The triplet of specifications — the product-market scope, the growth vector and the competitive advantage — describes the firm's product-market path in the external environment.
Ansoff (1965) gives only some indication of what he means by environment. This can be explained by Ansoff's classification of decisions into strategic. administrative and operating decisions. He (1965, p. 8) defines these types of decision as follows:
Strategic — to choose product-market mix
Administrative to structure the firm's resources for optimum performance
Operating — to optimize the realization of the profitability potential with the present strategy.
We shall approach practical objectives through a series of approximations. Keeping the maximization of the rate of return as the central theoretical objective, we shall develop a number of subsidiary objectives (which the economists call proxy variables) which contribute in different ways to improvement in the return and which are also measurable in business practice. A firm which meets high performance in most of its subsidiary objectives will substantially enhance its long-term rate of return. (The defect in our approach is that we cannot prove that the result will be a ‘‘maximum’’ possible overall return.) As will be seen, this road has its own obstacles: the difficulties of long term maximization are replaced by the problem of reconciling claims of conflicting objectives.