Volume 12, Issue 1 (3-2025)
J Entrepreneurial Strategies Agric 2025, 12(1): 64-72 |
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Zahedian Tejeneki R, Mojaverian S M. (2025). The Effect of Product Diversification Strategy on Creation: A Case Study of Building Food Industries in Mazandaran Province. J Entrepreneurial Strategies Agric. 12(1), 64-72. doi:10.61186/jea.2024.398
URL: http://jea.sanru.ac.ir/article-1-398-en.html
URL: http://jea.sanru.ac.ir/article-1-398-en.html
1- Department of Agricultural Economics, Faculty of Agricultural Engineering, Sari Agricultural Sciences and Natural Resource University, Sari, Iran
Abstract: (1574 Views)
Extended Abstract
Background: Knowing the behavior of investors in the stages of creating economic units is one of the first steps to solving the problems they face. Usually, investors have plans and programs for building economic units, based on which they provide the resources needed to build their units. The market situation is one of the conditions that investors pay attention to in unit construction plans. Choosing the right size of the unit, the number of products produced, and the right strategy for selling the product will greatly help in advancing the goals of the economic unit. In this regard, choosing the correct type and number of products produced by an economic unit will help considerably in attracting the target market. Product diversification strategy is one of the ways for economic units to achieve goals such as introducing the product to different markets, reducing risk, increasing market power, and reducing the probability of bankruptcy. However, the adoption of this strategy in the construction stage requires different production lines and more cost. The effects of this strategy are shown in the cost of creating the unit and the speed of completing the unit. Therefore, this study attempts to determine the effect of this type of strategy on the establishment of food and beverage industries in Mazandaran Province. The reason for choosing food industries in this study was the importance of these units in Iran's industry and their relationship with food security. Moreover, the cheapness of the raw materials of agricultural products and foreign exchange, and the lower capital required compared to other industrial units have made the food and beverage industry one of the priorities for reducing unemployment in every country.
Method: In this study, based on the level of physical progress, food and beverage industries in Mazandaran province were divided into four groups: primary, semi-developed, exploitable, and exploited. The role of influencing factors (type of activity, type of ownership, size of activity, location of activity, strategy of product diversification, and time) in the construction process of these industries was investigated using the ordered logit model and the required information was obtained from the website of the province's industry, the mining and trade organization. Mazandaran was collected in 2022.
Results: The initial examination of the estimated model shows that all three model thresholds are significantly different from each other, and the hypothesis of their equality is rejected at the 99% level. The prediction rate of the model is 60.11%, which is at a desirable level. The results of the link test (which indicates the effect of missing variables) are not significant; thus, the specified model is not problematic in terms of the selected and missing variables. The results of the ordinal logit model showed that among the variables affecting the construction process of food and beverage industries, the type of ownership had the greatest effect on the construction process. The time, variety of products, area of the unit, and place of establishment are the variables with a significant effect on the construction process. The proposed capacity, private ownership, cooperative ownership, and product diversification strategy are the variables that negatively affect the progress of construction. On the other hand, the industrial towns, Bread Biscuits Sweets activity, and the years 2007 and 2008 are the variables with a positive effect on the construction process. Furthermore, the choice of product diversification strategy by the applicants will reduce the chances of exploiting the food industry, so that the units with product variety have 6% lower chance of exploitation than the other units. The variable coefficient of the type of ownership shows that the probability of the cooperative units being placed in the preparatory group of construction is 38% higher than that of joint-stock units. In the later stages of construction, these units have less chance than joint-stock units. On the other hand, food industries with share ownership have 32.7% more chance of exploitation than private food industries. The availability of the necessary infrastructure to start activities in industrial towns increases the possibility of exploiting the food industries of Mazandaran Province, so that the chances of units whose location is in industrial towns are 13% higher than the other units. Choosing the activity of Bread, Biscuit, and Sweet products will increase the chances of using the food industry, so that the probability of completing these units is 11% higher than the other activities. A reason for this result can be the high consumption of bakery products (such as fancy bread, biscuits, and sweets) by people.
Conclusion: The results of this study show that, despite the benefits of the product diversification strategy in market development, this strategy increases construction costs and prolongs the construction process of the food and beverage industries. Moreover, the type of ownership and the type of activity are among the factors with a great effect on the construction process of food industries in Mazandaran Province. Based on the results of this research, the following are some of our suggestions: the priority of supporting the existing semi-finished units, granting new construction permits to joint-stock, private, and cooperative ownership, respectively, and providing cheap facilities for the construction of food and beverage industries. Additionally, despite the effect of the product diversity strategy in introducing the product on a wide level, this strategy increases the construction costs and prolongs the construction process of the food and beverage industries. Therefore, it is recommended that new units start working by offering products with less variety and start diversifying the product as the experience of the unit increases.
Background: Knowing the behavior of investors in the stages of creating economic units is one of the first steps to solving the problems they face. Usually, investors have plans and programs for building economic units, based on which they provide the resources needed to build their units. The market situation is one of the conditions that investors pay attention to in unit construction plans. Choosing the right size of the unit, the number of products produced, and the right strategy for selling the product will greatly help in advancing the goals of the economic unit. In this regard, choosing the correct type and number of products produced by an economic unit will help considerably in attracting the target market. Product diversification strategy is one of the ways for economic units to achieve goals such as introducing the product to different markets, reducing risk, increasing market power, and reducing the probability of bankruptcy. However, the adoption of this strategy in the construction stage requires different production lines and more cost. The effects of this strategy are shown in the cost of creating the unit and the speed of completing the unit. Therefore, this study attempts to determine the effect of this type of strategy on the establishment of food and beverage industries in Mazandaran Province. The reason for choosing food industries in this study was the importance of these units in Iran's industry and their relationship with food security. Moreover, the cheapness of the raw materials of agricultural products and foreign exchange, and the lower capital required compared to other industrial units have made the food and beverage industry one of the priorities for reducing unemployment in every country.
Method: In this study, based on the level of physical progress, food and beverage industries in Mazandaran province were divided into four groups: primary, semi-developed, exploitable, and exploited. The role of influencing factors (type of activity, type of ownership, size of activity, location of activity, strategy of product diversification, and time) in the construction process of these industries was investigated using the ordered logit model and the required information was obtained from the website of the province's industry, the mining and trade organization. Mazandaran was collected in 2022.
Results: The initial examination of the estimated model shows that all three model thresholds are significantly different from each other, and the hypothesis of their equality is rejected at the 99% level. The prediction rate of the model is 60.11%, which is at a desirable level. The results of the link test (which indicates the effect of missing variables) are not significant; thus, the specified model is not problematic in terms of the selected and missing variables. The results of the ordinal logit model showed that among the variables affecting the construction process of food and beverage industries, the type of ownership had the greatest effect on the construction process. The time, variety of products, area of the unit, and place of establishment are the variables with a significant effect on the construction process. The proposed capacity, private ownership, cooperative ownership, and product diversification strategy are the variables that negatively affect the progress of construction. On the other hand, the industrial towns, Bread Biscuits Sweets activity, and the years 2007 and 2008 are the variables with a positive effect on the construction process. Furthermore, the choice of product diversification strategy by the applicants will reduce the chances of exploiting the food industry, so that the units with product variety have 6% lower chance of exploitation than the other units. The variable coefficient of the type of ownership shows that the probability of the cooperative units being placed in the preparatory group of construction is 38% higher than that of joint-stock units. In the later stages of construction, these units have less chance than joint-stock units. On the other hand, food industries with share ownership have 32.7% more chance of exploitation than private food industries. The availability of the necessary infrastructure to start activities in industrial towns increases the possibility of exploiting the food industries of Mazandaran Province, so that the chances of units whose location is in industrial towns are 13% higher than the other units. Choosing the activity of Bread, Biscuit, and Sweet products will increase the chances of using the food industry, so that the probability of completing these units is 11% higher than the other activities. A reason for this result can be the high consumption of bakery products (such as fancy bread, biscuits, and sweets) by people.
Conclusion: The results of this study show that, despite the benefits of the product diversification strategy in market development, this strategy increases construction costs and prolongs the construction process of the food and beverage industries. Moreover, the type of ownership and the type of activity are among the factors with a great effect on the construction process of food industries in Mazandaran Province. Based on the results of this research, the following are some of our suggestions: the priority of supporting the existing semi-finished units, granting new construction permits to joint-stock, private, and cooperative ownership, respectively, and providing cheap facilities for the construction of food and beverage industries. Additionally, despite the effect of the product diversity strategy in introducing the product on a wide level, this strategy increases the construction costs and prolongs the construction process of the food and beverage industries. Therefore, it is recommended that new units start working by offering products with less variety and start diversifying the product as the experience of the unit increases.
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