Igor Ansoff:Father of Strategic ManagementFather of Strategic Management
Presented By
Anush Joseph
MPOB, MBA, ASIET
Prof. Nimal C Namboodiripad
Biography
• Igor Ansoff was born in Vladivostok, Russia, on December 12,
1918.
• Graduated from Stuyvesant High School, New York in 1937
• Studied General Engineering at Stevens Institute of
Technology and also completed MSc from the same institute.Technology and also completed MSc from the same institute.
• Did doctorate from Brown University
• He was an applied mathematician and business manager.
• He is known as the father of Strategic management.
• He taught for 17 years at the U.S. International University
• He died of complications from pneumonia on July 14, 2002.
Ansoff’s contributions
• Real-time strategic management
• Product-Market Growth Matrix
• The concept of Vertical/Horizontal integration
• The concept of environmental turbulence• The concept of environmental turbulence
Strategic management
• Strategic management function formulates, implements and evaluates cross-functional decisions that will enable an organization to achieve its objectives.
• The process specifies the organization's objectives, • The process specifies the organization's objectives, develops policies and plans to achieve these objectives, and allocates scarce resources to implement the policies and plans to achieve the objectives
Strategic management
• Strategic management involves adapting the
organization to its business environment.
• Strategic management affects the entire organization
by providing direction. by providing direction.
• Strategic management involves both strategy
formation (he called it content) and also strategy
implementation (he called it process).
Strategic management
• Strategic management is fluid and complex. Change
creates novel combinations of circumstances
requiring unstructured non-repetitive responses.
• Hence, strategic management in many cases is Hence, strategic management in many cases is
partially planned and partially unplanned.
• Strategic management is done at several levels:
overall corporate strategy, and individual business
strategies.
Environmental Turbulence
• By the 1980s change, and pace of change, had
become important for managing organisations.
• The issue of environmental turbulence underlies
Ansoff's work on strategy.
• However, if some organisations were faced with • However, if some organisations were faced with
conditions of great turbulence, others still operated
in relatively stable conditions. Consequently,
although strategy formulation had to take turbulence
into account, one strategy could not fit every
industry.
Environmental Turbulence
• There are five levels of environmental turbulence
outlined as:
– Repetitive--change is slow, and predictable
– Expanding--a stable marketplace, growing gradually
– Changing--incremental growth, with customer – Changing--incremental growth, with customer
requirements altering fairly quickly
– Discontinuous--characterised by some predictable and
some complex and sudden changes
– Surprising--change which cannot be predicted and which
both develops, and develops from, new products or
services.
ExistingExisting NewNew
Ansoff Matrix(Grid)
Product-Market Strategies
Market Market PenetrationPenetration
Product Product Development Development
ExistingExisting
NewNew
PenetrationPenetration Development Development (Expansion)(Expansion)
Market Market Development Development (Expansion)(Expansion)
DiversificationDiversification
Market-Penetration Strategy
� It seeks to increase market share for present
products or services in present markets through
greater marketing efforts.
� You have to take care of competitive reaction and � You have to take care of competitive reaction and
cost of conversion
� Example: Airlines use reduced fares & promotion like
various family travel packages to penetrate market
Product-Development Strategy
� Is a strategy that seeks increased sales by improving or modifying present products or services.
� For example McDonald’s starting Veg. burgers in IndiaIndia
� The following have to be considered when going for this strategy
– Market size/volume
– competitor reaction
– effect on existing products
– resources to deliver new products
Market-Development Strategy
• Involves introducing present products or
services into new geographic areas.
• It may be also targeting new segments in the
same market.same market.
� Have to be careful of competitive reaction,
understand new buyers and adaptability
Diversification
• When there is need to grow continually but there is a limit in the present line of business you go for diversification
• It means entry into new line of activity other than your traditional business. Hence this is different your traditional business. Hence this is different from the other three strategies and a lot more riskier.
• There are three types of diversification
– Horizontal
– Concentric and
– Conglomerate
Concentric diversification
• Concentric diversification includes adding new, but
related, products or services.
• Eg. Masala manufacturers getting into manufacture • Eg. Masala manufacturers getting into manufacture
of ready to eat food items.
Horizontal diversification
• Horizontal diversification includes adding new,
unrelated products or services for present
customers.
• For example, a company that was making
notebooks earlier may also enter the pen market
with a new product.
Conglomerate diversification
• Adding new, unrelated products or services is called
conglomerate diversification
• Eg. Reliance getting into the mobile phone business.• Eg. Reliance getting into the mobile phone business.
Integration
• Diversification can be classified by the direction of
the diversification.
• Integration can be either
– Vertical or – Vertical or
– Horizontal
• Integration can be done either by
– Purchase of competitors or
– Starting own business
Vertical integration
• The term vertical integration describes the degree to which a firm owns its upstream suppliers and its downstream intermediaries/ buyers.
• Vertically integrated companies are united through a hierarchy and share a common owner. hierarchy and share a common owner.
• Usually each member of the hierarchy produces a different product or service, and the products combine to satisfy a common need.
• Vertical integration is typified by
– Backward integration and
– Forward integration
– Balanced integration
Forward integration
• Forward integration involves gaining ownership or
increased control over distributors or retailers
• Forward Integration is when you are entering into • Forward Integration is when you are entering into
subsequent stage – eg.Harissons Malayalam
Plantations getting into packaged tea, Mafatlal
getting into readymades
Backward integration
• Backward integration is a strategy of seeking
ownership or increased control of a firm’s suppliers
• Backward Integration is entering preceeding stage
of business eg.Brooke Bond getting into plantation
business, Reliance into petroleum mining
Balanced integration
• In balanced integration, the company sets up
subsidiaries that both supply them with inputs and
distribute their outputsdistribute their outputs
Horizontal integration
• Horizontal integration refers to a strategy of seeking
ownership of or increased control over a firm’s
competitors eg. Tata Oil Mill being taken over by HLL
or Tata’s taking over Tetley
• Horizontal Integration is entering same level of • Horizontal Integration is entering same level of
business in same industry
• To get market coverage, subsidiary companies are
created which markets the product to a different
market segment/geographical area.
Written Works
• His written works include:
– Corporate Strategy published in 1965
– Business Strategy, 1969
– Strategic Management, 1984– Strategic Management, 1984
– The Firm: Meeting the Legacy Challenge,1986
– The New Corporate Strategy, 1989
– And more than 120 other published papers and articles translated into 8 languages
Honours
• Netherlands has established an Igor Ansoff Award in
his name for research in Strategic Planning and
Management
• Vanderbilt University has established an Ansoff MBA
Scholarship
• The Japanese Strategic Management Society also has
established an annual award in his name.
Thank you
Source: http://en.wikipedia.org/wiki/Igor_Ansoff
http://www.easy-strategy.com/igor-ansoff.html