business enterprise essay

Oliver SmithC3290685

Business Enterprise

Introduction

This essay will consist of analysing the application, appropriateness, purpose and limitations of using Ansoff’s Matrix as a model towards the business Thera4Sport. Firstly will be an introduction explaining Ansoff’s Matrix and how it is used, along with a description of the business. Secondly will be a breakdown of how the model is applied and its appropriateness towards Thera4sport. The next section will include the purpose of Ansoff’s Matrix and how it affects the business. Following this will be a section on the limitations to Thera4sport by using Ansoff’s Matrix as a business model. Finally will be a conclusion that will recap the main points of the essay.

The Business

The business in context is called Thera4sport. Thera4sport is a sports therapy business which is aimed at elite athletes. Their main product is a thermal vest, which contains pouches of a sodium acetate solution (used in hand warmers) on the main body muscles, allowing the athletes muscles to perform at their optimum temperature for longer.

Ansoff’s Matrix

Ansoff’s Matrix which was developed by Dr Igor Ansoff is a tool that helps businesses decide their product and market growth strategy. Ansoff’s Matrix consists of four growth strategies: Market penetration, Market Development, Product Development and Diversification. Market penetration is the name given to a growth strategy where the business focuses on selling existing products into existing markets. Market development is the name given to a growth strategy where the business seeks to sell its existing products into new markets. Product development is the name given to a growth strategy where a business aims to introduce new products into existing markets. Diversification is the name given to the growth strategy

where a business markets new products in new markets. (Tutor2u). Picture from (Tutor2u)

Application and Appropriateness

Ansoff’s Matrix is applied to new and existing businesses. By applying Ansoff’s Matrix to your business it allows you to see the options available to the business in relation to growth strategies. Businesses also use Ansoff’s Matrix for decision making and forecasting. The attraction of using each strategy to a business is determined by the amount of sales and the


probable risk. Most businesses choose to use market penetration as it has the least amount of risk and the most amount of success. Although it has the most success rate, it doesn’t have the highest profit rate as the products and brands in the market are very competitive as each company has a similar product so competitive pricing has to be used to make sales.

Using Ansoff’s Matrix in relation to Thera4sport is very appropriate. As a new business it is an ideal model to use to identify the most suitable growth strategy to use for the business. Because Thera4sport is launching a new product they have two different growth strategy options: Product Development and Diversification. As thera4sport is a new company they will probably want to have as little probably risk involved in their strategy as possible, so Product development strategy seems to be the most appropriate choice for them as Diversification carries too much probable risk, but this all depends on their projected sales, costs and target market. (Mercer, 2001)

Purpose and Effectiveness

Ansoff’s matrix is very useful to many different types of businesses, new and expanding. It allows businesses see whether they can expand their brand and lengthen the life of their products, by having more target markets or developing their product. By being able to position your brand into numerous different markets it allows the business to be sustainable and eventually dominate markets. This is lead to a brand being well known and respected as it will be used and/or purchased by a variety of people. By allowing businesses to see if they can expand their product and market range it allows a business to see if they have an expandable brand and product, which will give them more options to develop in the future.(Pringle & Field, )

Ansoff’s Matrix affected Thera4sport as it allowed them to look into which strategy would be better for them to adopt when launching their product. This allowed Thera4sport to look into market growth, market size, the risk involved in each strategy and product growth. This is very good in the eyes of Thera4sport as it allows them to take calculated risks, analyse their market and product competitors and allows them to see how much potential growth there is for the product and certain markets. Ansoff’s matrix is not in depth enough to fully affect the business choices made by Thera4sport, it merely helps the business to consider the best options available to them. (Bachmeier,)

Limitations

The main limitations look into the simplicity of the matrix. Ansoff’s Matrix focuses on two main items, product and market. When relating to markets the Ansoff’s Matrix isn’t in depth enough to discuss what the current markets entail, fellow competitors and technological processes to produce the products. Now if we relate Ansoff’s Matrix to products again it isn’t detailed enough, there are so many different aspects to consider and account for. The main issue to address is the technological processes involved in manufacturing the product,


so how much each unit will cost to make and what price it will be sold at to cover costs, make profit and also be competitive (Egan, 2001).

Conclusion

In conclusion Ansoff’s Matrix is a very simple structure to allow a basic insight into the decision of choosing your product and market, making it a good starting point for businesses to build from. But because Ansoff’s Matrix is a very simple structure, it doesn’t allow in depth research to take place for more important and influential decisions to the business, meaning that there is a limit to how long Ansoff’s Matrix is applicable to use for the business in question. So therefore I believe that the Ansoff’s matrix is suitable for Thera4sport to use and refer to but I wouldn’t recommend to rely and base all decisions from using it.

Bibliography

Bachmeier, K. (2008). Analysis of marketing strategies. Auflage, Druck and Bindung, Germany.

Egan, C. & Thomas. M, J. (2001). The CIM Handbook of Strategic Marketing. Butterworth-Heinemann, Oxford, UK.

Mercer, D. (2001). Marketing. Blackwell’s Publishing Limited, Oxford, UK

Pringle, H. & Field, P. (2008) Brand Immortality: How Brands can Live Long and Prosper. IPA, London.

Tutor2u (2011). Tutor2u. [Internet]. Available from: <http://tutor2u.net/business/strategy/ansoff_matrix.htm> [Accessed on 29th April 2011].