ACCA Strategic Professional · Strategic Business Leader · Strategic choices
Orchard Pharma has a strong sales force serving hospitals and has developed a new generic drug that it will sell to the same hospitals. The board is comparing this with entering the US retail pharmacy market with its existing drugs. Which statement best compares the two options using Ansoff's Matrix?
The hospital launch is product development, since a new drug goes to existing customers, while US retail entry is market development, since existing drugs go to a new market. Each changes only one dimension, so neither is diversification.
- AThe hospital option is product development and the US retail option is market development; the first leverages existing market knowledge, the second leverages existing productsCorrect
- BBoth options are diversification because each involves some change
- CThe hospital option is market penetration because the customers are unchanged
- DThe US retail option is product development because the sales channel is different
Explanation
A new drug to existing hospital customers is product development, relying on market knowledge. Existing drugs to a new US retail market is market development, relying on product know-how. Neither is diversification because only one dimension changes. Penetration needs existing products.
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