In which diversification strategy does a company enter new markets that are entirely separate from its core business?

The chosen answer, conglomerate diversification, is correct because it refers to a strategy where a company expands its operations by entering into markets that are distinctly different from its existing core business activities. This can involve acquiring or developing businesses that operate in unrelated industries, therefore diversifying the company’s interests and reducing risk by spreading operations across various sectors. For example, a company that primarily manufactures consumer electronics may engage in conglomerate diversification by acquiring a financial services firm. This approach allows the company to tap into new revenue streams and reduce its reliance on its original market.

Other strategies, such as concentric diversification, involve entering new markets that are somewhat related to the existing business, focusing on products or services that complement those already offered. Horizontal diversification is about expanding into new markets within the same industry, often by adding new, but related products or services that appeal to the same customer base. A joint venture, on the other hand, pertains to a collaboration between two or more companies to pursue a specific project or business goal, which does not necessarily imply moving into completely unrelated markets. Thus, conglomerate diversification stands out as the strategy that most accurately describes entering entirely separate markets.