Preview
IB DP Business Management — Unit 1: Introduction to Business Management | SL | 1.6 Growth and Evolution
📋 What You Will Learn
- Identify and define the four strategies of the Ansoff Matrix: market penetration, product development, market development, and diversification
- Explain how the matrix links product and market decisions to levels of strategic risk
- Apply the Ansoff Matrix to real business scenarios to justify a growth strategy
- Analyse the trade-offs between risk, resource requirements, and potential reward for each quadrant
- Evaluate which Ansoff strategy is most appropriate given a specific business context, linking to the concepts of change, creativity, and sustainability
📊 Topic Importance
| Paper | Relevance | Common Question Types |
|---|---|---|
| Paper 1 | High | Identify which strategy the pre-seen company is using; "Recommend" a growth strategy; "Evaluate" the suitability of a chosen strategy |
| Paper 2 | High | Section A/B: apply the matrix to a stimulus business; Section C: extended response linking a strategy to change, creativity, or sustainability |
| Paper 3 (HL) | Moderate | Recommend a growth direction for a social enterprise using the matrix alongside other tools |
🔍 Guiding Question When a business wants to grow, should it sell more of what it already makes to people it already knows — or should it take a risk and venture into unfamiliar products or markets? How does a manager decide?
🌍 Why This Matters In 2023, Apple launched the Vision Pro headset — a product in an entirely new category for a company famous for phones and laptops. That single decision — to enter an unfamiliar product space while targeting its existing premium customer base — is a textbook example of the strategic choices the Ansoff Matrix was designed to map. Every growth decision a business makes can be placed somewhere on this grid.
What Is the Ansoff Matrix?
Igor Ansoff, a Russian-American strategist, published the matrix in 1957 as a tool for thinking about how a firm can grow. Its power lies in its simplicity: it forces managers to ask just two questions — is the product new or existing? Is the market new or existing? The answers produce four distinct strategies, each carrying a different level of risk.
📘 Ansoff Matrix A strategic planning tool that maps four possible growth strategies against two dimensions — product (existing or new) and market (existing or new) — to help managers assess the risk and direction of growth.
The matrix is not just a classification tool. It is a decision-support framework: the further a business moves from its existing products and markets, the greater the risk it accepts. Understanding this risk gradient is the key analytical insight examiners reward.
The Four Strategies in Detail
1. Market Penetration — Existing Product, Existing Market
This is the lowest-risk strategy because the business is operating in familiar territory: it knows its customers and its product. The goal is to increase market share within the current market.
📘 Market Penetration A growth strategy in which a business seeks to increase its sales of existing products to its existing market — typically through lower prices, increased promotion, improved distribution, or loyalty schemes.
- How it works: increase purchase frequency among existing customers; attract customers from competitors; reduce prices