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Diversification - Related and Unrelated Diversification

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Diversification is a corporate-level strategy that can create value for an organization.

What are the differences between related and unrelated diversification?
Why would an organization select a related or unrelated diversification strategy over the other? Explain with examples of related and unrelated diversification.

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Solution Summary

The differences between related and unrelated diversification is given. What an organization should consider before deciding which type of diversification it should pursue is examined.

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What are the differences between related and unrelated diversification?


Related diversification occurs when a business adds or expands its product lines or markets. That is, the business continues selling similar products or providing similar services to new clients or customers. For instance, a furniture store can expand its operations by purchasing another furniture store in a different city. This would be considered to be related diversification.


Unrelated diversification occurs when a business expands by adding new, or unrelated, product ...

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