ABSTRACT
This study
examines the analysis of impact of diversification strategy on organization
growth with particular emphasis on Coca-Cola Nigeria Plc. In the course of the
study, relevant literatures were reviewed to have an insight into the
conceptual and theoretical framework of the study. The study adopted a survey
or disruptive research design, hence primary data were generated though
questionnaire which is the major research instrument used. A total of fifty (55) structured
questionnaires were administered among selected staff of Coco-Cola Nigeria Plc
on a simple random sampling procedure. The data generated were statistically
analyzed with relevant analytical tools such as simple percentage tables and
chi-square. The result of the findings
reveals that advertisement contributes to the achievement of small and scale
enterprise goals and objectives. From
the study, it was found that the respondent agreed that as their organization
adopt the product diversification strategy and it leads to increase in the
growth of the firm. It makes increased profit available to the firm from
variety of product. Also, a loss in one of the product line does not result
into a loss on the entire business of the firm, since the profit realized from
other product line and business covers it up. In conclusion, from the study, there is no doubt whatsoever that product
diversification is an important and vital corporate strategy option by which on
organization can achieve its growth and overall objective
TABLE OF
CONTENT
PAGE
TITLE
PAGE I
CERTIFICATE
II
DEDICATION III
ACKNOWLEDGEMENT IV
ABSTRACT V
TABLE
OF CONTENT VI-VII
CHAPTER ONE: INTRODUCTION
1.1 BACKGROUND TO THE STUDY 1
1.2 STATEMENT OF RESEARCH PROBLEM 2
1.3
OBJECTIVE OF THE STUDY. 2
1.4 RESEARCH QUESTIONS 3
1.5 STATEMENT OF RESEARH HYPOTHESES 4
1.6 SIGNIFICANCE OF THE STUDY 4
1.7 SCOPE AND DELIMITATION OF THE STUDY 5
1.8 DEFINITION OF TERMS 5
CHAPTER TWO: LITERATURE REVIEW
2.1
INTRODUCTION 8
2.2
INSTITUTIONAL TYPE AND FIRM SIZE
DIFFERENCES
AND DIVERSIFICATION 9
2.3
CONCEPT OF DIVERSIFICATION 10
2.4
REASON FOR DIVERSIFICATION 12
2.5.
THE BASIC DIVERSIFICATION STRATEGIES 13
2.6
WAYS BY WHICH DIVERSIFICATION EXTEND
THE CORE BUSINESS OF THE
ENTERPRISE 16
2.7
RATIONALIZING DIVERSIFICATION AND INTEGRATION
17
2.8
APPROACHES TO DIVERSIFICATION 24
2.9
FACTORS THAT NECESSITATE THE USE ACQUISITION
APPROACH 25
2.10
ACQUISITION SCREENING CRITERIA 32
2.11
STEPS OR STAGES INVOLVE IN ACQUISITION PROCESS 33
2.13
INTERNAL VENTURING 34
2.14 OBSESSION WITH DIVERSIFICATION-BE ALL WE CAN
POSSIBLY BE-IN THE DECADE’S FIRST HALF 36
CHAPTER
THREE: RESEARCH METHODOLOGY
3.1 INTRODUCTION 40
3.2 RESEARCH
DESIGN 40
3.3
RESTATEMENT OF QUESTIONS AND
HYPOTHESES 41
3.4 NATURE
OF DATA COLLECTION
3.5 POPULATION
OF THE STUDY 43
3.6 SAMPLE
AND SAMPLING TECHNIQUE 43
3.7 INSTRUMENT
OF ANALYSIS 44
3.8 PROBLEM
ENCOUNTERED ON THE FIELD 45
CHAPTER FOUR: DATA ANALYSIS AND PRESENTATION
4.1 INTRODUCTION 46
4.2 ANALYSES
OF RESPONSES 46
4.3 CHARACTERISTICS
OF SAMPLES 47
4.4 CLASSIFICATION
OF STATEMENT 50
4.5 PROLBEMS
FACED BY THE ORGANIZATION 58
4.6 SUGGESTED SOLUTION TO THE PROBLEMS 58
4.7 TESTING OF HYPOTHESIS 59
CHAPTER FIVE: SUMMARY, CONLCUSION AND RECOMMEDNATIONS
5.1 INTRODUCTION 67
5.2 SUMMARY OF FINDINGS 67
5.3 CONCLUSION 68
5.4
RECOMMEDATION 68
5.5 SUGGESTION FOR FURTHER STUDIES 69
BIBLIOGRAPHY
70
QUESTIONNAIRE 72
CHAPTER ONE
INTRODUCTION
1.0 BACKGROUND TO THE STUDY
Diversification
is one of the growth strategies available under the corporate level strategy,
along side with concentration, merger and acquisition, strategic alliance etc.
Diversification
occwurs when a company adds to its business either in term of consumer
function, consumer group or alternative technology [Oyedejo, 2004]. According
to De Wit and Meyer, (1998) diversification
occur when a corporation enter by starting up new activities [internal growth]
or buying it lead to expansion of
business and thereby ensures synergy and increase in profitability of organization.
It is also help organization to spread their risk. The intense demand to search
for growth opportunities and cost efficiencies has encouraged organization to
pursue Diversification Chandler, [1962].
According to
Thomas and Hunger (2008), diversification is explained to be when an industry consolidates
and becomes mature, most of the surviving firms have researched the limits
of growth using vertical and horizontal
growth strategies. Unless the competitors are able to expand internationally
into less mature markets, they may have no choice but to diversify into
different industries if they want to continue growth.
Diversification
can take various forms. The organization that produce product that serve
customer group, customer function,
alternative technology diversely related. e.g. Unilever Nig. Plc, the producer
of food product, and home and personal care product. How organization can also decide to produce product that
dose not serve the same
customer group, customer function & alterative technology U.A.C.
This research
work shall be focused on concentric or related diversification using Coca cola Nigeria Plc as case study .As it
diversify into the production of Table water and Juice (five alive).
1.1 STATEMENT OF RESEARCH PROBLEM
The intense
demand to search for growth opportunities and cost efficiency has encouraged
organization to pursue diversification (Chandler, 1990). This research work intends
to investigate whether diversification as it claim can increase long term
profitability of the organization, among others. It also intends to solve the
problem of how growth and cost efficiency can be achieved. The aforementioned
make this research work on impact of product diversification on organizational growth
for investigating and researching on.
1.2
OBJECTIVES OF THE STUDY
Every research
effort intends to solve and to make recommendations on a given phenomenon.
Better still, it is meant to confirm, re-establish or validate known table or thesis.
Specifically, the study is meant to achieve the following
i.
To know why product diversification
occur.
ii.
To know the merits and demerits of
product diversification.
iii.
To give a feasible look to the concept
of diversification.
iv.
To give a detailed and in-depth look
into the types of the concentric or related diversification as practiced by the
coca-cola Nig. Plc. Which diversifies into production of table water.
v.
To study the types of diversification
report for long profitability in the industry.
vi.
To examine if risk can be spread using
diversification.
1.3 RESEARCH QUESTIONS
1. Does the Coca Cola Nig Plc adopt the product
diversification strategy?
2. Does technological branching affect the
growth of the firm?
3. Does product diversification lead to the
spread of risk of the firm?
4. Is synergy one of the benefits derived by
the firm through the use of the product diversification strategy?
5. Did the firm adopt the internal venturing approach
to diversification strategy?
6. Did the firm adopt the acquisition approach
to diversification strategy?
7. Is there a direct relationship between
product diversification and growth of the firm?
8. Does the product diversification strategy
help the firm to overcome the growth limit of its economic and industrial
environment?
1.4 STATEMENT OF RESEARH HYPOTHESES
Based on the
purpose of the study, the problems identified and the questions asked the
following hypothesis shall be tested.
HYPOTHESIS
1
H1: That diversification is a strategic posture
for rebuilding and revitalizing organization businesses.
HO That diversification is not a strategic
posture for rebuilding and revitalizing organization businesses.
HYPOTHESIS
II
H1: that there is direct relationship between
product diversification and growth of the firm.
H0: that there is no direct relationship between
product diversification and growth of the firm.
1.5 SIGNIFICANCE OF THE STUDY.
The significance
of the outcome of this study cannot be over emphasized as the result will
showcase to different industrial sectors, how product diversification could be
effective in business operation. It would also reveal the various methods and
approaches to diversification.
The study has these
major areas significance.
Ø To
contribute to or expand the frontiers of the existing knowledge on product
diversification
Ø To
sustain existing knowledge and launch a new era for future discourse on the
area of study.
Ø To
highlight the usefulness of diversifications in business.
Ø To
awaken the consciousness of business owners on the need to adopt
diversification strategy in their business operations.
1.6 SCOPE AND DELIMITATION OF THE STUDY
This research is
intended to analyze the impact of product diversification strategy as adopted
by Coca Cola Nig. Plc which diversifies into the production of table water (Eva
water) and the production of juice drink (five alive).
As the case
study of the project, emphasis shall be laid on the Coca Cola Nig Plc.
1.7 DEFINITION OF TERMS
Corporate
Level Strategy: Is the senior management’s game plan for
directing and turning the organization as a whole. At the corporate level,
strategies refer to the broad line decisions taken at the top level of the
entire organization regardless of the number of the different industries in
which it competes or how many divisions or business unit has.
Growth
strategies: Are strategies used to pursue the growth
objective. It includes concentration, diversification, and vertical, integration
strategies as well as internal growth, acquisition, merger, joints venture
strategies and product and market development.
Diversification:
This occurs when a company adds to its business either in terms of customer
functions, customers groups or alternative technologies. It is used to identify
the directions of development, which take the organization away from its
present markets and its present products at the same time.
Related
or Concentric Diversification: Here a firm maintained
two or more lines of business, which although distinct, still possess some kind
of strategic fit. Two business are related if resources can be productively
between them.
Vertical
Integration: This is a type of related
diversification that consists of backward integration and forward integration.
Backward
Integration: This refers to development into
activities which are concerned with the inputs into the company’s current
business. In other words, the company goes further back in value chain of
producing its own raw materials, components, machinery, and making its own
designs producing its on finance
Forward
Integration: This refers to development into
activities which are concerned with a company’s outputs, that is, the company
goes further forward in the value chain by creating/producing its own
transport, distribution, repairs and servicing
Horizontal
Integration: This refers to development into activities which are competitive
with or directly complementary to, a company’s present activities.
Acquisition:
This
is an approach to diversification which occurs when a company purchases an
established company facilities, equipment, and personnel.
Internal
Venturing: This approach involves a company
starting a business from the scratch including building facilities, purchasing equipment,
recruiting personnel, opening up distribution channels/outlets, and so on.
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