Which growth strategy involves entering into unrelated industries to spread risk?

Which growth strategy involves entering into unrelated industries to spread risk?

• A. Diversification
• B. External Growth
• C. Vertical Integration (Forwards)
• D. Just In Time Production

Answer: (A)

Diversification is about growing by moving into new products or markets, and when this happens in unrelated industries it’s specifically aimed at spreading risk. By operating in areas that aren’t directly connected, the business isn’t as exposed to trouble in one particular industry—the performance of other, unrelated areas can help balance the overall results, supporting steadier growth. External growth means growing through actions like mergers or acquisitions, which can involve unrelated or related industries but isn’t defined by the risk-spreading idea. Vertical integration forwards is about taking control of the next steps in the supply chain (moving toward customers), not entering unrelated sectors. Just-in-time production is an operations approach to reduce stock and improve efficiency, not a growth strategy.

Diversification is about growing by moving into new products or markets, and when this happens in unrelated industries it’s specifically aimed at spreading risk. By operating in areas that aren’t directly connected, the business isn’t as exposed to trouble in one particular industry—the performance of other, unrelated areas can help balance the overall results, supporting steadier growth.

External growth means growing through actions like mergers or acquisitions, which can involve unrelated or related industries but isn’t defined by the risk-spreading idea. Vertical integration forwards is about taking control of the next steps in the supply chain (moving toward customers), not entering unrelated sectors. Just-in-time production is an operations approach to reduce stock and improve efficiency, not a growth strategy.