Question

compare and contrast advantages and disadvantages of related diversification strategy

Answer 1

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ADVANTAGES: Three key advantages of diversification include: Minimising risk of loss – if one investment performs poorly over a certain period, other investments may perform better over that same period, reducing the potential losses of your investment portfolio from concentrating all your capital under one type of investment.

DISADVANTAGES: If diversification isn't approached with caution, the result can be overextension of a company's resources. To run properly, every division of a corporation, no matter how large, needs enough resources to maintain its infrastructure and operations or it will begin to decline.

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