The Effect of Diversification Strategy on Organizational Performance
Moruff Sanjo Oladimeji, Itohowo Udosen
Klíčová slova
diversification strateg y, performance, organization, profitability, competitive advantage
Abstrakt:
In today’s dynamic and turbulent business environment, diversification has become a catalyst for
achieving competitive advantages and the creation of synergy in market operations. This is because
manufacturing companies operate in a highly competitive environment, especially among
firmsthat produce the same or similar goods. This study examines the effect of a diversification
strategy on an organization’s performance in the manufacturing sector. A quasi-experimental
study with an ex-post facto research design were used for the study. The respondent populationconsists
of thirty-one organizations listed in Nigerian Stock Exchange (NSE) for a period
of 20 years (1997-2017), while the sample size is comprised of six organizations purposively
selected based on their life-span and level of diversification. Three hypotheses were formulated
and tested using ratio analysis, while performance was measured in terms of ROA, ROI and
ROE; organization size, organizationvalue and growth; as well asleverage and liquidity. Data
was drawn from the financial reports of the selected organizations, with E-View version 9 used
for the data analysis. The study revealed that diversified organizations outperformundiversified
ones in terms of ROA and ROI. While related diversified organizations were discovered to be
positive in terms of ROA (26.8%), unrelated and hybrid diversified organizations were positive
in ROE (81.7% and 20.5%). A diversification strategy leads to growth and profitability (20%) and
a strong capital structure to cover liabilities (26%). The study concluded that diversification is a
strategic tool for achieving strategic relevance and spontaneous performance.
Celý článek ke stažení:
 The Effect of Diversification Strategy on Organizational Performance [PDF soubor] [Velikost souboru: 480.42 KB]
 10.7441/joc.2019.04.08
Oladimeji, M. S. & Udosen, I. (2019). The Effect of Diversification Strategy on Organizational
Performance. Journal of Competitiveness, 11(4), 120–131. https://doi.org/10.7441/joc.2019.04.08
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