EFFECT OF PRODUCT DIVERSITY AND MARKET COMPETITION ON REVENUE GENERATION IN THE MINISTRY OF TRANSPORT AND INFRASTRUCTURE IN KENYA: A CASE OF MECHANICAL AND TRANSPORT DIVISION
Kabiru Charles Mwangi - Masters Student, Management University of Africa, Kenya
Dr. John. Cheluget - Lecturer, Management University of Africa, Kenya
ABSTRACT
Governments are tasked with provision of services, maintenance of law and order as well as ensuring the welfare of the citizens is addressed among other responsibilities. In order to meet their developmental goals and plans, some Governmental agencies have been mandated to collect additional revenue so as to reduce the burden on the exchequer and fast track National development. The Mechanical and Transport Division within the State Department of Infrastructure in the Ministry of Transport and Infrastructure, through an act of parliament was mandated to levy charges for provision of equipment hire and consultancy services in all counties of the country. In the recent past however, the income generated has been on a downward trend. The objective of this study was to determine the effect of selected factors on revenue generation within the Ministry of Transport and Infrastructure taking the case of the Mechanical and Transport Division. The research sought to explore the effect of product diversity and market competition as the independent variables and revenue generation as the dependent variable. The study reviewed the resource – based view theory, the systems theory and the decision theory and is anchored on the resource – based view theory as it helps to focus on organizations resources in totality. The research adopted a descriptive research design on 67 respondents from a population of 154 selected through stratified sampling method. The primary data was collected by use of a structured questionnaire and analyzed using mean, standard deviation, frequencies and percentages. The statistical analysis revealed that a unit increase in product diversity would lead to a unit increase in revenue generation by 0.187, a unit increase in market competition would lead to a unit decrease in revenue generation by 0.052. It was apparent that the regression model was statistically significant in predicting the independent variables influence on the dependent variable. The study observed that market competition had reduced the revenue collected thereby making the division more innovative. From the findings of the study through product diversification, the division has been able to increase its revenue generation and hence increased profitability though it must review its product diversification strategies as guided by market dynamics in order to ensure sustainability in the long run. It was also found that revenue generation for the division was largely dependent on the existing level of market competition and the division should monitor the market dynamics if it has to maintain sustainability in the long run. It is recommended that research and development should take a key role in guiding the diversification strategy, provision of new products and services while marketing strategies should be enhanced.
