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Diversification

Diversification introduces new products or activities into new markets relative to the organisation’s existing position. It can be related to existing capabilities or largely unrelated, with different risks, synergies and management demands. The label alone does not establish whether it creates value. Evaluate strategic fit, entry method, resources, uncertainty and the ability to manage the new operation alongside current commitments.

Worked example

A specialist manufacturer entering an unfamiliar consumer-service business is diversifying; a related move may share more capability than an unrelated one.

Common mistake

Do not assume diversification automatically reduces overall risk if it introduces unfamiliar exposures or correlated demands on resources.

Where it appears in your exams

QualificationExamRelationshipPeriod
ACCA APM Supporting September 2026–June 2027
ACCA SBL Direct September 2026–June 2027