A2 Business Studies
Objectives and Strategy Unit 6
Decision-making to achieve objectives
Decision-making models
• Models are used to assist firms in important decision-making
at every level
• It varies from short-term and long-term, tactical and
strategic decisions
• Decisions are constrained by internal and external factors
• Often there is risk involved
• There are a number of models we will look at: Scientific
decision making and Ansoff’s Matrix
Scientific Decision-making
1. Set Objectives
In line with what want to
achieve within a given time-
5. Implement and
review decision
scale
2. Gather data
Has the outcome succeeded
in achieving the objectives?
Primary+secondary research
4. Select a strategy
/make a decision
3. Analyse data
Based on data analysis
Using methods such as
investment appraisal, costbenefit analysis, critical path
analysis, decision trees
Scientific Decision-making
Advantages:
+ A systematic process which removes ‘hunch’ decisions, bias
and subjectivity
+ It ensures decision are well researched which reduces risk
Disadvantages:
 It can be a slow process and often reduces creativity
 Does not guarantee the right decision is made
Ansoff’s Matrix
• Decision-making model/tool for corporate
planning.
• It provides companies with strategic
choices (options) each with different
degrees of risk.
Igor Ansoff
Ansoff’s Matrix
M
A
R
K
E
T
S
E
X
I
S
T
I
N
G
N
E
W
Enter a new market PRODUCTS
with an
existing product in new
geographic
locations or
EXISITING
NEW
market segments
New product in a new
e.g. Johnson's baby shampoo market
targeting adults, Kellogg’s
MARKET
PENETRATION e.g. 1990s Nokia
Cornflakes at different times of
movedPRODUCT
from car
CONSOLIDATION
day,
or a new band trying to
tyres to mobile
make
it in America
WITHDRAWAL
DEVELOPMENT
phones
and is now
DO NOTHING
market leader
Modifications or additions
to a product, which
maintains differentiation
MARKET
DEVELOPMENT
e.g. Mars Ice
cream,Cadbury’s
CreamEgg bar
DIVERSIFICATION
Increasing risk
Existing product, Existing markets
•Market penetration - Promote growth in
same market and develop further brand loyalty
•Consolidation - Concentrate on
activities in which have a competitive
advantage, maintain market share
•Withdrawal - Pull out of
market usually with very low
demand
•Do nothing - Continue with the same
strategy only appropriate in short term
Student Activity
1. Complete the A-Z activity on Ansoff’s matrix
2. Read the Hornby case study page 480
Which of the strategic options in Ansoff’s matrix have
benefited Hornby? (20 minutes)
Pictures sourced from www.ansoff.com, www.levongroup.net and www.hornby.com