Economies of Risk-spreading: The larger the size of the business, the greater is the scope for spreading of risks through diversification. Diversi­fication is possible on two lines as follows:

  • Diversification of Output: If there are many products, the loss in the sale of one product may be covered by the profits from others. By diversification, the firm avoids what may be called putting all eggs in the same basket. For example, Vickers Ltd., make aircrafts, ships, armaments, food-processing plant, rubber, plastics, paints, instruments arid a wide range of other products. Many of the larger firms have taken to diversification. ITC diversified to include marine products and hotel business in its operations.
  • Diversification of Markets: The larger producer is generally in a position to sell his goods in many different and even far-off places. By depending upon one market, he runs the risk of heavy loss if sales in that market decline for one reason or the other.


The following two tabs change content below.
We, at, believe in sharing knowledge and giving quality information to our BMS students. We are here to provide and update you with every details required by you BMSites! If you want to join us, please mail to [email protected]

Leave a reply

Your email address will not be published. Required fields are marked *


* is aimed at revolutionising Bachelors in Management Studies education, also known as BMS for students appearing for BMS exams across all states of India. We provide free study material, 100s of tutorials with worked examples, past papers, tips, tricks for BMS exams, we are creating a digital learning library.

Disclaimer: We are not affiliated with any university or government body in anyway.

©2020 BMS - Bachelor of Management Studies Community 

A Management Paradise Venture

Ask Us On WhatsApp

Log in with your credentials


Forgot your details?


Create Account