What is the growth matrix and how does it work?

The growth matrix, often referred to as the Ansoff Matrix, is a strategic planning tool that helps businesses determine their product and market growth strategy. This matrix presents four different growth strategies on the axes of new or existing markets and new or existing products. The four strategies are: Market Penetration, where a company seeks to increase its share within existing markets using current products; Product Development, where the focus is on introducing new products to existing markets; Market Development, which involves entering new markets with current products; and Diversification, which combines new products and new markets, thus representing the highest risk. The matrix works by providing a clear framework for companies to identify opportunities for growth based on their willingness to take risks and their capacity for innovation or market expansion. It's a simple yet powerful tool for companies to plan and execute their growth strategies systematically.