The Impact of Diversification On Financial Performance

The main objective of this project was to determine the impact of diversification on financial performance so as to enhance the effective implementation of the diversification strategy. The central issue that gave rise to this research is the increased attention and growing popularity of diversification among Zimbabwean companies. This study adopted the descriptive research methodology to answer the research questions which were both qualitative and quantitative in nature. Both primary and secondary sources of data were used in this study with the aid of eviews8 and stata11 packages to determine relationships between the variables under review. The variables included diversification as an independent variable and operating costs as well as operating profit as dependent variables. The research key findings show that diversification positively impacts operating cost by 49% and profitability by 66% at TelOne. From questionnaire and interview data analysis it has been found that the benefits of diversification outweigh its costs. Collective marketing and continuous product analysis were considered to be best practices in diversification.