7.1.2 Why SMEs should diversify their Business?
| Diversification, being a strategic approach, is the subject of extensive research aiming to examine its relation to the financial results of the companies. In the majority of studies a comparison is done between results of related and unrelated diversification, although the distinctive line between them is still not clear. |
For a long time related diversification has been considered financially more beneficial. However, recently, big multinational companies have challenged this statement with substantial profits that they achieved by diversifying in unrelated industries, like Canon which diversified from cameras to a wide range of office equipment. Walt Disney started as a movie company but later diversified to building entertainment parks, etc.
