diversification

In business, the development by companies, sectors, or countries of different types of products, markets, and activities, or the holding by investors of a varied share portfolio to spread risk. For example: a company may diversify if its original area of operation is becoming less profitable; diversification in the UK agricultural sector has included offering accommodation and services to tourists to augment income; and wealthy oil-producing countries, in the Middle East particularly, have been using their export revenues to establish a broader industrial base.

At company level, a risk associated with diversification is that a firm may lose sight of its core business and suffer as a result of entering new markets in which it has no expertise.