Business Management Toolkit: Ansoff Matrix (DP IB Business Management): Revision Note

Market penetration

• This strategy focuses on increasing sales of current products in current markets by improving efficiency, pricing or customer relationships

Application to Abraca (ABC)

• Improving efficiency in concrete production

  • ABC is considering increasing efficiency in its existing concrete factories

  • Lower production costs could allow competitive pricing or higher profit margins in a B2B market where buyers are price-sensitive

• Becoming more market-orientated

  • ABC could invest in better understanding what its construction industry customers need, rather than simply producing and selling

  • In a B2B market, this might mean tailoring concrete specifications to individual clients or offering better service

• Stronger relationships with construction firms

  • ABC could secure long-term contracts with developers and governments

  • This increases repeat business and market share

• Marketing greener concrete

  • ABC could promote its existing concrete as more sustainable

  • This may attract environmentally conscious construction companies

Challenges

• Highly competitive industry

  • Concrete markets are often local and price-sensitive

  • Competitors may lower prices to protect their market share

• ABC is already Country Z’s largest concrete producer

  • There may be a ceiling on how much more market share it can realistically capture through market penetration alone.

• Environmental criticism

  • Cement production produces high CO₂ emissions

  • Improving image may be difficult without major investment

Product development

• This strategy involves introducing new products to existing customers

Application to Abraca (ABC)

• Low-carbon or “green” concrete products

  • ABC could develop concrete with lower emissions

  • Growing government sustainability targets in many countries make this increasingly attractive to B2B customers

• Concrete using recycled aggregates

  • ABC is already researching using recycled products as aggregates in concrete

    • This would be a genuinely new product sold to ABC’s existing construction market

    • It directly supports ABC’s goal of reducing environmental impact and circular economy goals

• Expanded e-waste recycling services

  • The pre-release terminology list includes plastic-shredding machinery and solar panels, suggesting ABC may expand beyond circuit boards into recycling other materials

  • Processing solar panel waste or shredding plastics from electronic devices would be new products within ABC’s existing (newly established) e-waste market

Challenges

• ABC’s e-waste recovery process was discovered by chance during unrelated research

  • ABC does not appear to have a deliberate R&D track record in this field, which raises questions about whether it can develop further innovations intentionally

• New concrete formulations using recycled aggregates would need to meet strict construction safety standards before customers would trust them in building projects

• ABC’s core expertise is in concrete, not recycling technology

  • Developing new recycled products requires different skills and knowledge

Market development

• This strategy involves selling current products in new geographical or customer markets

Application to Abraca (ABC)

• Selling concrete in new geographical markets

  • ABC is currently described as Country Z’s largest concrete producer, suggesting it operates primarily in one country

  • Entering neighbouring countries or regions with growing infrastructure demand would be market development

  • The pre-release states that half of the world’s buildings are made from concrete, suggesting strong global demand

• Selling recovered metals to new customer segments

  • ABC currently sells gold to jewellery makers and also recovers other precious metals

  • Targeting electronics manufacturers, industrial buyers, or other sectors that use precious metals would mean selling existing products to new markets

• Becoming more market-orientated to identify new customers

  • ABC’s stated goal of becoming more market-orientated could lead it to identify customer groups it isn’t currently serving, in both concrete and e-waste recovery

Challenges

• Concrete is heavy and expensive to transport over long distances

  • This naturally limits geographical expansion

  • Entering new countries would likely require building new factories, which demands significant capital investment

• Different countries have different building regulations, environmental laws, and business practices

  • As a publicly held company, ABC would face scrutiny from shareholders over the risks of international expansion

• ABC’s e-waste processing currently handles 100 tonnes per week from one factory

  • Scaling up to serve new markets would require substantial investment in additional capacity

Diversification

• Diversification involves entering completely new industries or markets

Application to Abraca (ABC)

• ABC has already diversified

  • The pre-release shows that ABC has moved from being purely a concrete producer into e-waste processing

  • In 2024, ABC opened a factory to process e-waste (line 12) — this is a completely different industry from concrete production, with different supply chains, customers, and expertise

  • ABC now sells recovered gold to jewellery makers (line 14) — a customer group entirely outside the construction industry

  • This diversification arose by chance from concrete research, not from a deliberate strategic plan

• Where diversification could go next

  • Processing further types of e-waste

    • The terminology list includes solar panels and plastic-shredding machinery, hinting at diversification

    • If ABC sold these recycled outputs to customers outside its current concrete and jewellery markets, this would be further diversification

  • Recovering additional materials

    • If ABC expanded into recovering toxic metals (from the terminology list) for safe disposal rather than resale, it would be entering yet another market (environmental waste management)

Challenges

• ABC’s move into e-waste was accidental, not strategic

  • Successfully diversifying further would require deliberate planning in an industry where ABC has limited experience

• E-waste processing involves handling toxic metals (from the terminology list)

  • This carries health, safety, and environmental risks that are very different from concrete production

• Gold and precious metal prices fluctuate on global commodity markets

  • ABC’s revenue from this diversification is therefore less predictable than concrete sales

• ABC must manage two very different businesses simultaneously

  • This places demands on management, resources and expertise.

For further information on the Ansoff Matrix, check out these detailed revision notes