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An Ansoff Matrix of the Irish Economy

Susan Hayes Culleton • May 25, 2021
An Ansoff Matrix of the Irish Economy

At the CPA Ireland Conference, I shared insights into how Ireland can develop an economic strategy. For this purpose, I used the Ansoff Matrix, an economic tool used to plan strategies for growth.

The Ansoff Matrix composes of four quadrants, each focusing on a separate issue:

1. Market penetration: What the country is already doing well in
2. Product development: What new products can businesses sell to existing customers
3. Market development: How can businesses market its existing products to new customers
4. Diversification: Building a new product and selling it to a new market


1. Market Penetration

Ireland must first look at market penetration by identifying what the Irish economy does well and should continuing on developing in. Focusing on what Ireland does well is an essential component to economic success, for those are the key drivers to optimise growth. 

I mentioned several sectors in Ireland that are currently excelling: Ireland's agriculture sector is currently doing very well, where the food and drink sector locate 78.6% of its resources from the local industry. In this case, agriculture acts as a huge multiplier within the region, perpetuating the flow of money within the economy. Pharmaceutical exports are also doing economically well—they account for 40 to 50% of all Irish exports, equating to 70 billion euros annually. With the recent attention on vaccines, the percentage is likely to rise.

Foreign direct investment is an extremely important type of investment to Ireland as it continues to grow. 44% of regional investments are now outside Cork and Dublin, moving opportunities around the country. Ireland’s economy is also a great place to start small businesses. Small and medium enterprises (SMEs) now account for 99.8% all private business enterprises, employing over 1 million people. These companies are creating a plethora of jobs, an opportunity that Ireland should take account of when strategizing. 

Tourism is a sector Ireland has always performed well in. However, in light of recent travel restrictions, the tourism industry could look towards the inherent opportunity of staycations. People in Ireland spend more abroad than travellers to Ireland do, and there is much to offer within the borders of Ireland for local travel-goers. If we modify aspects of the sector to fit with our current limitations, the tourism can continue to flourish. 

I believe the first way the Irish economy can grow is to double down on what we do really well and protect that, and even introducing new technologies in light with recent world developments.

 2. Product Development


Secondly, Ireland could look at product development, brainstorming innovations that target existing customers to create new opportunities for the economy.

 

Shopping local is a massive trend in Ireland—the increase of 540% of traffic in Google searches for ‘shop local Ireland’ can attest to that. E-commerce is bourgeoning technology that can drastically improve this trend to further the support of domestic retailers and provide more opportunities for consumers to access local businesses. Other opportunities for product development include the rising impact of social media, and environmental topics that could influence product development and buyer decisions.

 

A big opportunity in Ireland is reverse innovation—building local products in foreign countries then selling them in the local sectors. By doing so, we can learn from other countries in terms of technologies and mindsets, and adopting them into the local context.


3. Market Development


Ireland can expand its current sectors to draw in new consumers mainly by reinventing rural Ireland. Recent data from myhome.ie shows exponential increases in searches for properties less than 100,000 euros in rural counties such as Cork and Galway, indicating a rising interest in properties. Ireland should take advantage of this rising trend to further develop rural Ireland and exacerbate the growth of the economy in this particular sector.

 

4. Diversification


Ireland has great potential for diversify, by looking outward in search of further inspiration for growth, particularly in sectors that gaining momentum in bringing billions, if not trillions' worth of investments. I believe we should mainly focus on the United Nation’s roadmap towards digital cooperation—the focus on universal connectivity in making digital goods available. Areas could include AI, building architecture for cooperation, and cybersecurity, all of which Ireland has the potential to become the leading light in.

 

Another major trend we could look at are the UN’s sustainable development goals, a concept that is increasingly gaining attention and slowly becoming mainstream. Ireland has the possibility to be a leading nation for these goals. Areas could include the social, where we can build our societies around the workplace, and innovation practices.

The Ansoff matrix is a beneficial tool when strategising growth for the economy and one that Ireland would greatly benefit from using moving forward.



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