Ansoff Matrix
Term of the week
What: The Ansoff matrix (aka product-market expansion grid) is a structured framework used for evaluating business growth strategies.
Why: Growth investors can use the Ansoff matrix to assess the relative attractiveness of companies’ chosen growth strategies and the level of risk associated with each option.
How: The Ansoff matrix distinguishes four growth strategies: market penetration (increasing sales of existing products in existing markets), market development (selling existing products in new markets), product development (introducing new products to existing markets) and diversification (entering new markets with new products).
Conclusion: The more a company’s growth strategy leverages its existing competencies and resources, the lower its associated risk.
