Ansoff Matrix was introduced by Igor Ansoff, a Russian-born pioneer of strategic management and corporate planning. He was also the strategist who first identified the fact that competitive advantage in the market was vital in the element of planning process (2001).
Ansoff matrix helps to define two vital factors for marketing: what is sold and who it is sold to. Therefore, it pertains on the products and markets and enables to give the four alternative courses of actions when considering marketing objectives:
- selling existing products to existing markets (market penetration);
- extending existing products to new markets (product development);
- developing new products for existing markets (market development); and
- developing new products for new market (diversification) (2005).
This paper will focus on analyzing the strategy development directions of Virgin Group, McDonald’s and eBay. In the end, the author also recommends changes to the matrices of each of them.
Virgin Groups: Diversification
For Virgin Groups, diversification is used in its strategic development. It is business growth through new products and new market. It is considered as appropriate option when the current markets are saturated or when the products are already reaching the end of its lifecycle because it can help in order to produce vital synergies and can also help in order to spread the risk by broadening the product and market portfolio (2002).
Unrelated diversification or conglomerate diversification was applied by the company. Virgin Group of UK was mainly associated with music and recording, however, the company ventured into new products and new markets including Virgin Cola, Virgin Megastores, Virgin Airlines and Virgin Telecommunications. As a result, the Virgin Group had been able to have a result of higher gains from higher risk strategic direction (2010).
McDonald’s: Product Development
McDonald’s is always considered as one of the most loved and successful brands in the world. It had already established its name in the global market. As a result, the strategic direction of the company focuses on product development. Product development mainly focuses on the development of new products for the existing and current markets. The intention of this strategic direction is to attract new customers, retain existing ones and increase the market share ( 2002).
This is used by McDonalds, because the company is dealing with the needs of the customers of which it has some experience because the company has been operating in the market for a long period of time (2002). One of the best examples of this aspect is the strategy and views of the company on the changing demands and needs of their customers regarding their menu or diet. Thus, the objectives of the company focus on the growing interests of the public in wholesome and healthy foods, together with the different premium products in different part of the world (2005).
e-Bay: Market Penetration
e-Bay is one of the most successful e-commerce website in the world wide web. The strategic direction of the company is market penetration. The main aim of a market penetration strategy is to increase the market share by using the current products within the existing markets. This involved the actions and programs to be done in order to enhance the current core competencies or build a new one ( 2002).
In the case of e-Bay, the company focuses on improving the quality of their service in order to improve the reputation of the company compare with its direct and indirect competitors. e-Bay is focusing on the improvement of its service by application of updated and high-tech Information System, which will help to improve the visit of the customers, at the same time improve the quality of service, more importantly the security and safety of its online users ( 2010).
Virgin Group, McDonalds and e-Bay have different growth strategic directions. However, based on the current performance of these two companies, it can be seen that the application of their respective strategies have enabled them to be successful and leader in their respective market. Based on this, it can be said that different companies must focus on the particular growth strategic directions that are matched with their current performance, strengthens and weaknesses in order to ensure success.