18 Explain the term 'diversification' using a business example.

[Sir Afzal Shad]

18 Explain the term 'diversification' using a business example.[3]
Hint: Spreading risk > A business making only soft drinks starts selling snacks as well > If drink sales fall, it can rely on snack sales.

[Abdullah Baig]

Kn
Diversification is when a business expands by offering new products or entering new markets to reduce risk
App
For example, a company that originally only sells soft drinks may start producing snacks as well allowing it to attract a wider range of customers so if drink sales fall, the business can still earn revenue from snack sales helping to keep its overall income stable
An
Therefore, diversification reduces risk by preventing the business from depending on a single product or market, making it more resilient to changes in demand.

[Aarib Saad]

(KN)It means spreading the risk of the business.
(APP)For instance, Pepsi Cola previously only used to produce soft drinks but it later introduced Lays as a sub-brand of Pepsi Cola that produces Chips/Crisps.
(AN)Thus, this means that if the sales of it's soft drinks fall, it can still rely on Lays for incurring sales revenue, so more financial freedom, allowing for more riskier decisions, which can lead to the business being able to develop a USP.

[Naveen fatima]

[KN] Some businesses choose to offer different types of products and services in order to avoid or reduce risks.
[APP] For example, A business that was only producing soft drinks starts to sell snacks aswell.
[AN] It helps the business to avoid relying on a specific product. If sales from one falls the income from the other can keep the business stable and profitable.

[Arham Qadri]

It is spreading the risk of the business.
[APP] For example a business that sells chips can start selling drinks.
[AN] This means if sales of chips fail it can still rely on drinks for sales revenue so more freedom


[Sir ya question ni sahi sa pata chala]

[Abdullah Mohsin]

[KN] Diversification means spreading the risk of failure.
[APP] For example, a chips producer like Lays could introduce a new product line such as fruit juices. This helps the business reduce dependence on a single product, since if sales of chips decline, revenue from drinks can still support to operate the business.
[AN] This ensures a more stable income and improves the business’s long-term survival by spreading risks across different markets.

[shamaim shakeel]

[KN] Diversification means a business expands by adding new products or entering new markets to reduce risk and increase growth opportunities.
[APP] For example, Apple diversified by moving from selling only computers to also selling phones, tablets, and smartwatches.
[AN] This helps the business because if one product’s sales fall, others can still make profit, reducing overall risk and making the company more stable.

[EmmanWaseem]

It is spreading the risk
For example a shop sells cold drinks and now they added chips of different flavours
This means customers will be more attracted wanting to try the new products which will increase the revenue especially if brought together

[Fatima ibtehaj]

[KN]Diversification means when a business expands by adding new products or entering new markets that are different from its existing ones.
[APP]Coca-Cola mainly sells soft drinks, but it has diversified by introducing bottled water.
[AN]This helps Coca-Cola reduce its dependence on soft drinks and attract different types of customers leading towards a rise in brand image and creation of a USP hence leading towards customer loyalty.

[abdurrehman waseem]

KN: Diversification means expanding into new products or markets to reduce dependency on existing ones.
App: For instance, Samsung produces not only phones but also TVs, fridges, and semiconductors.
An: This strategy spreads risk — if one product line performs poorly, others can sustain profits.

[Aayan Zaidi]

KN: Diversification means a business expands into new products or markets to reduce risk.
APP: E.g Apple started with computers but later made iPhones and watches.
AN: This helps the business grow and stay safe if one product's sales fall