Final answer:
Diversification strategies in business involve expanding a company's offerings to reduce risk and increase profitability. By diversifying, businesses aim to provide products or services of equal or better quality at a lower cost than competitors.
Step-by-step explanation:
Diversification strategies in business refer to the practice of expanding a company's offerings or entering new markets to reduce risk and increase profits. By diversifying, businesses aim to provide products or services of equal or better quality at a lower cost than their competitors. This can be achieved through various approaches, such as expanding product lines, entering new geographic markets, or targeting different customer segments.
For example, a company that originally focused on manufacturing smartphones may choose to diversify by expanding into the production of smart home devices. By doing so, they can tap into new revenue streams and reduce their dependency on a single product line. Similarly, a business may choose to diversify by entering international markets to take advantage of new opportunities and lower production costs.
Diversification strategies are aimed at achieving sustainable growth and a competitive advantage in the marketplace.