IB Business Management HLTopic 8 — The Pre-Released StatementPaper 1Toolkit~12 min read
Bringing the Ansoff Matrix Into Your Answers
Ansoff answers one question: if ABC wants to get bigger, which direction should it go? There are only four directions, and they get riskier as you move away from what the company already knows. Once you can place ABC’s options in the grid, growth questions almost write themselves.
📚 What you need to know
Ansoff sorts growth by two things: is the product existing or new, and is the market existing or new?
The four boxes are market penetration, product development, market development and diversification.
Risk rises as you move away from the top-left corner. Diversification is the riskiest.
ABC has already diversified by opening the e-waste factory in 2024.
Penetration in concrete generates the cash that pays for the riskier boxes.
The strategies are not independent. That link is the best evaluation point in this topic.
The four boxes, filled in for ABC
Learn one example per box for ABC. That is enough to answer almost any growth question in the paper.
Box by box
Market penetration — sell more of what you already make
ABC’s stated aim of increasing efficiency in concrete sits here. Lower unit costs let it price more aggressively in a market where buyers are sensitive to price, or keep the same price and take a better margin. It could also lock in longer contracts with construction firms.
The catch is real, though. ABC is already the largest producer in Country Z. There is a ceiling on how much more share you can take when you are already at the top, and rivals will cut prices to defend themselves.
Product development — new products, same customers
This is the box most students underrate for ABC. Low-carbon concrete and concrete made with recycled aggregate would both be genuinely new products sold to the construction firms ABC already supplies.
Why product development fits ABC so well. It uses expertise ABC already has, sells to customers it already knows, and directly serves the environmental goal it has already stated. Low risk, on-strategy, and it differentiates ABC from rivals still selling ordinary concrete.
Market development — same products, new customers
Two versions here. Geographically, ABC could sell concrete in neighbouring countries — but concrete is heavy and expensive to move, so that usually means building new plants abroad, which is a large capital commitment. More cheaply, ABC could sell its recovered gold to a different customer group: electronics manufacturers and industrial buyers, not just jewellery makers.
Diversification — new products, new customers
ABC has done this already. The 2024 e-waste factory is a different industry with different supply chains and different customers. The terminology list hints at going further: solar panels and plastic-shredding machinery both point beyond circuit boards.
🤔 Why “it happened by accident” matters here too
Textbook diversification is a deliberate move to spread risk. ABC’s came out of a laboratory surprise. That means the company got the benefit of diversification without ever building the planning capability that usually goes with it. If a question asks whether ABC should diversify further, that is your strongest caution: it has done it once by luck, not by skill.
Risk rises as you leave home
The height of each block is roughly how much of the plan is unfamiliar. Penetration risks least because almost nothing changes.
So which one should ABC choose?
The honest answer is all four, in a sequence, and saying that well earns marks.
🧩 A sequence you can defend
Penetration first. Efficiency in concrete protects the margins that fund everything else. It is the safest and the fastest.
Product development next. Recycled aggregate concrete uses existing skills and existing customers, and it serves the environmental goal.
Controlled diversification alongside. Grow e-waste steadily rather than betting the company on it.
Market development last. New countries need new factories and new regulators. Expensive, slow, and hardest to reverse.
If a question asks you to recommend one strategy, still mention the others briefly and explain why you rejected them. Choosing without comparing is what separates a level 2 answer from a level 4.
Worked examples
WORKED EXAMPLE
Explain one reason why ABC’s move into e-waste processing is an example of diversification. [2]
Step 1: define against the tool
Diversification means selling a new product in a new market, which is the highest-risk box in the Ansoff matrix. [1]Step 2: apply it
Recovered gold is a completely new product for ABC, and jewellery makers are a completely new customer group with no connection to the construction firms it normally supplies. [1]2 / 2Both halves of the definition need evidence. New product and new market, one example each.
WORKED EXAMPLE
Discuss whether diversification into e-waste processing is the best growth strategy for ABC. [10]
Open by defining and framing
Diversification means new product, new market. Ansoff places it as the riskiest of four growth routes, so the question is whether the reward justifies that risk for ABC.
Argue for
Concrete demand is cyclical and ABC is exposed to tightening emissions rules. E-waste is growing, hugely underserved, and ABC has a room-temperature process rivals do not have. It also spreads risk across two unrelated demand cycles.
Argue againstProduct development may be the better bet. Recycled aggregate concrete uses ABC’s existing expertise and existing customers, carries less risk, and serves the same environmental goal. Meanwhile e-waste supply is uncertain and revenue depends on gold prices ABC cannot control.
Judgement
Diversification is worth continuing but not worth prioritising. The strongest plan is efficiency in concrete to fund it, product development to differentiate, and measured e-waste growth. It depends heavily on whether ABC can secure a reliable supply of circuit boards.
Balanced, applied, decided, and it says what it depends onFour short paragraphs. Do not write six — you will run out of time on the rest of the paper.
💡 Exam tip
Say which box and why before you evaluate. Placement is a knowledge mark.
Do not draw the grid unless asked. Write the boxes as paragraphs.
Use “already”. ABC has already diversified — that changes the question from “should it?” to “how far?”
Link risk to finance. Riskier boxes need more capital, and ABC would likely need borrowing or a share issue.
Remember related diversification. ABC’s move grew out of its own lab, which makes it less risky than a random leap.
Always name the rejected options. “Market development is possible but transport costs make it expensive” is one sentence and one mark.
⚠ Common mix-up
Market development is not marketing. It means selling the same product to a different market.
New product to old customers is product development, not diversification.
Penetration is not just advertising. Cutting cost to win share on price is penetration too.
Ansoff does not tell you what to do. It sorts options by risk. The recommendation is still yours.
Riskiest does not mean worst. Diversification can be right if the core market is shrinking.
Do not put every ABC idea in diversification. Most of them are penetration or product development.
Up next: Bringing Porter’s Strategies Into Your Answers — how ABC competes, and the trap of trying to do everything at once.
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