From the standpoint of a firm, the term implies an increase in the range of goods or services provided by a firm, potentially reducing the risk associated with particular product lines having weak performance.  The term could also apply to the projects developed by the firm—in different countries or regions of the world.  From the standpoint on an investor, the term applies to having a portfolio of investments, such that when some are performing poorly, overall returns do not fall dramatically, since other investments tend to perform well.  Thus, diversification reduces risk associated with achieving a particular return.  Also, see Diversifiable risk and Beta.