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How do you Increase Profitability Through Diversification?

How do you Increase Profitability Through Diversification?

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Diversification can increase profitability by great extent. Once a company starts to operate at a particular segment for several years, then the growth opportunity in that segment starts to decline as there are no more new opportunuities left to venture in that segment. In a mature phase, companies try to diversify and enter new segments so that they again reach growing phase in new segment and increase profitability. Business cycle starts with growing phase, then slowly reaches to maturity. Once a particular company reaches maturity phase with its existing product line, then they start to explore new product line to again start with the growing phase and incresae profitability.

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