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It is a marketing strategy when a company wants to enter a new market and introduce a new product especially developed for this new market.
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Diversification occurs for a business when it develops a new product or expands into a new market. A business may diversify to manage risk by minimizing the harm to the business during economic downturns.
A risk management technique that mixes a wide variety of investments within a portfolio. The rationale behind this technique contends that a portfolio of different kinds of investments will, on average, yield higher returns and pose a lower risk than any individual investment found within the portfolio. Diversification strives to smooth out unsystematic risk events in a portfolio so that the positive performance of some investments will neutralize the negative performance of others. Therefore, the benefits of diversification will hold only if the securities in the portfolio are not perfectly correlated.
Diversification are with intentions of making use of the existing customer base and also with relative unexplored areas of the existing business where possibilities well ascertained. Business-wise Product line diversification as well as Production-wise Manufacturing line diversification are possible options. Agree with all expert answers.
expanding a companies business operations into a new industry in order to produce new kinds of valuable goods or services.
