CHAPTER ONE

INTRODUCTION

1.0   BACKGROUND TO THE STUDY

Diversification is one of the growth strategies available under the corporate level strategy, along side with concentration, merger and acquisition, strategic alliance etc.

Diversification occwurs when a company adds to its business either in term of consumer function, consumer group or alternative technology [Oyedejo, 2004]. According to De Wit and Meyer, (1998)diversification occur when a corporation enter by starting up new activities [internal growth] or buying it lead  to expansion of business and thereby ensures synergy and increase in profitability of organization. It is also helporganization to spread their risk. The intense demand to search for growth opportunities and cost efficiencies has encouraged organization to pursue Diversification Chandler,[1962].

According to Thomas and Hunger (2008), diversification is explained to be when an industry consolidates and becomes mature, most of the surviving firms have researched the limits of  growth using vertical and horizontal growth strategies. Unless the competitors are able to expand internationally into less mature markets, they may have no choice but to diversify into different industries if they want to continue growth. 

Diversification can take various forms. The organization that produce product that serve customer group, customer   function, alternative technology diversely related. e.g. Unilever Nig. Plc, the producer of food product, and home and personal care product.  How organization can also decide to   produce   product that  dose not  serve  the same  customer group, customer function & alterative technology U.A.C.

This research work shall be focused on concentric or related diversification using  Coca cola Nigeria Plc as case study .As it diversify into the production of Table water and Juice (five alive).

1.1   STATEMENT OF RESEARCH PROBLEM

The intense demand to search for growth opportunities and cost efficiency has encouraged organization to pursue diversification (Chandler, 1990). This research work intends to investigate whether diversification as it claim can increase long term profitability of the organization, among others. It also intends to solve the problem of how growth and cost efficiency can be achieved. The aforementioned make this research work on impact of product diversification on organizational growth for investigating and researching on.

1.2 OBJECTIVES OF THE STUDY

Every research effort intends to solve and to make recommendations on a given phenomenon. Better still, it is meant to confirm, re-establish or validate known table or thesis. Specifically, the study is meant to achieve the following

    i.        To know why product diversification occur.

  ii.        To know the merits and demerits of product diversification.

iii.        To give a feasible look to the concept of diversification.

 iv.        To give a detailed and in-depth look into the types of the concentric or related diversification as practiced by the coca-cola Nig. Plc. Which diversifies into production of table water.

   v.        To study the types of diversification report for long profitability in the industry.

 vi.        To examine if risk can be spread using diversification.

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