EFFECTS OF UNRELATED DIVERSIFICATION STRATEGY ON COMPETITIVE ADVANTAGE OF ENERGY COMPANIES IN NAIROBI COUNTY, KENYA

Abstract

Organizations often adopt growth strategies for various reasons, such as boosting profits, supplementing income, and seizing emerging opportunities in new markets and regions. These strategies include related diversification, unrelated diversification, and multinational diversification. This study aimed to examine the influence of unrelated diversification strategies on the competitive advantage of energy companies. A mixed research design was employed, using both primary data (through questionnaires and interviews with senior management) and secondary data (from published information on energy companies). Descriptive statistics, correlation, and regression analyses were conducted using the Statistical Package for Social Sciences (SPSS). The results indicated a positive and significant relationship between unrelated diversification (r = 0.718, p = 0.000) and competitive advantage. The model's statistical significance was demonstrated by the coefficient of determination (R²) and ANOVA results, showing that unrelated diversification explains a significant portion of the competitive advantage. Based on these findings, the study recommends that energy companies diversify their product portfolios and establish policies to effectively guide their diversification efforts.