CA Intermediate · Financial Management and Strategic Management · Strategic Choices
Kaveri Auto Components, a Chennai firm, makes brake pads for two-wheelers. It decides to start making seat covers for the same two-wheeler makers, using its existing customer relationships and distribution but a different manufacturing technology. According to Ansoff's matrix, which growth strategy is this?
This is product development in Ansoff's matrix. Kaveri is introducing a new product, seat covers, into its existing market of two-wheeler manufacturers. Market penetration would be more of the same product, and diversification would need both a new product and a new market.
- AMarket penetration
- BMarket development
- CProduct developmentCorrect
- DConglomerate diversification
Explanation
Ansoff's matrix classes a new product sold in an existing market as product development. The customers are the same two-wheeler makers, so it is not market development or diversification. Market penetration would mean selling more brake pads to the same customers.
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