ABSTRACT
This
study investigates the effect of product-market diversification on the market
performance of poultry farms in Abia State, Nigeria. The overarching objective
is to understand how diversification strategies impact profitability, market
share, and sales volume within the poultry farming sector. Specific objectives
include identifying diversification methods, assessing their effects on profitability,
market share, and sales volume, and determining the factors influencing
diversification decisions.
Utilizing
a survey research design, data was collected from 60 poultry farms across eight
selected local government areas in Abia State. Descriptive statistical tables
were employed to analyze diversification methods, while performance analysis
and logit regression were used to assess the impact of diversification on
profitability, market share, and sales volume.
The
findings reveal that diversified poultry farms tend to be more profitable and
possess a larger customer base compared to non-diversified ones. The majority
of poultry farms sell their products in bulk to retailers, indicating a
concentration of customers. Regression analysis suggests that factors such as
capital, firm size, education level, and access to credit significantly
influence diversification strategies, explaining about 71.1% of the variations.
In
conclusion, enterprises that engage in product-market diversification are more
likely to achieve higher profitability and market performance compared to those
that do not diversify. Government initiatives should focus on encouraging
women's participation in the poultry business, facilitating access to credit
and marketing inputs for poultry dealers, and promoting continuous learning and
adoption of best practices among poultry entrepreneurs.
Based
on these findings, the following recommendations are proposed:
1.
Government should conduct awareness campaigns to encourage women's participation
in the poultry business.
2.
Enabling environments should be created to facilitate access to credit and
marketing inputs for poultry dealers, fostering diversification.
3.
Poultry entrepreneurs should invest in acquiring technical knowledge and experience
to enhance their business operations and scale.
Implementing
these recommendations can contribute to the growth and sustainability of the
poultry farming sector in Abia State, fostering economic development and
livelihood improvement for poultry entrepreneurs.
TABLE OF CONTENTS
CHAPTER
ONE
INTRODUCTION
1.1 Background
of the study
1.2. Statement of the problem
1.3. Objectives of the study
1.4. Research
questions
1.5 Research
hypotheses
1.6 Significance of the study
1.7 Scope of the study.
CHAPTER
TWO
REVIEW
OF RELATED LITERATURE
2.1 Conceptual framework
2.1.1
Types of diversifications.
2.1.2
Methods of implementing diversification.
2.1.2 Overview of Poultry Industry in Nigeria
2.1.3 Benefits of
product market diversification
2.1.2
Methods of implementing diversification
strategy
2.1.4 Cost of
product market diversification
2.1.5
Product-market diversification
perspectives
2.1.6 The impact of
diversification on the performance of poultry farms
2.2 Theoretical
framework
2.2.1 Transaction costs theory
2.1.3 Market
power theory
2.2.4 Agency
theory
2.3 Empirical review
CHAPTER
THREE
RESEARCH
METHODOLOGY
3.1 Research Design
3.2 Study area
3.3 Population of study
3.4 Sampling technique
3.5 Method of data collection
3.5.1 Questionnaire design
3.6 Method of data analysis
3.6.1 Model specification
CHAPTER FOUR
RESULTS AND DISCUSSION
4.1
Data presentation and analysis
4.2 Socio-economic characteristics of the
respondents
4.2 Age of respondents
4.3 Diversification strategies adopted by poultry
farmers in Abia state.
4.4 Effect of product market diversification on
the profitability of the poultry farms in Abia State.
4.6 Factors
affecting product market diversification strategy on poultry enterprises in
Abia state.
CHAPTER FIVE
SUMMARY, CONCLUSION AND RECOMMENDATIONS
5.1 Summary
5.2 Conclusion
5.3 Recommendations
REFERENCES
CHAPTER ONE
INTRODUCTION
1.1
Background of the study
Diversification has become a popular
strategy among Nigerian firms. The term “diversification
” coined by Ansoff (2012) in his famous study “A model fordiversification” which explained different type of
expansion strategies to be followed by a company. Out of several reasons for
poultry farms to diversify, the primary
reason is, reducing risk of relying on only one or a few sources of income.
Some other possible reason to diversify is avoiding cyclical or seasonal
fluctuations (by producing goods or services with different demand cycles),
achieving higher growth rate and competing a rival by invading its core
industry or market.
Diversification is an option pursued by companies when they
have consolidated their positions in their base industries and hold underutilized
resources that can be used in other sectors of the economy at a low opportunity
cost (Chandler, 2015).
Diversification is a very important tool used by companies
these days to divide their risk by developing a range of products using the
concept of asset specificity. The main purpose of diversification is to increase
the benefits of economies of scope through a more efficient utilization of
business resources across multiple markets (Clarke, 2014). To achieve these
benefits, effective co-ordination of dispersed business resources is essential.
The high costs of resources in multiple markets may undermine the benefits of
these economies of scope (Montgomery, 2014).
According to Shin (2011),
diversification can increase the demand for information andcommunication
technology (ICT) because of the need for co-ordination of business
resourcesacross multiple markets. The extent to which a firm is able to meet this
demand can probablymake a difference in performance. In other words, it can be
hypothesized that increased use ofICT improves the performance of poultry farms
that are highly diversified. In the study of 48 Nigerianfirms mentioned above
(Oyedijo, 2012), it was found that related diversifiers performed betterthan
unrelated and mixed diversifiers.
According to Shin (2014), although
related diversification can lead to higher corporateperformance when compared
to unrelated diversification, the realization of economic benefitsfrom related
diversification is highly dependent on increased co-ordination and
informationprocessing across related businesses i.e. whether or not special
technologies, production skills,industry knowledge, distribution channel, resource
inputs and research facilities andcompetencies of one business are easily
transferable and usable by another.
Marketing performance comprises of the actual output or results of an
organization as measured against its intended outputs (goals and objectives).
According to Richard (2010) Marketingperformance can be measured by sale and market share of
firm.
In the light of the above, the research
work is set to determine the effect of product market diversification on the performance of poultry farms in Abia State.
1.2.
Statement of the problem
Despite the assumed benefits of
diversification such as the spreading of risks and cost, the advantage of
synergy arising from economics of scope and the pooling and/leveraging of
resources, the organizational, managerial and investment challenges of
diversification appear enormous for
poultry farm in a third world
nation such as Nigeria to bear. Poultry farm in third world nations can ill afford
the experiences of product-market
diversification failure and this diversification has leadto failure of many poultry farms in
Nigeria in recent time due to inadequate knowledge of diversification.
Diversification can also lead to the
problem of moral hazard, the chance that people will alter behavior after
entering into a contract-as in a conflict of interest by providing insurance
for managers who have invested in firm specific skills, and have an interest in
diversifying away a certain amount of poultry farm specific risk and may look
upon diversification as a form of compensation (Amihud and Lev 20111, Bhide
2013).
Furthermore, the continued existence
of every organization among other things depends on the various alternatives of
revenue generation and financial discipline. Where there is no Instituted
System of generating revenue from diverse sources and financial discipline,
financial recklessness may become the order of the day and this will definitely
affect the marketing performance of poultry farmnegatively (Anoff, 2012).
Again, poor design and implementation
of diversification are commonly
associated with distress in poultry farm, which hinderpoultry farm ownerfrom meeting their financial
responsibilities to their various stakeholders and this has significant effect
on market performance of organization
(Anoff, 2012).
1.3.
Objectives of the study
The broad objective of the study is to
examine the effect of product-market diversification onthe performance of selected poultry farms
in Abia State.
The specific objectives are to;.
i.
identify different
diversification method adopted by Poultry farms in Abia State.
ii.
determine the effect of
product-market diversification on profitability of the poultry farms in Abia
State.
iii.
estimate the effect of
product-market diversification on market
shares of poultry farms in Abia State
iv.
estimate the effect of
product-market diversification on sales
volume of poultry farms in Abia State.
v. determine the factors affecting product-market diversification of poultry farms in Abia State.
1.4.
Research questions
1. What are the diversification strategy
adopted by Poultry farms in Abia State?
2. What are the effect of product-market
diversification on the profitability of the
poultry farms in Abia State?
3. What are the effect of
product-market diversification on the market share of poultry farms in Abia
State?
4. What are the effect of
product-market diversification on the sales volume of poultry farms in Abia
State?
5. What are the factors
affecting product-market diversification
of poultry farms in Abia State?
1.5
Research hypotheses
The following hypotheses will be
stated in null form;
H01:
Product-market diversification has no significant influence on the profitability.
H02:
Product-market diversification has no significant influence on market share.
H03:
Product-market diversification has no
significant influence on sales volume.
H04:
Risk, Output, Size of market, capital,cost
of production haveno significantly influence on product-market diversification.
1.6
.Significance of the study
The research work will focus on examine
the effect of product-market diversification onthe performance of selected poultry farms in Abia
State.
This study is not a mere academic
exercise. It holds immense benefits; it will be of significance to the
following.
Firstly,
findings and recommendations of the study will be of immense benefit to owners
of poultry farms in the state, it will enlighten them on how to handle issue of
diversification in their businesses.
Economic planner and policy makers will
gain immensely from the study as it will explore examine the effect of product-market
diversification onthe performance of selected poultry farms and suggest more
success oriented ways of enhancing the product-market diversification.
Finally, Researchers and students interested in a similar field of study
in future will find this work useful conceptual guide and reference material.
1.7
Scope of the study.
The
research work will focus on effect of
product-market diversification strategy on the performance of selected poultry
farms in Abia State.
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