Diversification is a business strategy that firms use to enter into new industries by developing new products. Businesses must diversify as it cushions firms in the event where one of its business interests suffers an economic downturn. Therefore, if one area of the business suffers an adverse market environment leading to losses, a better performing segment of the company helps to keep the firm afloat (Ketchen & Short 2018). Companies also use diversification strategies for growth, and to ensure that a diversification strategy is viable, it must meet a few requirements. First, the industry to which a company is diversifying should have the potential for profitability. Such profitability will enable the business to .....
