Diversification strategy and performance of radio Africa limited in Kenya

Abstract

This study focused on the adoption of Diversification as a strategy at Radio Africa Limited in Kenya and its effect on the organization’s performance. Turbulence in the business environment has led to companies looking for various ways to retain their competitive edge, and sustain their businesses. In the fight for survival and relevance, some organizations have resorted to diversification strategy, corporate strategy adopted by firms that wish to grow, increase their revenues and increase their market share. This study took a critical look at the relationship between diversification strategy and performance of Radio Africa Limited in Kenya, while examining the type of diversification, measures of organizational performance, and theories relating to the subject. A case study was carried out within the organization, and data collected by interviewing the senior managers involved in research, strategy formulation and implementation as well as finance. All these executives had worked at the organization for over five years and these qualities made them suitable sources of information for the study. The performance was looked at in terms of growth in market share and revenues to the organization. Data was analysed using data analysis, and results summarized and presented in the project. Some limitations to the study were experienced in the data collection, as the organization is privately owned, and its financial reports are not in the public domain. In addition, the authorities in research for the industry have premium prices on their reports, making them largely inaccessible for scrutiny and analysis. The study concluded that there is a positive relationship between diversification strategy and performance of radio Africa Limited in Kenya. It was also clear from the research, that though the performance improved as a result of the strategy, the overall growth in revenues was decreasing at a decreasing rate. Therefore, a recommendation for further research is to establish the reasons for this decline. The findings of this study are consistent with researchers that have found a positive relationship between diversification and performance. The implications include the need for government to create an enabling environment for the growth of media outlets, and to govern the media houses’ practices for the good of the country. Another implication is on the need for organizations to diversify to promote growth in revenues, market share, sustain competitive advantage and to remain relevant.