Implanting strategic management External-identifier: urn:acs6: isbn_pdf:dcce-4a1a-adfd-0be06edd8. PDF · Epistemological Underpinnings and Original Concepts of Strategic Management. H. Igor Ansoff, Daniel Kipley, A. O. Lewis, Roxanne Helm-Stevens, Rick. Request PDF on ResearchGate | Implanting Strategic Management Competitive actions can be strategic or tactical (Ansoff, ; Dutton.
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Trove: Find and get Australian resources. Books, images, historic newspapers, maps, archives and more. Part 5 Introducing Strategic Management to an Organisation. 2 Ansoff, I. and McDonnell, E. Implanting Strategic Management, 2nd edn, Prentice Hall. Coming more than 25 years after the last edition, this edition of the groundbreaking Ansoff work on the concepts and practical implementation of strategic.
Another example of market penetration strategy would be that of Pakistan State Oil. The company experiences competition from local and foreign oil companies that sell petroleum through retail petrol stations.
The strategy adopted by Pakistan State Oil is similar to that of Southwest Airlines, in that they operate within competitive markets, but by investing competitively, they are able to maintain market share and grow within their respective industries.
This strategy also illustrates the low risk advantage of market penetration. The companies utilise existing products in an already known market. They do not have to invest in research and development or excessively advertise within a new market in order to create awareness. Since market penetration is focused on retaining existing customers, it is a lot cheaper than acquiring new customers in an unknown market.
However, a major disadvantage of this strategy is that it does not promote corporate growth into other potentially higher earning sectors Watts et al, By focusing simply on retaining existing customers, Watts et al argue that the company loses out on the new investment potential, while Fifield also depicts that expanding market share within an existing industry poses a significant risk as the industry growth may decline and the organisation has lower growth potential.
The various alternatives available would be to leverage an existing product into a new geographical region, using different product dimensions, distributing the products through new channels, or adopting different pricing strategies Proctor, The major goal of market development would be to attract a new customer segment, using a slightly different strategy, into consuming an existing product Ansoff, The risk associated with this strategy has been depicted by Watts et al to be moderate, due to the risks associated with entering a new market.
According to a case study in Christensen et al , p. They realised that apart from being used solely for baking, the products could be used as a household cleaning and deodorizing product, so they repackaged its contents and marketed them to supermarkets and corner shops as effective cleaning agents. Due to the relative infancy of the market, they had to engage in a series of advertisement that helped to communicate the relevance of their product and methods through which it could be used for other purposes.
Through this strategy, they were able to increase revenue and adapt one product to different market segments.
This case study confirms previous assumptions that through market development, a company could leverage an existing product into a new market Collis and Montgomery, The market development actions they engaged in were essential in building product awareness amongst the new customers.
According to Fifield , companies engaging in market development would gain new customers, increase turnover and profits, and ensure corporate growth due to the relative potential for growth within the new segment.
However, Hooley et al also discuss the risks associated with market development. If the strategy fails, then the company would have lost the substantial capital utilised in marketing and pushing this product into the new market. This definition entails any new or modified product aimed at an existing market. This strategy entails a moderately high risk due to the level of product development and research required to develop a new product for a market that is already used to an existing product Watts et al, The Apple iPod is a real life example of a new product delivery into an existing market.
Prior to its introduction, most individuals usually listened to music on cassette players, desktop computers and the Sony Walkman CNet, There was no innovative product in the market that allowed individuals to carry their music library on a digital device without the need for cassettes or compact discs.
The iPod is a typical example of product development due to its innovative approach to playing music. It consisted of the sleek wheel navigation system that was relatively easy to use and display methods, which made scrolling through vast amounts of music much easier.
Due to the product innovation method employed during its development, the Apple iPod quickly gained market share and is now the market leader in music devices CNet, Also confirming Hooley et al view that if a product development strategy for entry into a new market is successful, it may lead the company into introducing more innovative products into the same market or parallel markets, such as in the introduction of iPhone into the smart phone market, and most recently the iPad into the slate PC market.
However, the benefits associated with such a strategy seem to be limited to strong brands with an already existing brand image in similar markets. Watts et al depict that smaller firms aiming to introduce a new product into an existing market may face shortfalls in marketing the product and investing in product development.
Doyle also states that the high costs and time related in developing a new product for an existing market may be discouraging. Lynch thereby concludes that careful research needs to be undertaken before an organisation can implement a product development strategy, due to the lack of guarantee regarding market success.
Such a strategy entails offering a new product in a new market and is often used when a market has become saturated and profits are limited Lynch, Doyle asserts that diversification strategies are usually in three forms: full diversification, backward diversification, or forward diversification. The diversification form adopted by the organisation usually depends on whether they are entering a completely new market, integrating backward and competing with suppliers or integrating forward and competing with buyers.
It is interesting to note that Ansoff's rst interest was the corporation. But in the s, he conceptualized the Environment Serving Organization ESO to show how strategic management can be applied to a wide range of particular organizations.
Today, few students, teachers and consultants realize that they are using, on a daily basis, a large set of concepts and tools elaborated in this seminal book and developed further by consulting rms Boston Consulting Group, Mc Kinsey, AD Little or other researchers.
Examples include the three levels process of decisions strategic, administrative, operational; the objective system; the concepts of synergy and competencies prole; the matrix products markets; the generic strategies and the growth vector; the portfolio analysis. Obviously, Ansoff did not discover, stricto sensu, all these notions. But, for the rst time, strategy analysis and formulation could be supported by a large systematically and coherent framework, relevant for ill-structured and complex simulations or problems to speak like Herbert Simon.
Ansoff appeared as the right man at the right time with the right tools to enrich long-range and strategic planning which were implemented in the s and s in large American companies and sold in the academic world by Ackoff, Steiner, and others.
Indeed, the t was so good that the father of corporate strategy became almost the champion of strategic planning in the eyes of critical commentators, especially Mintzberg.
However, at the same time, the new idea of strategic planning soon became overly fat units within large American rms, e. Although, the answer given by Ansoff was very clever, it was by no means defensive. In fact, he mostly agreed on the weaknesses of strategic planning, as highlighted by comments and criticism.
In a very reactive manner, he produced a research program and a conceptual framework to introduce exibility to the procedures and to enlarge the scope of strategic planning, under the refreshed name of strategic management . Under his pen, strategic management appears as an enlarged conceptual and technical framework which deals with deliberate strategy implementation, catches emerging bottom-up strategies, link strategies, structures and management systems and try to balance economical calculus with power and political processes in and around the rm.
The rst work attempts to build an applied theory of strategic behavior; the second book, explicitly addressing practitioners, gives the tool box to implement strategic management in different kinds of ESOs, while facing turbulence and often unpredictable threats and opportunities, discontinuous changes, and constant renewal.
Once again, the framework is a systemic approach to prepare organizations to be more proactive, to anticipate events and to avoid bad surprises.
In Ansoff's own words, we can say that he wants to produce future-oriented real-time integrative management, in which forecasting and scenarios enable the organization to identify, as soon as possible, weak signals, threats and opportunities which can occur and to monitor the constant transformation of capabilities cultures, structures and management processes in a coherent way. Ansoff and strategic foresight As implied above, Ansoff is not seen as a father of future studies even if, during his years at the RAND Corporation, he had to deal with difcult long-term investments and had meetings with several American experts in the eld.
His main purpose remains the organization or corporate strategy. Nonetheless, today one can say that his vision and approach were closer to strategic foresight than to long-range forecasting and planning.
Like everyone in those days, Ansoff spoke about forecasting, but all the chapters of his last two books show that he was foresight driven. Especially, if we take Implanting Strategic Management, we can nd: strategic issue management, weak signals and graduated response, strategic surprise management, diagnosing turbulence, managing strategic posture transformation, patterns of responsiveness, alternative methods for managing a discontinuous change and so on In Strategic Management itself, which is theory-oriented, Ansoff is talking about perception of the environment by the organization according to the level of turbulence when he says that an ESO is myopic if its perception of the environment is narrower than needed to capture the full scope of the environmental turbulence  and that it is in tune with the environment when the range of its perception matches the environmental turbulence.
He goes further to call an ESO foresightful when its perception scope exceeds that of current environmental turbulence [6, p ].
It is particularly interesting to read these two books once again, especially during these last months of crisis in both economics and governance. The Ansoff construction appears now as a very clear and early warning signal against Friedman's view and his shareholder maximization.
Ansoff was explicitly engaged against Friedman and was trying to promote a stakeholder his word was constituencies theory of governance and strategic management. For him, managerial activity is a necessary balance and negotiation between different sets of interest and criteria.
In particular, economic calculus must be challenged by political processes in and around the rm. Only this balanced management is able to produce sustainable development in the long term.
But he developed later criticism against the design school which became so radical that they irt with the destruction of strategy's raison d'tre. It is worth recalling here that Ansoff graduated in engineering and earned a PhD in applied mathematics.
Actually, during his time at the RAND Corporation, he produced a lot of quantitative models for the aeronautics industry. However, in the eld of strategy, he was by no means interested in validating average micro-relations of the type if A then B ceteris paribus, which he considered irrelevant in helping top managers to create the future of their organizations. For this reason, Ansoff always stayed out of the mainstream of American management research.
Out of the mainstream, and often seen as a non scientist, as he told us, he was nonetheless top-ranked, even in academic journals.
Perhaps it is worth remembering that he lived in the USSR until the age of 18, and that he reached a high level but was always ghting in his career in the United States and that he wanted to live in Europe for ten years to see something more complex and challenging. We might like to remember that he was, over the long haul, a planner, Chief Executive Ofcer, consultant, teacher and researcher. Not bad for a beginner in the academic world!
Yet Ansoff left this outstanding university to become founding dean of a new business school at Vanderbilt University, Nashville, Tennessee.