Assignment 09: Cost, Differentiation, Focus & Strategy

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Strategic Analysis for Healthcare

Chapter 23

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Ansoff Matrix

The Ansoff matrix can be used to

categorize an existing strategy,

determine the risk associated with a new or proposed strategy, or

develop new strategies.

For our purposes, we will focus on the matrix as a strategy development tool.

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Ansoff Matrix

The matrix considers products or services in comparison to the markets the company proposes to serve.

The matrix compares these factors on the basis of whether each is new or existing.

Markets are placed on the vertical axis, and products and services are placed on the horizontal axis.

The intersection of these axes creates four possible blocks.

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	New	Market Development		Diversification
		(Risk = moderate)		(Risk = high)
Markets

		Market Penetration		Product Development
	Existing	(Risk = low)		(Risk = moderate)
		Existing		New
			Products and Services

Ansoff Matrix

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Market Penetration

The bottom left box represents strategies aiming to provide existing products to existing markets.

Such strategies are considered “market penetration” because they involve driving existing products deeper into existing markets.

A company’s efforts in this area may seek to attract new customers, but they are still within the same overall market.

Market penetration is the least risky box on the grid: The company already knows its products, services, and customers.

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Market Development

The top left box represents strategies aiming to provide existing products to new markets.

Strategies of this type are considered “market development” because they involve driving existing products into markets that are currently unserved by the organization.

These are moderate-risk strategies because the organization knows its products but the market is new.

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Product Development

The bottom right box—labeled “product development”—involves developing new products for existing markets.

An organization typically knows its market and patients/customers well, and it may have insights as to what the market’s unmet needs are. The organization may then create new products or services to meet these needs.

Developing a new product for an existing market is a moderate-risk proposition: The company knows its customers well but is developing a new product.

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Diversification

The top right box—“diversification”—is the box with the highest risk, because the organization is creating new products for new markets. It is essentially approaching a double unknown.

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Ansoff Matrix

To use the Ansoff matrix, lay out the four-box grid format and brainstorm specific strategies that correspond to each box.

For example, begin with new products for existing customers. What are the needs of your existing market and customers?

Try to identify at least five possible strategies to address bringing new products to existing customers.

Repeat this process for the remaining three boxes.

If you successfully brainstorm a large number of ideas, pick the top five for inclusion in each box.

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Exercise

Break into groups and use the space on page 153 of your book to develop strategies for each box of the Ansoff matrix.

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