Corporate Governance and Diversification Strategy by Icea Lion Group in Kenya

Abstract

Strategy is one of the games that companies put in place to ensure that they are ahead of the pack. With the fierce competitions in the globe, companies are required to establish a paradigm shift to gain competitive advantage in the market. Diversification strategies ensured companies exploited fully their resources to attract new markets. Diversification strategy meant organizations make optimal use of resources for profitability. The presence of effective corporate governance principles in organizations ensures that the managements do not pursue strategies that would deviate from benefiting the shareholders. The central objective of corporate governance was the facilitation for good and diligent leadership to ensure the organization’s long-term success. The study sought to establish how corporate governance influences the diversification strategy at ICEA Lion Group. This was a case study with data collected by interview guides and analyzed using content analysis. The respondents were senior managers who understand the business and the research variables. The study established that corporate governance aspects ownership structure of the company, board structure and the board size influence the diversification strategy decisions. The board as the ultimate decision making body approved all the diversifications strategies pursued by the company. The non-executive directors have upheld quality corporate governance, which ensured strategic guidance to the management. In conclusion, corporate governance continued to create a conducive environment for good business practices. Good corporate governance structure continued to attract attention due to its positive impact on the success of businesses and society. The study recommended that the board should consider gender diversity in the board and seek to have term limits for the board members. The study established that the company adopted diversification strategy as one of the strategies to add value to the shareholders wealth. However, it is recommended that proper guideline be put in place to ensure continuous review of this strategy to see how it can benefit the company more.