Business

• ANSOFF Matrix


  A strategic planning tool that helps managers to formulate growth strategies and assess their risks
• Growth strategies in ANSOFF Matrix


  • Market penetration
  • Product development
  • Market development
  • Diversification (related)
  • Diversification (unrelated)
• ANSOFF Matrix


  • Assesses risk of different growth strategies
  • Existing vs new products on x-axis
  • Existing vs new markets on y-axis
• Market penetration


  Selling existing products in existing markets (low risk)
• Examples of market penetration

  • Decreasing price
  • Increasing promotion
  • Hiring more staff to produce/service more
• Product development


  Selling new products in existing markets (medium risk)
• Market development


  Selling existing products in new markets (medium risk)
• Diversification (related)


  Selling new products in new markets (high risk)
• Diversification (unrelated)


  Selling new products in new markets (high risk)
• Tools above the line are for Standard and Higher Level, tools below the line are for Higher Level only
• When applying ANSOFF Matrix, it's important to understand the purpose, how it works, pros/cons, and how it relates to key IB Concepts (change, creativity, ethics, sustainability)
• BCG Matrix


  A product portfolio analysis tool that helps to examine the products in terms of market share and market growth
• Tools in the business management toolkit

  • Standard and higher level tools
  • Higher level tools
• Purpose of business management tools

  • Determine strategies for organizations
  • Explain how the tool works
  • Discuss the pros and cons
  • Apply the tool in internal assessment
  • Provide an example IIA extract
• Market growth


  High or low
• Market share


  High or low
• Categories of products in BCG Matrix

  • Star
  • Cash Cow
  • Question Mark
  • Dog
• Star products


  • High market growth
  • High market share
  • Generate high incomes
  • Require significant investment to sustain growth
• Market is growing


  Need to increase promotion or production to maintain high market share
• Most managers prefer products to be Cash Cows rather than Stars
• Marketing mix


  A set of decisions in product marketing that need to be made by managers
• Elements of marketing mix

  • Product
  • Price
  • Promotion
  • Place
  • People
  • Processes
  • Physical evidence
• Goods


  Tangible products
• Services


  Intangible products
• Types of products


  • Consumer products (B2C)
  • Producer products (B2B)
• FMCG (Fast Moving Consumer Goods)


  Goods that do not have an expiration date but are used frequently, so they need to be purchased often
• Perishables


  Goods that perish quickly, e.g. food
• Durables


  Products that can last for a very long time, e.g. washing machine, car, computer
• Specialty Goods


  Goods with unique characteristics, usually distributed through limited channels, e.g. designer clothes
• Product life cycle


  Succession of stages a product goes through from launch to decline
• Stages of product life cycle

  • R&D
  • Launch/Introduction
  • Growth
  • Maturity/Saturation
  • Decline
• Product portfolio


  All the products an organization offers
• BCG Matrix


  A tool to evaluate products in a portfolio based on market growth and market share
• BCG Matrix categories


  • Stars
  • Cash cows
  • Question marks
  • Dogs
• Product life cycle


  Relationship with product portfolio and marketing mix
• Product life cycle


  Relationship with investment, profit and cash flow
• Profit


  Positive difference between revenues and costs
• Cash flow


  Total amount of cash inflows and outflows affecting an organization's liquidity
• Investment


  Purchase of long-term assets to generate future earnings
• R&D stage: Prototype of a good is usually produced, no sales or marketing mix yet, high investment, no profits or positive cash flow