Horizontal Diversification

Horizontal Diversification

In risk management, the act or strategy of adding more investments of like kind to one's portfolio to hedge against the investments already in it. Ideally, this reduces the risk inherent in any one investment, and increases the possibility of making a profit, or at least avoiding a loss. That is, horizontal diversification involves investing in similar instruments. Examples include investing in several technology companies or in different types of bonds. Horizontal diversification may be as broad or as narrow as the investor chooses. In general, broader diversification equates to less risk and lower return. See also: Markowitz Portfolio Theory, Vertical diversification.
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They used vertical diversification to create linkages in the existing industries and horizontal diversification with an emphasis on exports and technological upgrade.
The IMF experts also suggested that successful strategies combine vertical diversification (in specific sectors) to create linkages in existing industries, and horizontal diversification (across sectors) beyond the comparative advantage, with an emphasis on exports and technology upgrading.
Each of the Gulf states has developed long-term strategies, using different combinations of vertical and horizontal diversification.
Successful strategies have relied on a policy mix of promoting vertical diversification in "comparative advantage" sectors such as oil and gas and petrochemicals and endeavours into horizontal diversification beyond these sectors with an emphasis on technological upgrade and competition in international markets," it said.
There are two kinds of diversification at farm level: horizontal diversification and vertical diversification.
Contributors describe the dangers and the magnitude of the challenge of converging and connecting illicit networks; the ways and means used by transnational criminal networks and how illicit networks actually operate and interact; how the proliferation, convergence, and horizontal diversification of illicit networks challenge state sovereignty; and how different national and international organizations are fighting back.
Vertical and horizontal diversification can also be opted for the same.
MNCs pursued their Chinese expansion at full speed last year and were active across the spectrum including M&A, joint ventures, research partnerships, geographic and horizontal diversification, new and expanded research operations, manufacturing facility expansion and internal restructuring.
Horizontal diversification takes place within the same sector by adding new products.
Nevertheless, we would consider horizontal diversification for Globaltrans at a reasonable price as a positive development, as it could be a good avenue for its accumulating cash pile.
Pavitt (1994) posits that horizontal diversification presents key opportunities for new product development, specially in large or R&D based organizations.
Further horizontal diversification opportunities in sectors such as banking and utilities are yet to be explored in the region, as the operators develop and test the delivery model of these services," added Vasiljev.

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