Diversification is a company’s growth strategy (part of the Ansoff Matrix) that involves starting new or acquiring existing businesses that are outside the company’s current products and markets. This strategy is the riskiest because it enters uncharted territory.
Diversification is undertaken when there is a high potential for synergy between new and existing activities or when current markets are saturated. It can be concentric (related to the core activities) or horizontal (unrelated). Successful diversification requires precise risk analysis and proper portfolio management.
