Diversification means a distribution of something to the wider quantity of products, risks, customers, market segments or investments. The reason for the diversification is usually higher probability of the success, higher profitability or risk reduction.
Diversification in practice: To diversify means to spread the load among multiple points or simply expand the possibilities. It is one of the basic methods when they do not want to rely solely on one client, one bank or one supplier. The term is used in many areas of management.
For example, they can diversify the production by producing a broader portfolio of products. The investment risks can be diversified by investing in multiple markets or more mutual funds.