The Ansoff Growth Matrix (first published by Igor Ansoff in 1957) suggests that a business can follow one of four main pathways to pursue growth:
- Market penetration – increasing sales of existing products to existing customers
- Product development – making sales of new products to existing customers
- Market development – making sales of existing products to new customers
- Diversification – making sales of new products to new customers.
Although the level of risk involved in each pathway increases the higher the number (ie 4 being the greatest risk), the level of reward does not necessarily follow the same pattern.
The strategies and actions required to be successful in each of these pathways are quite different, and may require different sets of skills and resources to be employed within the business.
Businesses should carefully consider the risks and benefits associated with each of these pathways before deciding which to pursue. Pathways to grow should be discussed and analysed as part of the strategic and business planning processes.
Contact your local Business Advisory Service for advice on managing business growth or identifying consultants who can offer support.
The Enterprise Connect program may also be helpful in this process.