What is diversification in the context of business growth?

Diversification in the context of business growth refers to the strategy of a business acquiring or developing new products or services that are completely different from its existing offerings. This approach allows a company to enter new markets, spread risk, and potentially increase revenue streams. By diversifying, a company can take advantage of new opportunities and mitigate threats that may arise from changes in its core market.

Diversifying into completely different areas can enable a business to leverage different skills, capabilities, and resources, ultimately aiming for greater financial stability and growth potential by not relying solely on existing products or markets. This strategy contrasts with other growth methods, such as mergers or takeovers that involve related businesses or attempts solely aimed at increasing brand recognition.