IMPACT OF PRODUCT DIVERSIFICATION STRATEGY ON ORGANIZATIONAL GROWTH
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IMPACT OF PRODUCT DIVERSIFICATION STRATEGY ON ORGANIZATIONAL GROWTH
ABSTRACT
This study explores the impact of diversification strategy on organisational growth, with a focus on Coca-Cola Nigeria Plc. Throughout the investigation, relevant literatures were studied to get insight into the study’s conceptual and theoretical frameworks.
The study used a survey or disruptive research design, therefore primary data were collected by a questionnaire, which was the primary research tool used.
A total of fifty (55) structured questionnaires were distributed to chosen employees of Coco-Cola Nigeria Plc using a simple random sampling approach. The data were statistically analysed using appropriate analytical tools such as simple percentage tables and chi-squared.
The study’s findings show that advertising helps small and medium-sized businesses achieve their goals. According to the study, respondents agreed that their organization’s product diversification strategy led to increased company growth. It increases the firm’s profit from a variety of products.
Also, a loss in one of the product lines does not result in a loss for the firm’s overall operation, because the profit realised from other product lines and businesses compensates for it.
In conclusion, from the study, there is no doubt whatsoever that product diversification is an important and vital corporate strategy choice via which an organisation may attain its growth and ultimate goal.Chapter one
INTRODUCTION
1.0 Background of the Study
Diversification is one of the corporate-level growth strategies accessible, alongside concentration, merger and acquisition, strategic alliance, and so on.
Diversification occurs when a corporation expands its offerings in terms of customer function, consumer group, or alternative technology [Oyedejo, 2004].
According to De Wit and Meyer (1998), diversification occurs when a corporation enters new operations [internal growth] or purchases them, which leads to corporate expansion and so ensures synergy and increases the organization’s profitability.
It also helps organisations share their risk. The increasing need to seek out growth prospects and cost reductions has driven organisations to pursue diversification. Chandler,[1962].
According to Thomas and Hunger (2008), diversification occurs when an industry consolidates and matures, and the majority of the surviving firms have investigated the boundaries of expansion through vertical and horizontal growth techniques.
If competitors are unable to expand abroad into less established markets, they may be forced to diversify into new industries in order to maintain growth.
Diversification can take many forms. The organisation that creates products that serve a variety of consumer groups, functions, and alternative technologies. For example, Unilever Nig Plc is a food, home, and personal care product manufacturer.
How may organisations decide to manufacture products that do not service the same client group, customer function, or alternative technology? U.A.C.
This research will focus on concentric or linked diversification, with Coca-Cola Nigeria Plc serving as a case study.As it expands into the manufacturing of table water and juice (five living).
1.1 Statement of Research Problem
The high need for development prospects and cost savings has motivated organisations to embrace diversification (Chandler, 1990). The purpose of this research is to determine whether diversity, as claimed, may boost the organization’s long-term profitability.
It also seeks to address the issue of how to attain expansion while being cost efficient. The aforementioned factors contribute to the investigation and research of the impact of product diversity on organisational growth.
1.2 PURPOSE OF THE STUDY
Every research endeavour aims to solve a problem and make recommendations about a certain phenomenon. Better better, it is intended to corroborate, re-establish, or validate an existing table or thesis. Specifically, the study aims to achieve the following:
i. Understand why product diversification occurs.
ii. Understand the advantages and disadvantages of product diversification.
iii. To provide a practical look at the concept of diversification.
iii. To provide a deep and in-depth look into the various sorts of concentric or linked diversification as practiced by Coca-Cola Nigeria Plc, which diversifies into the manufacture of table water.
v. To investigate the many sorts of diversification reports for long-term profitability in the industry.
vi. To determine whether risk may be distributed by diversification.
1.3 RESEARCH QUESTIONS.
1. Does Coca Cola Nig Plc follow a product diversification strategy?
2. How does technology branching effect the firm’s growth?
3. Does product variety spread the firm’s risk?
4. Is synergy one of the benefits that the firm gains from using the product diversification strategy?
5. Did the corporation use the internal venturing approach to diversification?
6. Did the corporation use an acquisition-based diversification strategy?
7. Is there a direct relationship between product diversity and company growth?.
8. Does the product diversification strategy assist the firm in exceeding the growth limit of its economic and industrial environment?
1.4 Statement of research hypotheses.
Based on the study’s goal, difficulties highlighted, and questions posed, the following hypotheses will be investigated.
Hypothesis 1.
H1: Diversification is a strategic approach to rebuilding and revitalising organisation companies.
HO Diversification is not a deliberate approach to rebuilding and revitalising organisation enterprises.
Hypothesis II.
Hypothesis 1: There is a direct association between product variety and company growth.
Hypothesis: There is no direct association between product diversification and company development.
1.5 IMPORTANCE OF THE STUDY.
The relevance of the findings of this study cannot be overstated, as they will demonstrate to various industrial sectors how product diversity may be effective in business operations. It would also demonstrate the various strategies and approaches to diversification.
These are the primary areas of significance in the study.
Ø To advance existing knowledge on product diversification.
The goal is to preserve current knowledge and pave the way for future research in the field.
Ø To emphasise the importance of diversification in business.
The goal is to raise awareness among business owners about the importance of diversifying their businesses.
1.6 Scope and Limitations of the Study
The purpose of this study is to assess the impact of Coca-Cola Nig. Plc’s product diversification strategy, which includes the manufacturing of table water (Eva water) and juice drinks (five living).
The Coca-Cola Nig Plc will serve as the project’s case study.
1.7 Definition of Terms
Corporate Level Strategy: This is the senior management’s strategy for guiding and turning the organisation as a whole. At the corporate level, strategies are broad-based decisions made at the highest levels of an organisation, independent of the number of industries in which it competes or the number of divisions or business units.
Growth strategies are strategies used to achieve the growth goal. It encompasses concentration, diversification, and vertical integration methods, as well as internal growth, acquisition, merger, joint venture, and product and market development.
Diversification occurs when a corporation expands its business, either through new customer functions, customer groups, or alternative technologies. It is used to identify development paths that diverge from the organization’s current markets and products.
Related or Concentric Diversification: A company maintains two or more lines of operation that, while unique, yet have some strategic fit. Two businesses are related if their resources may be used efficiently together.
Vertical Integration: This sort of related diversification combines backward and forward integration.
Backward integration refers to the development of activities that are concerned with the inputs into the company’s existing activity. In other words, the company goes further down in the value chain by creating its own raw materials, components, machines, and making its own designs, producing its own money.
Forward Integration: This refers to development into activities that are concerned with a firm’s outputs, that is, the company moves farther forward in the value chain by creating/producing its own transportation, distribution, repairs, and servicing.
Horizontal integration refers to the growth of activities that are either competitive with or directly complementary to a company’s existing activity.
Acquisition: This is a diversification strategy in which a corporation obtains existing company buildings, equipment, and workers.
Internal Venturing: This technique entails a company beginning a business from the ground up, which includes building facilities, purchasing equipment, hiring employees, opening distribution channels/outlets, and so on.
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