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Ansoffs model is one of the best tool which companies to develop market and product expansion strategies. Ansoffs model is based upon four type of strategies namely market penetration strategy, market development strategy, product development strategy and diversification strategy. The strategy is also dependent on company objectives include increasing sales, increasing profit, enter into new market, develop new product and enter into new business.
Ansoffs model
Intensive Strategies
Market Penetration strategy Market Development strategy Product Development strategy
Those three strategies are sometimes referred to as intensive strategies because they require intensive efforts if a firms competitive position with existing products is to improve.
The aim of intensive strategies is to broaden the market share and to increase the profit by making the existing products more effective and by introducing new and various sets of products in order to increase the market share too.
Developing a new market for the existing company product is called market development strategy.This is the process of finding new market for the new customer to increase company performance by increasing sales and profits. Companies can develop market on geographical such as city,country,region,state etc and demographical such as age,sex,gender,class etc. ex: Pakistan State Oil(PSO) developing new market by exporting oil to Afghanistan. Chinese products developed new market for their product worldwide.
Product development is a strategy that seeks increased sales by improving or modifying present products or services.
The best thing about this strategy is youve already established yourself in your current markets and you know what your customers want. You have the distribution channels, and you know how to reach them.
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Diversification Strategies
Diversification Strategy is the development of new products in the new market. Diversification strategy is adopted by the company if the current market is saturated due to which revenues and profits are lower. At the corporate level, it is generally and its also very interesting entering a promising business outside of the scope of the existing business unit.
The two general types of diversification strategies are related and unrelated. Businesses are said be related when their value chains possess competitively valuable cross-business strategic fits. Businesses are said to be unrelated when their value chains are so dissimilar that no competitively valuable cross-business relationships exist.
Related Diversification...
Six guidelines for when related diversification may be effective
When an organization competes in a no-growth or slow growth industry. When adding new, but related products would enhance sales of current products. When new, but related products could be offered at competitive prices. When new, but related products have seasonal sales levels that counterbalance existing peaks and valleys. When an organizations products are in the decline stage of the life cycle. When an organization has a strong management team.
Unrelated Diversification...
Unrelated Diversification
Unrelated Diversification is a form of diversification when the business adds new or unrelated product lines and penetrates new markets
An unrelated diversification strategy favors capitalizing upon a portfolio of businesses that are capable of delivering excellent financial performance in their respective industries.
When the new products have countercyclical sales patterns compared to an organizations present products. When an organizations basic industry is experiencing declining annual sales and profits. When an organization has the capital and managerial talent needed to compete.
When an organization has the opportunity to purchase an unrelated business that is an attractive investment. When financial synergy exists between the acquired and acquiring firms. When existing markets for an organizations present products are saturated. When antitrust action could be charged against an organization that historically has concentrated on a single industry.
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