Key Idea: At HL, the Ansoff Matrix is used not just to identify growth strategies but to evaluate whether a strategy is realistic, risky and financially appropriate for the business in the stimulus. Students are expected to move beyond naming the quadrant and towards judgement.
[Diagram: ansoff-matrix]
📉 Lower-risk growth: **Market penetration —** existing products in existing markets. **Known customers + known product**. **Often uses promotion, pricing or loyalty methods**. **Usually lowest risk**.
📈 Higher-risk growth: **Market development —** existing product in a new market. **Product development —** new product for existing market. **Diversification —** new product in new market. **Diversification usually has the highest uncertainty**.
🧠 What HL students should do: Identify the correct quadrant. Explain why the strategy fits the case. Assess risk and likely reward. Judge whether the business has the resources to carry it out.
⚠️ Limits of Ansoff: Only focuses on product and market. Ignores finance, operations and stakeholder resistance. Oversimplifies some strategies. Needs support from SWOT, STEEPLE and financial evidence.
HL answers should not stop at naming the quadrant. The key is explaining why the product or market is new or existing and what that means for risk, control, finance and implementation.
A stronger HL judgement is: this is diversification, so risk is high; however, the business’s strong cash reserves, established brand and partnership with a local distributor reduce implementation risk.
Important: Common HL trap: confusing market development with product development. Always ask separately: is the product new, and is the market new?
- Identify whether the product is new or existing
- Identify whether the market is new or existing
- Place the strategy in the correct quadrant
- Explain the risk level in context
- Judge whether the business has the resources and capabilities
- Add a supported conclusion if asked to recommend