Definitions (3)

1.Banking: Spreading a bank's assets (loans) over a wider assortment of quality borrowers, to maintain or improve earning levels while maintaining the same level of exposure.
2.Corporate strategy: Practice under which a firm enters an industry or market different from its core business. Reasons for diversification include (1) reducing risk of relying on only one or few income sources, (2) avoiding cyclical or seasonal fluctuations by producing goods or services with different demand cycles, (3) achieving a higher growth rate, and (4) countering a competitor by invading the competitor's core industry or market. In contrast to vertical integration, diversification does not increase a firm's market or monopolistic power.
Also called market diversification.

Use diversification in a sentence

  • The diversification process was rather easy and it allowed more groups to be represented rather than the more popular ones.

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  • The diversification of funds was a great choice made my our financial department so we diversified our wealth intelligently and profitably.

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  • Having a wide range of diversification in a retirement portfolio is an ideal method of maintaining a safety net of constant funds and being able to take advantage of market upswings at the same time.

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