University School of Business

Bachelor of Business Administration

Corporate Strategy (BAT-351)
Asst. Prof. Neha Dhammi

Growth Strategies
DISCOVER . LEARN . EMPOWER
Objectives:
The objective of this course is to
impart in-depth knowledge to the
students regarding the theory and
practice of Corporate Strategy.
To understand the Corporate
planning-an overview, SBU,
Modes of strategic decision
making, Strategic intent.

To understand the Competition

Analysis: Porter’s Five Forces
Theory, Generic strategies,
Competitive Advantage, Value
chain analysis.

To understand the Strategic

Implementation and Control
Stability, Growth, Turnaround,
Retrenchment, Diversification,
vertical integration, Horizontal
integration
Growth Strategies
• The Ansoff Matrix, also called the Product/Market Expansion Grid, is a
tool used by firms to analyze and plan their strategies for growth. The
matrix shows four strategies that can be used to help a firm grow and
also analyzes the risk associated with each strategy.
• The matrix was developed by applied mathematician and business
manager, H Igor Ansoff, and was published in the Harvard Business
Review in 1957. The Ansoff Matrix has helped many marketers and
executives better understand the risks inherent in growing their
business.

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• The four strategies of the Ansoff Matrix are:
• Market Penetration: This focuses on increasing sales of existing
products to an existing market.
• Product Development: Focuses on introducing new products to an
existing market.
• Market Development: This strategy focuses on entering a new market
using existing products.
• Diversification: Focuses on entering a new market with the
introduction of new products.

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Ansoff Matrix

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The Ansoff Matrix: Market Penetration
• In a market penetration strategy, the firm uses its products in the existing market.
In other words, a firm is aiming to increase its market share with a market
penetration strategy.
• The market penetration strategy can be executed in a number of ways:
• Decreasing prices to attract new customers
• Increasing promotion and distribution efforts
• Acquiring a competitor in the same marketplace

• For example, telecommunication companies all cater to the same market and
employ a market penetration strategy by offering introductory prices and
increasing their promotion and distribution efforts.
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The Ansoff Matrix: Product Development
• In a product development strategy, the firm develops a new product to cater to the existing
market. The move typically involves extensive research and development and expansion of the
company’s product range. The product development strategy is employed when firms have a
strong understanding of their current market and are able to provide innovative solutions to
meet the needs of the existing market.
• This strategy, too, may be implemented in a number of ways:
• Investing in R&D to develop new products to cater to the existing market
• Acquiring a competitor’s product and merging resources to create a new product that better
meets the need of the existing market
• Forming strategic partnerships with other firms to gain access to each partner’s distribution
channels or brand
For example, automotive companies are creating electric cars to meet the changing needs of their
existing market. Current market consumers in the automobile market are becoming more
environmentally conscious
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The Ansoff Matrix: Market Development
• In a market development strategy, the firm enters a new market with its existing product(s). In
this context, expanding into new markets may mean expanding into new geographic regions,
customer segments, etc.
The market development strategy is most successful if
• (1) the firm owns proprietary technology that it can leverage into new markets,
• (2) potential consumers in the new market are profitable (i.e., they possess disposable income),
• (3) consumer behavior in the new markets does not deviate too far from that of consumers in
the existing markets.
• The market development strategy may involve one of the following approaches:
• Catering to a different customer segment
• Entering into a new domestic market (expanding regionally)
• Entering into a foreign market (expanding internationally)
For example, sporting goods companies such as Nike and Adidas recently entered the Chinese
market for expansion. The two firms are offering roughly the same products to a new 10
demographic.
The Ansoff Matrix: Diversification
• In a diversification strategy, the firm enters a new market with a new product.
Although such a strategy is the riskiest, as both market and product development are
required, the risk can be mitigated somewhat through related diversification.
There are two types of diversification a firm can employ:
1. Related diversification: There are potential synergies to be realized between the
existing business and the new product/market.
For example, a leather shoe producer that starts a line of leather wallets or accessories
is pursuing a related diversification strategy.
2. Unrelated diversification: There are no potential synergies to be realized between
the existing business and the new product/market.
For example, a leather shoe producer that starts manufacturing phones is pursuing an
unrelated diversification strategy.
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Diversification
Diversification may be divided into further categories
• HORIZONTAL DIVERSIFICATION
This involves the purchase or development of new products by the company,
with the aim of selling them to existing customer groups. These new products
are often technologically or commercially unrelated to current products but
that may appeal to current customers. For example, a company that was
making notebooks earlier may also enter the pen market with its new product.
• VERTICAL DIVERSIFICATION
The company enters the sector of its suppliers or of its customers. For example,
if you have a company that does reconstruction of houses and offices and you
start selling paints and other construction materials for use in this business.
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Diversification
• CONCENTRIC DIVERSIFICATION
Concentric diversification involves the development of a new line of products or
services with technical and/or commercial similarities to an existing range of
products. This type of diversification is often used by small producers of consumer
goods, e.g. a bakery starts producing pastries or dough products.
• CONGLOMERATE DIVERSIFICATION
Is moving to new products or services that have no technological or commercial
relation with current products, equipment, distribution channels, but which may
appeal to new groups of customers. The major motive behind this kind of
diversification is the high return on investments in the new industry. It is often
used by large companies looking for ways to balance their cyclical portfolio with
their non-cyclical portfolio.
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 Summary
• The Ansoff Matrix, also called the Product/Market Expansion Grid, is a
tool used by firms to analyze and plan their strategies for growth.
• The matrix shows four strategies that can be used to help a firm grow
and also analyzes the risk associated with each strategy.
Assessment Pattern

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 APPLICATIONS
• Helpful in understanding the concepts of corporate strategy.
• We get to know about the functions the managers perform in an
organization and the role of management in framing, implementing
and evaluating strategies.
 REFERENCES
Text Books:
• Strategic Management & Business Policy, Kazmi, TMH
Buy at Flipkart
• Strategic Management, R. Srinivasana‐PHI
Available at PHI
Video Links:
• https://www.youtube.com/watch?v=dCvPZLQdw08&t=2s
• https://www.youtube.com/watch?v=WKr-lfE4QaE
• https://www.youtube.com/watch?v=8-pcuDIQKUw&t=4s
Weblinks:
• https://static.careers360.mobi/media/uploads/froala_editor/files/Strategy-
Implementation-and-Control.pdf
• https://nptel.ac.in/courses/110/108/110108047/
THANK YOU

For queries

Email: neha.e9421@cumail.in