CA Intermediate · Financial Management and Strategic Management · Strategic Choices
A Pune-based two-wheeler parts maker with a 12% share in a growing market decides to raise its share by aggressive pricing, wider dealer coverage and heavier advertising for its existing parts, without launching new products or entering new markets. Under Ansoff's product-market matrix, this is:
The strategy is market penetration in Ansoff's matrix. The firm sells its existing products in its existing market and tries to gain share through price, distribution and promotion. No new product or new market is involved, so the other three options do not fit.
- AMarket penetrationCorrect
- BMarket development
- CProduct development
- DDiversification
Explanation
Existing products sold in existing markets with the aim of higher share is market penetration. Market development needs new markets, product development needs new products, and diversification needs both to be new. None of those apply here.
Did you get it right without looking?
One question tells you little. A timed set on Strategic Choices shows your real accuracy, how long you take and where you lose marks.
More Strategic Choices questions
- Vihaan Pharma has a drug with high market share in a market growing at about 3% a year, generating large cash surpluses. Its new drug has lo…
- Mehra Pharma, a Hyderabad firm, plans to grow in the generic medicines market. Its management is weighing a joint venture with a Japanese fi…
- Ruchi Textiles, an Indian firm, buys a small yarn-spinning unit that supplies its own weaving looms, so that it now controls its raw materia…
- A Mumbai bank and an Indian insurance company enter an agreement in which the insurer's products are sold through the bank's branches. Each …
- Vihaan Pharma has several divisions. Its corporate head office decides to sell off two loss-making divisions that fit poorly with its core b…
- A Surat textile firm acquires a cotton-yarn spinning mill that currently supplies its weaving units, so that it controls its own raw materia…