ACCA Strategic Professional · Strategic Business Leader · Strategic choices
Orlin Motors sells petrol cars in Europe. It now launches electric vehicles, developed in-house, in Asian markets where it has no presence. A director says this is product development because Orlin already has car-making expertise. How should the strategy be classified?
It is diversification, specifically related diversification. Ansoff classifies by newness of product and market, and both are new here. Shared car-making expertise reduces the risk and makes it related, but it does not move the strategy into product development.
- AProduct development, because the core technology is related
- BMarket development, because the cars are still cars
- CDiversification, because both product and market are new, although it is related diversification given the shared expertiseCorrect
- DMarket penetration, because Orlin remains in the car industry
Explanation
Both the product (electric vehicles) and the market (Asia) are new, so Ansoff's matrix places it in diversification. The shared industry expertise makes it related diversification, but it does not make it product development, which requires an existing market.
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