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ACCA Strategic Professional · Advanced Performance Management · Strategic management accounting

Orvane Ltd uses Ansoff's matrix. It plans to sell its existing range of industrial pumps to customers in a new overseas region. Which growth strategy is this, and how does its risk compare with diversification?

This is market development, because existing products are sold into a new market. Risk is lower than diversification, since only the market is new, whereas diversification involves both new products and new markets.

  1. AMarket development, with lower risk than diversificationCorrect
  2. BProduct development, with higher risk than diversification
  3. CMarket penetration, with the lowest risk of all strategies
  4. DDiversification, with the same risk as other strategies

Explanation

Existing products sold into new markets is market development. Only one of product or market is new, so risk is lower than diversification, where both are new. Market penetration would use existing products in existing markets.

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