France Telecom - the Ansoff Growth Matrix

The Ansoff Growth matrix is a tool that helps businesses deciding their product and market growth strategy, which provides a simple way of generating four basic alternative directions for strategic development: see the following diagram.

Source: http://www.onlyit.cn/okm/theory_market_ansoff_matrix.html (Assessed: 24/11/2010)

Based on Ansoff matrix, France Telecom can consider market development, product development and diversification as its strategy for growth.

 Product development (P261)

This strategy involves modifications to improve their quality, style or whatever characteristics are valued by customers together with implies greater degrees of innovation. For France Telecom, it could carry out product development by extending its fixed and mobile coverage and speed, in mature countries as well as emerging countries, in order to meet the ever increasing needs of its customers. Moreover, France Telecom could perform research and development in the different technical areas in terms of technologies for terminals and their users, middleware and telecom networks. For example, to increase the number of customers or users, France Telecom could possess the technical resources and skills to improve product quality or, by carrying out Research and Development(R&D) so that t launch new satisfying products and services valued by customers such as 4G and broadband services.

However, product development can be an expensive and high-risk activity according to Johnson (2008,P261). Because product development typically involves mastering new technologies that may be unfamiliar to the organisation, as well as are typically subject to the risk of delays and increased costs due to project complexity and changing project specifications over time. Notwithstanding the fact, it is considered as slight risky among four strategies based on the failure rate of new products and the element of the unknown associated with this strategy.

 Pursuing diversification

Diversification implies new products, services and markets. It is the case at France Telecom. To achieve sales of 44.8 billion euros (33,7 billion euros at 30 September, 2010) at the end of 2009, as well as a total customer base of more than 203 million customers in 32 countries at 30 September 2010( See http://www.orange.com/en_EN/group/ Asessed:1/12/2010), France Telecom is seeking to double revenue by entering emerging markets through acquisitions. For the emerging markets such as Africa and the Middle East, they provide the services and environment needed to both extend the network and set up new services.(http://online.wsj.com/article/SB10001424052748704535004575348420398911714.html, Assessed: 1/12/2010) Management is being strengthened while marketing capabilities