Determinants Of Business Diversification Of Multi-Purpose Cooperatives In Ambo Wereda, West Shoa Zone, Oromia Region, Ethiopia.

Abstract

Background: multi-purpose cooperatives member’s pool resources together; reduce costs, build capacities and thereby backup each other at the moment of great challenges. Today business organizations are working in dynamic and fast changing Business environment such as private company, corporation and cooperatives have continuously emphasized on diversifying their business activities to benefit their share holder. Objective: The objective of the study is to assess Determinants of business diversification of multi-purpose cooperatives in Ambo woreda. Method: The primary data were collected from three multi-purpose cooperatives the total population of the study include 293 multi-purpose cooperative clients, where 210 from Metti multi-purpose cooperative societies, 44 from Illammu Goromti multi-purpose cooperative societies, 39 from Utubajirenya multi-purpose cooperative societies randomly selected respondents, but 20 of cooperative clients are unwillingness to respond, key informants and focus group discussions were done with experts of cooperative office and cooperative leaders and active members. The secondary data specific to the study area were collected from documents and records of multi-purpose cooperatives. Result: The data were analyzed using descriptive statistics and binary logistic regression model. The analysis showed that only27.30% of sample respondents were use diversified business services, however 72.70% were not get diversified business services from their multi-purpose cooperatives. It also showed that six variables have a significant effect on the business diversification of multi-purpose cooperatives as the logit model shows that provision of training, trust on cooperative, inadequate capital, and absence of market information, less income of member and unfulfilled demand of members have significantly influence. Recommendation: The following points were recommended to diversify business of multi purpose cooperatives. Awareness creation Training regarding to the benefits of cooperatives and advantages of business diversification should be given to cooperatives by the concerned body. Conclusion: Trust should be developed among members and cooperative leaders. Internal capitalization concept, provision of demand driven services and delivery of market oriented information should be improved.