A strategy which reduces or spreads business risk by adding different product and services to a company’s portfolio. This is particularly important when new and formidable competitors enter a company’s traditional market, or economic downturns hit a particular industry sector hard. Many long-established businesses also find they need to diversify as a result of changes in society and customer taste. An example is Coca-Cola which, despite being the industry leader in the cola market, has diversified into drinks like Fanta, Sprite and even bottled water.

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