| dc.description.abstract | Fierce global competition demonstrates the need for an expanded paradigm to understand how
competitive advantage and firm performance is achieved. Using diversification strategy,
companies may be able to utilize all its capabilities or resources, and be able to attract new
business from market segments not catered for earlier. However, absence of corporate
governance control will lead managers to pursue strategies that may deviate from the interest of
the shareholders thus the need for effective implementation of corporate governance in all
organizations whether public or private. Thus corporate governance is increasingly being
recognized as an important aspect of an efficient and effective board of directors, enhancing
investment performance. The objective of the study was to determine the influence of
diversification strategy on corporate governance at the Simba Corporation Limited. The research
design used was a case study. The study used primary data which was collected using an
interview guide. The respondents were the head of departments for strategy and business
development, and the executive directors. The data obtained was analyzed using content
analysis. The study found out that ownership structure, board structure, board size and
institutional investors influence the corporation diversification strategy and corporate
governance. Ownership structure ensures that there is enhanced corporate governance quality as
various stakeholders expectations have to be proactively managed. Managers undertake sound
business decisions for the corporation through implementation of ethics policies, monitoring and
control frameworks that are technology and risk based have been put in place by the
shareholders. The board of directors was found to be made up of both internal and external
members. Diversification strategy of the corporation was sanctioned by the board and therefore
the ultimate effect of diversification strategy pursued by the organization is shouldered by the
board. Non-executive members were found to have upheld the corporate governance framework
that ensures the strategic guidance of the company, the effective monitoring of management by
the board, and the board’s accountability to the company and the shareholders. The study found
out that the corporation smaller board was effective since they experience fewer communication
and coordination problems and this has helped the corporation pursue corporate governance and
diversification strategy. The study recommends that recommends that in order to have proper
monitoring by independent directors, the corporation should require additional disclosure of
financial or personal ties between directors (or the organizations they work for) and the
company. Further the non-executive directors need to be trained on internal corporate
governance mechanisms. | en_US |
