Diversification is a means whereby a business builds up its revenue by recognising chances to create or obtain businesses that are not precisely linked to the company’s existing businesses. There are three main types of diversification: concentric, horizontal and conglomerate.

Concentric diversification results in new product lines or services that have technological and/or marketing synergies with already accessible product lines, even though the products may attract a new customer base.

Horizontal diversification happens when the company develops new products that could attract its present customer groups even though those new products may be technologically unconnected to the existing product lines.

Conglomerate diversification happens where there is neither technological nor marketing synergy and required reaching new customer groups and individuals.