| dc.description.abstract | Diversification is the strategy of introduction of new product line or services to the
market or reaching out to new markets with the same product with the aim of increasing
revenue base and reducing the risks of over reliance on one product. After years of losses,
the South Nyanza sugar company limited started a diversification strategy to jumpstart it
into increased revenue and profits realization. The company diversified into ethanol
production from molasses, selling molasses to distilleries and farmers, electricity
generation to power the factory plant, supply energy to the company owned staff
residential estates and the national grid; production of briquettes from bagasse, fueling
power boilers from remnant of cane fiber after juice extraction and filter press mud. This
study therefore explored whether this diversification process of Sony Sugar realized
improved performance or not. The research collected both primary and secondary data.
Primary data was in the form of interviews, which were administered to the departmental
and divisional heads while the secondary data was collected from the revised annual
plans of Sony Sugar. The study established that the diversification strategy of Sony Sugar
had improved the performance of Sony Sugar as well as increasing the operating cost of
the company. The study established that the diversification strategy had increased the
profits and revenue of the company by 30%. The study also established that the
diversification strategy had improved the value of the firm by increasing sales of the main
product of the company through smart pricing as a result of lower electricity cost due to
local production of electricity, addition of assets to the company, improved revenue
streams, created new partnerships with other organizations and development of new
products for new markets. The study recommends that that the company adopts a policy
of outsourcing or franchising the diversified operations to other organizations but
retaining the infrastructure. This will see to it that the company reduces the increasing
operation cost as a result of diversification but still make profits. The study recommends
that the company should adopt a policy of staff optimization whereby some duties of the
diversified operations and the main operation which is sugar production are merged and
assigned to the same employees. The study suggests that future researchers should do the
same study but involve the views of managing director and staff this is because they may
have more strategic and technical information on diversification in Sony Sugar. | en_US |
