The acquisition of two or more counter-cyclical businesses is an example of using diversification to reduce risk.

Question

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One of the purposes of diversification is to reduce the risk that is inherent in the variability in revenues and profits of a firm over time. If a firm enters new products or markets that are affected differently by seasonal or economic cycles, its performance over time will be more stable. For example, a firm that manufactures lawn mowers may diversify into snow blowers in order to even out its annual sales.

The Acquisition of Two or More Counter-Cyclical Businesses Is an Example