Diversification involves

Diversification involves

• A. Existing Product in an Existing Market
• B. New Product in a New Market
• C. Market Penetration
• D. Product Extension

Answer: (B)

Diversification is a growth approach where a business introduces a new product to a new market, so both the product and the market are outside the company’s current scope. This step into unfamiliar territory can open up new revenue streams and spread risk, but it also demands new capabilities and carries higher uncertainty. This is why the best choice is describing a new product in a new market. By contrast, staying with the same product in the same market is market penetration, adding new variations of existing products in the same market is a form of product extension or development within the existing market, and introducing a new product in the same market would be product development rather than diversification.

Diversification is a growth approach where a business introduces a new product to a new market, so both the product and the market are outside the company’s current scope. This step into unfamiliar territory can open up new revenue streams and spread risk, but it also demands new capabilities and carries higher uncertainty.

This is why the best choice is describing a new product in a new market. By contrast, staying with the same product in the same market is market penetration, adding new variations of existing products in the same market is a form of product extension or development within the existing market, and introducing a new product in the same market would be product development rather than diversification.