Ansoff's matrix and Porter's generic strategies in global markets

Ansoff's matrix applied globally

Ansoff's matrix sets existing or new products against existing or new markets:

• Market penetration (existing product, existing market): grow share at home or in current countries, for example through promotion or price cuts. Lowest risk.
• Market development (existing product, new market): selling current products in a new country. This is the most common global move. Medium risk: the product is known but the market is not.
• Product development (new product, existing market): new products for current countries.
• Diversification (new product, new market): new products in a new country. Highest risk, as the firm lacks knowledge of both.

Entering a new country with an adapted product sits between market development and diversification, so risk rises as adaptation increases.

Porter's generic strategies

Porter's matrix (generic strategies) asks whether a firm competes on low cost or differentiation, across a broad market or a narrow segment:

• Cost leadership: lowest costs in the industry, allowing low prices or higher margins (scale, efficient supply chains, low-cost locations).
• Differentiation: unique features, brand, quality or service that let it charge a premium.
• Cost focus: low cost aimed at a niche.
• Differentiation focus: a premium niche product.

Porter warned against being 'stuck in the middle', neither cheapest nor clearly different.

Using the models in global decisions

Ansoff helps judge the risk of entering a country; Porter helps decide how to compete there. A firm differentiating at home may need to compete on cost in a low-income market, or target a premium niche. Limitations: both are simplifications; markets in fast-changing emerging economies shift quickly; they do not tell a firm what customers want, so market research is still needed. The October 2023 series examiner report praised answers that applied cost leadership, differentiation and focus to parts of a Vietnamese cosmetics market, while answers that wrote about the market only in general terms scored poorly.

Worked example

A Korean noodle brand, already sold in Asia, begins selling its existing noodles in Nigeria and also launches a new frozen meal range in Nigeria. Classify each move.

1. Existing noodles in a new market: market development.
2. New frozen meals in a new market: diversification.

Answer: Market development (medium risk) and diversification (highest risk).

Check yourself

1. A UK supermarket opens stores in Malaysia selling its existing range. In Ansoff's matrix this is
   • market development
   • market penetration
   • product development
   • diversification
   Show answer

   market development. Existing products in a new market.

2. Which Ansoff strategy carries the most risk for a business going global?
   • Market penetration
   • Market development
   • Diversification
   • Product development
   Show answer

   Diversification. New products in new markets: the firm knows neither.

3. A furniture retailer uses huge volumes, flat-pack design and efficient global supply chains to offer the lowest prices worldwide. Which Porter strategy is this?
   • Cost leadership
   • Differentiation
   • Differentiation focus
   • Cost focus
   Show answer

   Cost leadership. Lowest costs across a broad market.

4. A Swiss firm makes very expensive hand-built mechanical watches for wealthy collectors worldwide. Which Porter strategy is this?
   • Cost leadership
   • Cost focus
   • Market penetration
   • Differentiation focus
   Show answer

   Differentiation focus. A premium product for a narrow segment.

5. Which is NOT one of Porter's generic strategies?
   • Cost leadership
   • Threat of new entrants
   • Differentiation
   • Focus
   Show answer

   Threat of new entrants. Threat of new entrants is one of Porter's five forces, a different model.

6. Explain what Porter meant by being 'stuck in the middle'.
   Show answer

   A business that neither has the lowest costs nor offers a clearly differentiated product has no competitive advantage, so it loses price-sensitive customers to cost leaders and quality-seeking customers to differentiators.. Without a clear position, a firm is beaten by both kinds of rival.

7. Explain one limitation of using Ansoff's matrix for a global marketing decision.
   Show answer

   It only shows the level of risk; it does not tell the firm whether customers in the new country actually want the product, and conditions in fast-changing economies can change quickly, so market research is still needed.. Models support, but do not replace, research and judgement.

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Sources

• Pearson Edexcel International Advanced Level in Business specification (first teaching 2018)
• Pearson Edexcel IAL Business WBS14/01 examiner report, October 2023 series (published January 2024)

Last updated 8 November 2026. Spotted a mistake? Tell us.