Lesson 3.8.1

3.8.1 Strategic direction: choosing markets and products Quiz: AQA Business, Unit 8

20 questions

Written by Revision Ninja · Last reviewed 11 October 2026

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Lesson 3.8.1, Strategic direction: choosing markets and products: 20 multiple choice questions for the AQA Business (7132), Unit 8: Choosing strategic direction, written with Revision Ninja.

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The 20 questions

  1. In the Ansoff matrix, what does market penetration involve?

    • Selling existing products into existing markets to increase market share
    • Selling new products into new markets to spread risk across several sectors at once
    • Selling new products into existing markets, such as a new version of an established range
    • Selling existing products into new markets, such as a new country or region

  2. In the Ansoff matrix, what does market development involve?

    • Selling new products into existing markets through a product launch for current customers
    • Selling existing products into new markets, such as a new country or customer group
    • Selling new products into new markets, which is the highest-risk option in the matrix
    • Selling existing products into existing markets through a loyalty scheme for regular customers

  3. In the Ansoff matrix, what does product development involve?

    • Acquiring a business in a totally unrelated sector to enter a market the firm has never served before
    • Selling existing products at lower prices to win additional customers from rival firms in the market
    • Selling existing products to new customers in a foreign country with different tastes and laws
    • Developing new products and selling them to existing customers in existing markets

  4. In the Ansoff matrix, what does diversification involve?

    • Selling existing products into new markets, which spreads risk across several overseas countries
    • Selling new products into new markets, which carries the highest risk of the four options
    • Selling existing products into existing markets, which carries the lowest risk of the four options
    • Selling new products into existing markets, which is the most common route to growth for firms

  5. Which Ansoff strategy is typically the least risky for a business?

    • Market development, because it always involves a total change of the firm's product range each year
    • Diversification, because it spreads risk across unfamiliar products and markets at the same time
    • Market penetration, because it uses existing products in markets the firm already knows
    • Product development, because it always requires entry into new overseas markets with new products

  6. A bakery launches a loyalty card that gives regular customers a discount on bread they already buy. Which Ansoff strategy is this?

    • Market penetration
    • Diversification
    • Market development
    • Product development

  7. A UK food manufacturer starts exporting its existing product range to France. Which Ansoff strategy is this?

    • Product development
    • Diversification
    • Market penetration
    • Market development

  8. A bakery launches a new range of gluten-free products for its existing customers. Which Ansoff strategy is this?

    • Product development
    • Diversification
    • Market development
    • Market penetration

  9. A confectionery company starts making and selling clothing for the first time. Which Ansoff strategy is this?

    • Market penetration
    • Market development
    • Diversification
    • Product development

  10. A business sells 2 million pounds of goods in a market worth 20 million pounds, a 10% share. It aims for a 12% share of a market worth 25 million pounds. How much extra sales does this give?

    • 3 million pounds
    • 0.5 million pounds
    • 1 million pounds
    • 2 million pounds

  11. Which factor most influences a firm's choice of which markets to compete in?

    • The name of the chief executive, which determines whether the firm can enter any overseas market
    • Market size and growth rate, together with the firm's capabilities and resources
    • The colour of the firm's logo, which determines which countries it can enter with its products
    • The number of employees the firm has in its human resources department at the time of decision

  12. Why might a firm choose diversification?

    • To spread risk across different products and markets, so that a fall in one area does not threaten the whole business
    • To reduce its capital requirements, because diversification always needs less funding than other strategies
    • To reduce the total number of products it sells, so that management can focus on a smaller range only
    • To avoid all competition by selling only to customers who have never bought from any rival in the market

  13. A firm's home market is shrinking. Which is the most suitable starting point for evaluating its strategic direction?

    • Assess whether existing products can reach new markets or whether new products should be developed, weighing risk and resources
    • Assume the firm should stop trading immediately, since a shrinking market always makes any strategy unprofitable
    • Ignore the market and invest in advertising only, because promotion alone can always reverse a decline
    • Increase prices in the shrinking market without any analysis, because demand will rise as competitors leave

  14. Evaluate the value of Ansoff's matrix for strategic decision making.

    • It is only relevant to public sector organisations that do not compete with any private firm in their market
    • It guarantees that the firm will grow by choosing the option with the most new products in the portfolio
    • It gives an exact forecast of sales growth for every option, so managers need no other analysis at all
    • It gives a clear framework for comparing growth options, but it ignores resources, competitors and the feasibility of each route

  15. Which evaluation of diversification is most accurate?

    • It is always lower risk than market penetration, because new markets are always safer than existing ones for firms
    • It has no costs, because entering a new market and launching a new product require no investment at all
    • It only works for businesses that are already the market leader in their industry and have unlimited funds
    • It can spread risk, but managers may lack experience of the new market, and integration of unrelated businesses can be difficult

  16. A firm considers market development into a foreign country. Which factor should it analyse before deciding?

    • The annual weather pattern of the foreign country, which has no direct effect on the attractiveness of any market
    • The colour of the logo used by competitors in the foreign market, which determines customer loyalty there
    • The number of staff employed by the firm's home-country suppliers, which sets the price of its products abroad
    • The attractiveness of the foreign market, including its size, growth and the regulations that apply to imports

  17. A software firm sells its existing product to government departments for the first time, having previously sold only to businesses. Which Ansoff strategy is this?

    • Market development
    • Diversification
    • Product development
    • Market penetration

  18. A supermarket increases its advertising so that shoppers buy more of the same products in its existing stores. Which Ansoff strategy is this?

    • Market penetration
    • Market development
    • Product development
    • Diversification

  19. A car maker launches an electric version of its existing model to its established customers. Which Ansoff strategy is this?

    • Market development
    • Product development
    • Diversification
    • Market penetration

  20. Why might a firm prefer market penetration to diversification?

    • It removes the need for competitors to be considered when the firm plans its growth in the market
    • It always produces higher profit margins than any other strategy in every market and every year
    • It requires the firm to enter several overseas markets at the same time to spread its costs
    • It builds on existing knowledge and customers, so it needs fewer new skills and less investment

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