An analysis of concentric diversification strategy on Organization competitiveness: Case of sugar firms in Kenya

Abstract

Sugar industry in Kenya has faced a lot of challenges in the recent past. Inefficient production process and stiff competition from low cost producers as well as high cost of sugar production in Kenya are among the main challenges faced by the sector. The sugar firms have resulted into using various diversification strategies in order to build a competitive edge over their rivals and try to overcome these challenges. The paper analyzes the contribution of concentric strategies on sugar firm competitiveness in Kenya. The study adopted descriptive correlational survey design and this being a census study; all the nine main sugar firms in the Kenya were studied. This being a census study, all the sugar firms in Kenya which were registered and licensed by the Kenya Sugar Board as at February 2013, and still in operation at the time of data collection in the year 2013 were studied. Using a questionnaire, primary data was collected from the production and marketing managers as key informants of each of the sugar firms. The production  and marketing managers of every sugar firm were selected to take part in the study as they are perceived to be knowledgeable on the issues under study and for which they are either responsible for their execution or they personally execute them. The data collected was analyzed using descriptive and inferential statistics. Cronbach’s alpha coefficient was used to measure the reliability of the scale, which was used to assess the interval consistency among the research instrument items. In order to determine the strength and the direction of the relationship between the study variables, the researcher used simple regression analysis. The regression results reveal that concentric strategies had overall significance impact on competitiveness (p-value = 0.000). The regression results also shows that at individual level, there was a statistically significant positive linear relationship between concentric diversification and firm competitiveness (? = 0.269, p-value 0.001) in that the p-value is less than ? (0.001 < 0.05). The study found out that concentric diversification had positive effect on sugar firms’ competitiveness in that 54.8 percent of the sugar firm competitiveness can be explained by concentric diversification (R square= 0.548).

Key Words: Concentric Diversification, Competitiveness, Sugar Firms in Kenya