Manuel Pellegrini has told El Mercurio that Manchester City need to make signings as they "must make a jump in quality."
City chairman Khaldoon Al Mubarak said earlier this month that the club are planning to heavily invest in new players this summer after UEFA announced that, unlike last year, they will not be subject to a net spending restriction.
Sources have told ESPN FC that they are ready to sanction a £50 million bid for Raheem Sterling as well as targeting a world-class centre-forward such as Gonzalo Higuain or Karim Benzema, and they could also make a move for Juventus star Paul Pogba.
Pellegrini said that, after a season in which City had finished second in the Premier League as well as exiting the Champions League to Barcelona at the round-of-16 stage, it is clear that investment is required.
"We need to improve the squad, because the club wants to keep progressing year after year, and not for the lack of trophies," he said. "The teams always want new faces and City must make a jump in quality. It was shown against Barcelona.
"But I am at a club which keeps growing, because it has the financial power to do that. There is still a very big distance to the best clubs in Europe, and we are trying to narrow that, on the pitch and in the offices.
"For next season, I aspire to win, to play well, to be liked, as there are different ways to win. I like to win playing well."
City won the title in the 2013-14 season but found their spending heavily restricted as a result of UEFA's financial fair play punishments.
Explaining the club's barren 2014-15 season, Pellegrini said: "When you most need to reinforce is when you are champions -- some renewal is important -- but when as a coach you try and give footballing explanations, people believe they are personal excuses.
"I have no excuses to give, as I am the first who is unhappy with the season."
Asked what was lacking last season, he said: "Bigger ambition and commitment were lacking. In general, from everyone.
"The success of the previous season maybe led to a relaxation, for which I am the first person responsible, because I manage the group. That is not an excuse, but we did not have to be seen as favourites, as Chelsea, Liverpool, Arsenal and Manchester United could spend whatever they wanted."
He also denied there were problems with players such as Yaya Toure, whose future was the subject of speculation for some time before he eventually pledged his future to the club after the end of the season.
"All the rumours outside are difficult to be denying them all the time," Pellegrini said. "There was never any problem with any player."
ESPN FC's Spain correspondent Dermot Corrigan contributed to this report.