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Home > QFINANCE Dictionary > Definition of diversification

Definition of

diversification

General Management

developing new areas for growth or risk reduction a strategy to increase the variety of business, service, or product types within an organization. Diversification can be a growth strategy, taking advantage of market opportunities, or it may be aimed at reducing risk by spreading interests over different areas. It can be achieved through acquisition or through internal research and development, and it can involve managing two, a few, or many different areas of interest. Diversification can also be a corporate strategy of investment in acquisitions within a broad portfolio range by a large holding company. One distinct type is horizontal diversification, which involves expansion into a similar product area, for example, a domestic furniture manufacturer producing office furniture. Another is vertical diversification, in which a company moves into a different level of the supply chain, for example, a manufacturing company becoming a retailer.

Definitions of ’diversification’ and meaning of ’diversification’ are from the book publication, QFINANCE – The Ultimate Resource, © 2009 Bloomsbury Information Ltd. Find definitions for ’diversification’ and other financial terms with our online QFINANCE Financial Dictionary.

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