Diversification Strategy and Profitability of Selected Food and Beverage Firms in Lagos State, Nigeria

Abstract

The rapid pace of competition in today’s global business environment had prompted the need for the Food and Beverage (F&B) firms around the world to produce strategies on how best to improve performance through the provision of product varieties and the need for expansion through an increase in market share, productivity, and full utilization of resources at their disposal. Despite this awareness, a persistent decline was observed in the organizational in terms of profitability and their performance outlook remained poor. The study, therefore, examined the effects of diversification strategy on the profitability of selected F&B firms in Lagos State, Nigeria. Therefore, this study examined the effect of diversification strategy and profitability of selected food and beverage firms in Lagos State, Nigeria. The study adopted a survey design, the population is given as 12, 495 regular employees of six selected F&B firms in Lagos State, Nigeria. The research advisor sampling table was used to select a sample size of 491 from the population while data was collected using a valid and reliable questionnaire with a Cronbach alpha value greater than 0.7. The data were analyzed using descriptive and inferential tools. Multiple Regression Analysis was used to determine the impact of the variables using the Statistical Package for Science Solutions (SPSS) version 24. Diversification has a significant effect on profitability (β = 0.947, t = 47.805, R2 = 0.839, p-value = 0.001). The study concludes that diversification has a significant effect on profitability of selected Food and Beverage (F&B) firms in Lagos State, Nigeria. Thus, the study recommends that Food and Beverage firms can also explore new distribution channels, invest in marketing and branding, and enhance their operational efficiency to achieve better profitability. It's also essential for them to keep track of the latest market trends and consumer preferences to develop products and services that meet the evolving needs of their customers. Keywords: Competitive Advantage, Diversification, Food and Beverage Companies, Performance Outlook, and Profitability