Analysis of value chain and performance of leather companies in Kenya
Date
2019
Authors
Karinga, Kennedy Mwari
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Abstract
The performance of a company is the core aspect for management and shareholders as it is a measure of success or failure and usually guides decision making within that business. Value chain analysis is a fundamental approach to conducting internal analysis of a company since it is a systematic examination and analysis of the specific activities or functions through which a firm can create value and realize growth in margins. Analysis of the value chain has significant impact on decisions regarding performance of the company or industry as the activities of the value chain have a bearing on costs. This study’s objective was to analyze the value chain and performance of the leather companies in Kenya.
The study used a descriptive research design and a census was conducted on five leather processing companies in Kenya. The study collected primary data gathered using structured questionnaires through interviews and analyzed using descriptive statistics. The research yielded both qualitative and quantitative data. The study found that the leather value chain in Kenya has three main levels of participation i.e. the raw hides and skins level, tannery level and finished leather products level. Additionally, the study concluded that the highest average gross and net margins were realized at finished leather product level, followed by the tannery level and the raw material level had the lowest gross and net margins in the value chain. Combined activity analysis of the value chain indicated that the combination would result in the lowest margins on gross margins and net margins across all value chain levels. The leather value chain in Kenya can be profitable for the investor who specializes at particular levels of activity. Cost control is invaluably critical in production planning and processing resulting in maximization of margins.
Description
A Thesis submitted in partial fulfillment of the requirements for the award of the Degree of Masters of Business Administration at Strathmore University Business School
Keywords
Value chain analysis, Performance