Effects of Diversification Strategies on Firm’s Financial Performance: A Case Study of Zambia Postal Services Corporation

Abstract

The research was devoted to discussing the effects of diversification on a firm’s financial performance a case study of Zambia Postal Services Corporation. The study was guided by 4 objectives; to identify the diversification strategies used by the Zambia postal services cooperation; to determine the effect of diversification strategies on the financial performance of the Zambia postal services cooperation, to assess the effect of the types of diversification on the financial performance of the Zambia postal services cooperation and to explore the extent to which diversification affects the financial performance of the Zambia postal services cooperation. The study used Qualitative Research Design in which 20 senior and middle Management employees of Zampost were purposively selected for interviews. The study findings established that Zambia Postal Services Corporation used concentric and horizontal diversification strategies. Diversification strategies can have either a positive or negative effect on the financial performance of the cooperation. To a greater extent, diversification affects the financial performance of the Zambia Postal Services either positively or negatively. Some of the recommendations arising from the study are that organizations willing to achieve economies of scope and redeem their financial position in the face of downturn or decline in product life cycle should diversify their product to better meet customers’ demands, profitability, expansion as well as increase performance since diversified organizations are discovered to perform better than undiversified ones; organizations should identify their rare and inimitable capabilities to achieve economies of scale and outsmart competitors and that research and Development centers should be developed for proper channeling of resources, identification of opportunities as they arise in the business environment and selection of the best strategic options.