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Rank Ansoff strategies by risk (lowest to highest)
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All Flashcards in Topic 6.2
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6.2.125 cards
Rank Ansoff strategies by risk (lowest to highest)
Penetration (lowest) → Development (medium) → Product development (medium) → Diversification (highest).
P → D → PD → Div
Buying a competitor in same market = Ansoff ___
Market penetration — same products, same market, increasing share.
Penetration
Ansoff = 2×2 grid: products (existing/new) vs ___
Markets (existing/new).
Markets
Market penetration = ___ product + ___ market
Existing product + existing market — sell more to current customers. Lowest risk.
Existing + existing
What is the Ansoff matrix?
A 2×2 grid mapping four growth strategies based on existing/new products and existing/new markets.
2x2: products vs markets
Buying a company in a new country = Ansoff ___
Market development — existing products, new geographic market.
Development
Why is diversification the highest risk?
Both the product AND market are unfamiliar — everything is new and uncertain.
Both new + uncertain
Four strategies: penetration, development, ___, ___
Product development, diversification.
PD + Div
Market development = ___ product + ___ market
Existing product + new market — take current products to new customers/locations. Medium risk.
Existing + new
The two axes of the Ansoff matrix?
Products (existing/new) and Markets (existing/new).
Products vs Markets
Buying a company making different products for your customers = ___
Product development — new product, existing market.
Product development
Ansoff is like a ___ for growth
Sat-nav — showing different routes with different risk levels.
Sat-nav
Product development = ___ product + ___ market
New product + existing market — create new products for current customers. Medium risk.
New + existing
Why is penetration the lowest risk?
You know the product AND the market — familiar territory.
Both familiar
Risk: penetration (lowest) → diversification (___).
Highest.
Highest
Buying a company in a totally different industry = ___
Diversification — new product AND new market.
Diversification
The Ansoff matrix helps businesses decide ___
How to grow — which combination of products and markets to pursue.
How to grow
Risk increases as you move away from ___
What you know — the further from existing products/markets, the more uncertain.
What you know
Used to evaluate ___ strategies including ___
Growth; takeovers.
Growth + takeovers
Diversification = ___ product + ___ market
New product + new market — everything unfamiliar. Highest risk.
New + new
Diversification can be very rewarding IF ___, but many ___
Successful; fail — it's high risk, high reward.
Reward if success, many fail
Methods for market penetration?
Increase advertising, lower prices, loyalty schemes — aim to increase market share.
Ads, price cuts, loyalty
For takeover questions: identify the ___ and explain ___
Quadrant; WHY the takeover fits that category.
Quadrant + why
Name the four Ansoff strategies
Market penetration, market development, product development, diversification.
P-D-P-D
Quick: Existing product + new market = ___
Market development.
Development
6.2.220 cards
Five steps to apply Ansoff in exams?
1) ID product (existing/new) 2) ID market (existing/new) 3) Place in quadrant 4) Explain risk 5) Evaluate suitability.
Product → Market → Quadrant → Risk → Evaluate
Worked example: food company buys same-snack company abroad. Quadrant?
Market development — existing product (same snacks), new market (different country).
Market development
Name three limitations of the Ansoff matrix
Only considers products/markets (ignores finance, competition); oversimplifies; doesn't show HOW to implement.
Products only + simple + no 'how'
Apply Ansoff: identify product/market → place in ___ → explain ___
Quadrant; risk level.
Quadrant + risk
Exam questions want you to ___ Ansoff, not just ___
Apply it to the specific scenario; describe it.
Apply, not describe
Always link to the specific ___ — don't just describe the model
Business in the case study.
Business
The takeover gives instant ___ to the new market, reducing risk vs ___
Access; starting from scratch.
Access vs starting fresh
Ansoff assumes risk increases equally, but ___
Some diversifications are less risky than others — it depends on context.
Context matters
Limitations: oversimplifies, ignores ___, no implementation guide
Finance and competition.
Finance + competition
Always explain BOTH the knowledge (which ___) AND the application (why ___)
Quadrant; it fits this specific business.
Quadrant + why it fits
Real decisions are rarely neatly in ___
One quadrant — reality is more complex than a 2×2 grid.
One quadrant
Step 1: Is the product ___?
Existing or new — what is the business selling?
Existing or new
Step 2: Is the market ___?
Existing or new — who are they selling to?
Existing or new
Risk of market development = medium because ___
Product is proven but the new market is unfamiliar — customer preferences may differ.
Proven product, unknown market
Best used alongside ___, ___ and financial data
SWOT and STEEPLE.
SWOT + STEEPLE
Ansoff is best used alongside ___
SWOT, STEEPLE and financial analysis — it's a starting point, not the whole answer.
Other tools
Quick: New product + existing market = ___
Product development.
Product development
Ansoff doesn't show ___
How to implement the strategy — just identifies which type of growth it is.
Implementation
A takeover can reduce market development risk by ___
Providing instant access, local knowledge and existing customer base in the new market.
Instant access + local knowledge
Step 5: Evaluate whether the strategy ___
Suits this specific business — consider its strengths, resources and risk tolerance.
Suits THIS business
Topic 6.2 study notes
Full notes & explanations for Ansoff matrix
BM exam skills
Paper structures, command terms & tips
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