What term describes a firm that enters into a different market segment?

Diversification refers to a business strategy where a firm expands its operations into different market segments or product lines that are distinct from its current offerings. This approach allows a company to reduce risk by spreading its investments across various markets, thereby potentially increasing revenues and overall stability. For example, a technology company that traditionally sells hardware might diversify by developing software solutions, targeting customers in the tech industry.

The other terms, while related to business strategies, refer to different concepts. Integration usually involves combining operations within the same industry, either through acquisition or merger of similar firms. Internal growth focuses on expanding a company’s existing operations rather than branching into new segments. A merger specifically denotes the combination of two different companies into a single entity, which does not inherently involve entering new market segments but rather consolidating within existing ones.