diversification


diversification
1. The holding of a *portfolio of varied investments to spread and thereby reduce *risk. See *portfolio theory. 2. An increase in the range and variety of operations undertaken by an organization or an individual. *Multinational corporations tend to reduce their *risks by geographical diversification, as well as by entering different sectors of activity - these moves are typically intended to reduce overreliance on a small number of markets. However, although diversification generally leads to a spreading of (and therefore reduction of) risk, overdiversification can be counterproductive. A corporation that takes on an excessively wide range of operations may find that it loses strategic focus, and the range and variety of extensive activities may absorb an excessive amount of management time. In such cases, the negative effects of overdiversification can be mitigated by the *divestment of some operations.

Auditor's dictionary. 2014.

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  • diversification — [ divɛrsifikasjɔ̃ ] n. f. • fin XIIIe; de diversifier ♦ Action de diversifier, de se diversifier; son résultat. La diversification du savoir. (v. 1966) Comm. Le fait, pour une entreprise, de varier ou d élargir la gamme de ses produits ou de ses… …   Encyclopédie Universelle

  • Diversification — may refer to: Diversification (finance) involves spreading investments Diversification (marketing strategy) is a corporate strategy to increase market penetration Agricultural diversification involves the re allocation of some of a farm s… …   Wikipedia

  • diversification — I noun alteration, assortment, change, contrast, deviation, difference, differentiation, heterogeneity, multifariousness, multiformity, separation, shift, variation associated concepts: diversification of investments II index innovation Burton s… …   Law dictionary

  • Diversification — Di*ver si*fi*ca tion, n. [See {Diversify}.] 1. The act of making various, or of changing form or quality. Boyle. [1913 Webster] 2. State of diversity or variation; variegation; modification; change; alternation. [1913 Webster] Infinite… …   The Collaborative International Dictionary of English

  • diversification — c.1600, noun of action from M.L. diversificare (see DIVERSIFY (Cf. diversify)). Economic sense is from 1939 …   Etymology dictionary

  • Diversification — La diversification est le fait pour une entreprise d investir dans de nouvelles activités. Sommaire 1 En gestion d entreprise 1.1 Diversification externe / interne 1.2 Tests de diversification (options réelles) …   Wikipédia en Français

  • Diversification — Dividing investment funds among a variety of securities with different risk, reward, and correlation statistics so as to minimize unsystematic risk. The New York Times Financial Glossary * * * diversify di‧ver‧si‧fy [daɪˈvɜːsfaɪ ǁ dˈvɜːr , daɪ… …   Financial and business terms

  • diversification — Dividing investment funds among a variety of securities with different risk, reward, and correlation statistics so as to minimize unsystematic risk. Bloomberg Financial Dictionary The process of holding a range of investments in order to… …   Financial and business terms

  • Diversification — A risk management technique that mixes a wide variety of investments within a portfolio. The rationale behind this technique contends that a portfolio of different kinds of investments will, on average, yield higher returns and pose a lower risk… …   Investment dictionary

  • diversification — noun 1. the act of introducing variety (especially in investments or in the variety of goods and services offered) (Freq. 1) my broker recommended a greater diversification of my investments he limited his losses by diversification of his product …   Useful english dictionary

  • diversification — (di vèr si fi ka sion) s. f. Action de diversifier. HISTORIQUE    XIVe s. •   Selon la diversification de la reflexion de lumiere causée de l aer ou d aucunes vapeurs, ORESME Thèse de MEUNIER.. ÉTYMOLOGIE    Voy. diversifier. SUPPLÉMENT AU… …   Dictionnaire de la Langue Française d'Émile Littré