The limitations of diversification are as given below:

(i)    Huge funds are required for diversification. The internal savings fo the business may not be sufficient to finance growth.

(ii)    Diversification may invest new technology and new markets. The existing staff may experience problems in adapting to this growth pattern.

(iii)    The takes and responsibilities of top executive increase because of need to handle new product, technology and markets. They may find problems in coordination which may lead to inefficient operations.
(iv)    Diversification may involve unfamiliar products and markets leading to greater degree of risk.

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