If a company (considering its options on the product/market expansion grid) chooses to move into different unrelated fields (from what it ha ever done before) with new products as a means to stimulate growth the company would be following which of the following general strategies ?
Correct answer: D. diversification
- A. market penetrations
- B. market development
- C. product development
- D. diversification
Explanation
Diversification means entering new markets with new products, especially when the products and fields are unrelated to the firm's previous business. Market penetration, market development and product development retain either the existing product or the existing market.
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Individual consumers, firms and markets are examined through demand and supply, elasticity, consumer choice, production, costs, revenue and the determination of prices and output. The topic also covers market structures such as perfect competition, monopoly and oligopoly, plus market failure, externalities and the distinction between microeconomic decisions and economy-wide outcomes.
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