ACCA Strategic Professional · Strategic Business Leader · Strategic choices
Tidal Motors, a petrol car maker selling to private motorists, launches an electric van for logistics companies, a segment it has never served, using a new battery technology it has not previously produced. Under Ansoff's Matrix, what is the most appropriate classification and implication?
This is diversification, because both the product (electric vans with new battery technology) and the market (logistics companies) are new to Tidal. It carries the highest Ansoff risk, so the board should test for synergies and capability fit before proceeding.
- ADiversification; typically the highest risk, so a strong rationale such as related synergies should be testedCorrect
- BProduct development; risk is moderate because the firm knows motor vehicles
- CMarket development; risk is low because the brand is established
- DMarket penetration; risk is low because Tidal already sells vehicles
Explanation
A new product sold to a new customer segment with new technology is diversification, even though the industry is related. Ansoff regards it as the riskiest option, so the board should assess synergies, capabilities and funding before committing.
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
- Verano Tech makes enterprise accounting software for large banks. It has just developed a cloud-based payroll module and intends to sell it …
- Brightwell Group is a parent that holds many unrelated businesses. Its head office is small, gives units wide autonomy, and mainly sets fina…
- Dravin Retail acquired a competitor, Marlo Stores, to gain market share. Two years later, the expected synergies have not appeared. Marlo's …
- Halvorsen Marine, a boat builder, is considering acquiring a rival to enter the leisure yacht market. The board is checking whether the opti…
- Brightwater Telecom has three options: A is highly suitable and acceptable but needs skills it cannot acquire for five years; B is moderatel…
- Orlix, a software company, is considering a joint venture with a local firm to enter a new country. The local partner will contribute distri…