What are the different types of diversification?
An example of an AI chatbot conversation about types of diversification in business and investment.
What are the different types of diversification?
There are mainly two types of diversification: related and unrelated diversification. Related diversification involves expanding into areas that are similar to the existing business, while unrelated diversification involves entering into completely different industries.
Can you give me examples of each type?
Sure! An example of related diversification is a car manufacturer starting to produce motorcycles. An example of unrelated diversification is a food company acquiring a tech startup.
What are the benefits of diversification?
Diversification can reduce risk, increase market share, and provide new revenue streams. It helps businesses to be more resilient.
Are there any risks associated with diversification?
Yes, risks include overextension, dilution of brand identity, and potential management challenges in new areas.
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