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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Notable Quotes

  • Diversifying a Workforce
    "It’s important to hire people with diverse experiences and viewpoints, which you don’t necessarily get if you just hire straight-A Harvard MBA’s. Getting good grades and having courage are not the same thing. Being really smart and having good judgment are not the same thing. People – men or women – shouldn’t be winnowed out so early in life."
    - Susan Byrne


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