The Ansoff Matrix: A Legendary Tool, But with Two Logical Problems
5 Pages Posted: 6 Mar 2018 Last revised: 26 May 2020
Date Written: February 27, 2018
The Ansoff Matrix has been widely taught as part of business education for over 50 years. It portrays growth options as a 2 x 2 matrix of options, with one axis representing products (existing / new) and the representing markets (existing / new). Two logical problems arise from the matrix. Both problems relate to assumptions or interpretations pertaining to newness. If we assume a new product really is new to the firm, in many cases a new product will simultaneously take the firm into a new, unfamiliar market. In that case, one of the Ansoff quadrants, namely diversification, is redundant. Alternatively, if a new product does not necessarily take the firm into a new market, then the combination of new products into new markets does not always equate to diversification, in the sense of venturing into a completely unknown business - which the model, and many subsequent interpretations of the model in textbooks, assumes.
Keywords: Ansoff Matrix, Growth, Diversification, New Product Strategy
JEL Classification: M31
Suggested Citation: Suggested Citation