Firms diversify because there may be new technological or economic opportunities in another industry, or a firm could enter a complementary industry, keeping a similar market base or production line. Leveraging one’s core competencies by applying them to additional businesses, allows the firm to make the most of their competitive advantage. If the firm is a cost leader, it may be able to reduce costs for an acquired firm as well.
Proctor and Gamble has been and continues to shed some of its brands - what does this say about their prior diversification strategy?