What Is Diversification of Business? - Strategies, Definition & Examples


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Which one of the following is the best explanation of diversification?

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1. If you own a bookstore and decide to purchase the vintage clothing boutique next door, what type of diversification are you using?

2. If you operate a refrigerator factory and decide to start making freezers, what type of diversification strategy are you employing?

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About This Quiz & Worksheet

The accompanying quiz/worksheet combo will test your understanding of business diversification strategies. You will be asked to define what business diversification is and to identify some of the different types of diversification employed by businesses.

Quiz & Worksheet Goals

In this assessment you'll be tested on:

  • The general definition of business diversification
  • The term for diversification into the same type of business
  • A term for diversification into businesses with related products or markets
  • The type of diversification that occurs when businesses buy businesses that supply products or services to their business
  • What diversification into an unrelated business is called

Skills Practiced

  • Critical thinking - apply relevant concepts to examine information about the advantages and disadvantages of business diversification
  • Problem solving - use acquired knowledge to solve business diversification practice problems
  • Knowledge application - use your knowledge to answer questions about the most common types of business diversification

Additional Learning

To learn more about business diversification strategies, review the accompanying lesson on What is Diversification of Business - Strategies, Definition, and Examples. This lesson covers the following objectives:

  • How businesses diversify
  • Why businesses diversity
  • The types of diversification strategies employed by businesses