Diversify

Diversification is about expanding a company’s portfolio of assets to create a more robust business model and minimize the impact of fluctuations in one area by offsetting them with gains in another. One common approach is product diversification, where a company expands its product line to cater to different customer segments. Market diversification involves entering new geographic regions while asset diversification considers the allocation of resources across various asset classes each with different risk-return profiles. A business might choose to diversify to help mitigate economic vulnerabilities, unlock new revenue or improve their agility to better cope with shifts in consumer preferences. Diversification can be an intangible asset in that it signals to the market that a company is forward-thinking and prepared to capitalise on emerging opportunities. A good example is The Walt Disney Company, which started as an animation studio but quickly diversified into theme parks, media networks, film studios and consumer products. This created new revenue streams, reduced its reliance on any single market and built a powerful brand.