Final answer:
A related diversification strategy involves expanding into new markets or industries that are related to the current business, while unrelated diversification involves entering into completely different markets or industries. Both strategies aim to reduce risk and can provide opportunities for growth. Examples include a car manufacturer diversifying into electric vehicles (related) and expanding into the hospitality industry (unrelated).
Step-by-step explanation:
A related diversification strategy involves a company expanding into new markets or industries that are related to its current business. This can involve offering new products or services that complement the existing ones. For example, a car manufacturer diversifying into electric vehicles would be considered a related diversification.
On the other hand, unrelated diversification involves a company entering into completely different markets or industries that have no direct connection to its current business. This strategy is often pursued to reduce risk by not relying solely on one industry. An example of unrelated diversification is a car manufacturer expanding into the hospitality industry by acquiring a hotel chain.
Related diversification: Expanding into new markets or industries that are related to the current business. Unrelated diversification: Entering into completely different markets or industries with no direct connection to the current business. Diversification strategies: Related and unrelated diversification.