Diversification is the process of entering new industries, distinct from a companys core or original industry, to make new kinds of products that can be sold profitably to customers in these new industries. A multibusiness model based on diversification aims to find ways to use a companys existing strategies and distinctive competencies to make products that are highly valued by customers in the new industries it enters. A diversified company is one that makes and sells products in two or more different or distinct industries. A diversification strategy should enable a company or its individual business units to perform one or more of the value-chain functions (1) at a lower cost, (2) in a way that allows for differentiation and gives thecompany better pricing options, or (3) in a way that helps the company to manage industry rivalry betterin order to increase profitability.

There are four primary ways in which pursuing a multibusiness model based on diversification can increase company profitability. Explain these four ways to increase profitability. They provide an example of a company that has used diversification. Include the type of multibusiness model used by the company. Do not repeat the textbook examples such as Phillip Morris or Proctor and Gamble. Do some research and find your own example.