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This paper examines the business strategy of diversification. Diversification of business lines was widely considered to be a prudent strategy throughout the 1980’s. Diversification offered multiple revenue streams as well a degree of hedged risk management. However, the practice of diversification largely fell out of favour beginning in the 1990’s. Many companies began to devote full focus to their primary business line, while spinning off business lines that were considered to be unrelated to their core competency. Focusing on the core competency products and/or services was thought to be a more efficient approach, with a higher return on the company’s resources. The strategy of business diversification has largely been theoretical with little empirical evidence collected to measure its success or failure..

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