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