Firms work to diversify. Which of the following is not a diversification method that firms use?
A) Firms seek to expand the customer base.
B) Firms seek to obtain raw materials from several suppliers.
C) Firms seek to isolate their product by selling to a single niche market.
D) Firms seek to produce more than one product.

Question

Quizplus · Accepted Answer

Isolating a product to sell to a single niche market is not a form of diversification. In fact, it is the opposite of diversification because the firm is focusing on a narrow market segment. The other choices (A, B, and D) all involve expanding the firm's offerings or opportunities in some way.

Firms Work to Diversify