enables firms to
generate different growth options
ranging from market penetration to
diversification.
• Firms must consolidate their current
market positions before embarking on
various growth strategic options.