DIVERSIFICATION

DIVERSIFICATION

From time to time Companies that are focused on a single line of business become nervous about putting all their commercial eggs in no one basket.

The exposure to this type of risk is reduced by increasing their business portfolio.

Therefore over time it is appropriate to look for new opportunities along their major lines of business or look for entirely new business ideas to cultivate.

Companies that follow the process of diversification are called conglomerate e.g. Dangote Group. The conglomerate is a player in the cement, sugar and flour business.