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Business enterprise essay
 

Business enterprise essay

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    Business enterprise essay Business enterprise essay Document Transcript

    • Oliver SmithC3290685 Business EnterpriseIntroductionThis essay will consist of analysing the application, appropriateness, purpose and limitationsof using Ansoff’s Matrix as a model towards the business Thera4Sport. Firstly will be anintroduction explaining Ansoff’s Matrix and how it is used, along with a description of thebusiness. Secondly will be a breakdown of how the model is applied and its appropriatenesstowards Thera4sport. The next section will include the purpose of Ansoff’s Matrix and howit affects the business. Following this will be a section on the limitations to Thera4sport byusing Ansoff’s Matrix as a business model. Finally will be a conclusion that will recap themain points of the essay.The BusinessThe business in context is called Thera4sport. Thera4sport is a sports therapy businesswhich is aimed at elite athletes. Their main product is a thermal vest, which containspouches 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 MatrixAnsoff’s Matrix which was developed by Dr Igor Ansoff is a tool that helps businesses decidetheir product and market growth strategy. Ansoff’s Matrixconsists of four growth strategies: Market penetration,Market Development, Product Development andDiversification. Market penetration is the name given to agrowth strategy where the business focuses on sellingexisting products into existing markets. Marketdevelopment is the name given to a growth strategywhere the business seeks to sell its existing products intonew markets. Product development is the name given to agrowth strategy where a business aims to introduce newproducts into existing markets. Diversification is the namegiven to the growth strategy where a business markets new products in new markets.(Tutor2u). Picture from (Tutor2u)Application and AppropriatenessAnsoff’s Matrix is applied to new and existing businesses. By applying Ansoff’s Matrix toyour business it allows you to see the options available to the business in relation to growthstrategies. Businesses also use Ansoff’s Matrix for decision making and forecasting. Theattraction of using each strategy to a business is determined by the amount of sales and the
    • Oliver SmithC3290685probable risk. Most businesses choose to use market penetration as it has the least amountof risk and the most amount of success. Although it has the most success rate, it doesn’thave the highest profit rate as the products and brands in the market are very competitiveas 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 isan 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 strategyoptions: Product Development and Diversification. As thera4sport is a new company theywill probably want to have as little probably risk involved in their strategy as possible, soProduct development strategy seems to be the most appropriate choice for them asDiversification carries too much probable risk, but this all depends on their projected sales,costs and target market. (Mercer, 2001)Purpose and EffectivenessAnsoff’s matrix is very useful to many different types of businesses, new and expanding. Itallows businesses see whether they can expand their brand and lengthen the life of theirproducts, by having more target markets or developing their product. By being able toposition your brand into numerous different markets it allows the business to be sustainableand eventually dominate markets. This is lead to a brand being well known and respected asit will be used and/or purchased by a variety of people. By allowing businesses to see if theycan expand their product and market range it allows a business to see if they have anexpandable brand and product, which will give them more options to develop in thefuture.(Pringle & Field, )Ansoff’s Matrix affected Thera4sport as it allowed them to look into which strategy wouldbe better for them to adopt when launching their product. This allowed Thera4sport to lookinto market growth, market size, the risk involved in each strategy and product growth. Thisis very good in the eyes of Thera4sport as it allows them to take calculated risks, analysetheir market and product competitors and allows them to see how much potential growththere is for the product and certain markets. Ansoff’s matrix is not in depth enough to fullyaffect the business choices made by Thera4sport, it merely helps the business to considerthe best options available to them. (Bachmeier,)LimitationsThe main limitations look into the simplicity of the matrix. Ansoff’s Matrix focuses on twomain items, product and market. When relating to markets the Ansoff’s Matrix isn’t in depthenough to discuss what the current markets entail, fellow competitors and technologicalprocesses to produce the products. Now if we relate Ansoff’s Matrix to products again itisn’t detailed enough, there are so many different aspects to consider and account for. Themain issue to address is the technological processes involved in manufacturing the product,
    • Oliver SmithC3290685so 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).ConclusionIn conclusion Ansoff’s Matrix is a very simple structure to allow a basic insight into thedecision of choosing your product and market, making it a good starting point for businessesto build from. But because Ansoff’s Matrix is a very simple structure, it doesn’t allow indepth 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 businessin question. So therefore I believe that the Ansoff’s matrix is suitable for Thera4sport to useand 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].