Diversification Strategies, Environment and Growth of Food Processing Companies in Nairobi County, Kenya

Abstract

The purpose of this study was to determine the influence of diversification and environment on growth of Kenyan food processing companies. The specific goal of the research was to determine if diversification strategies have a positive influence on growth of food processing Industries, to establish whether environment as a moderating factor has an impact on growth in food processing industries and to find out how food processing industries in Nairobi have adopted various kinds of diversification and how it has impacted on their growth. This research applied the cross-sectional research design. This study targeted food processing companies with a population of 64 companies in Nairobi County. Semi structured questionnaires were used in data collection and the qualitative data obtained was analyzed using both descriptive and inferential statistics. The percentages, standard deviation, mean as well as frequency were used. The data was then presented using charts and tables. The inferential statistics used was multiple linear regressions to establish the relationship existing amid predictor and dependent parameters. From this research, it was established that Concentric, Horizontal and Conglomerate diversification strategies have been adopted by the Food Processing Industry. It was established that the companies developed products and services related to the existing ones. The companies market their new services that have the technological synergy with the current ones while at the same time introducing new services that are very appealing to the customers. The research also discovered that the diversification strategies influence food processing industries. Introduction of the new product into the market by the companies enabled companies to expand the geographical reach while increasing the economies of scale. Due to this, the company increased its sale volume due to introduction of the firms with related technical economical capabilities which increases the market share. This increased overall profit of these companies. This research proposes that the firms should arise with the clear diversification strategy. This can be achieved by setting clear strategic diversification goals, clearly setting environment to be used to measure growth in the companies. The firm should also involve all employees from the earliest stage; this increases the accuracy and compliance rate of the research.