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GCSE Business · key term
Developing different products or serving different markets to reduce dependence on one source of sales.
Used by AQA, Edexcel and OCR
Paper 1, Paper 2
Revise: Operating in Competitive MarketsDiversification reduces reliance on one product or market. If demand falls in one area, sales elsewhere may help support the business. However, entering unfamiliar markets also introduces new risks and requires resources.
Specification 1.5.5 · Paper 1
Offering a wider range of products or serving different customer groups to reduce reliance on a single source of sales.
Revise: Responses to External InfluencesDiversification reduces reliance on one product or customer group. For instance, a café might add a range of lower-priced meals to appeal to customers spending less. This could protect some sales, but introducing products also involves costs, and customers may not buy them.
Paper 1
In external growth, a merger or takeover involving a business in an unrelated industry, spreading activity across different markets.
Revise: External GrowthHorizontal integration, vertical integration and diversification explain the relationship between the businesses joining. For example, buying a rival is both a takeover and horizontal integration.
Distinguish how businesses join (merger or takeover) from their relationship (horizontal, vertical or diversification). A takeover can be any of these types.
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