Factors influencing outsourcing decision making of non-core functions in the pharmaceutical industry in Kenya: a case of GlaxoSmithKline
Date
2017
Authors
Kagambi, Claire
Journal Title
Journal ISSN
Volume Title
Publisher
Strathmore University
Abstract
GlaxoSmithKline bas in the recent past embarked in outsourcing most of the functions that are deemed to be non- core to the business. There has been reported challenges' in regard to outsourcing experiences in the company. Both internal and external auditors attributed the challenges of outsourcing decision on lack of employee competence in handling non-core functions, increased costs on non-core functions which could be as well outsourced at a cheaper rate and lack of innovative measures set by GlaxoSmithKline. The aim of the study was to review the general factors influencing outsourcing decision making of non-core functions in the pharmaceutical industry in Kenya. Specifically, the study aimed; to determine the effect of employee competence cost reduction and innovativeness on outsourcing decision making of non-core functions in the pharmaceutical industry. This study employed explanatory research design in this study. The company has 116 employees in the management level who acted as the study target population. A total number of90 employees were sampled. This study utilized the simple random sampling technique where every element in the sampling frame had an equal chance of being picked as stratified. In the study a questionnaire was used as the sole primary data collection instrument. The data was qualitative in nature. The study utilized quantitative method of data analysis. Pearson correlation was used to test for relationship between the independent variables. Factor analysis was further used to explain con-relations among multiple outcomes. The study found that employee competence had an effect on outsourcing decisions as it enabled the organization to engage highly skilled personnel to efficiently handle employee issues. The study also found that cost reduction was a determinate to outsourcing decisions in GSK. The findings from the study show that innovativeness had an effect on outsourcing decisions as the outsourced companies helped GSK to concentrate more on innovation of products and other related services. The conclusion, five most critical factors influence outsourcing decision making of non-core functions were established as follows: level of employee specialization, employee time worked, new product development, exploring new markets and operational cost of the term. The findings show that several factors constitute outsourcing decision making of non-core functions in pharmaceutical industry in Kenya. The study noted that Glaxosmithkline applies outsourcing decision making of non-core functions. The study recommends that managers in GlaxoSmithKiine need to ensure that research, development and market investments are concentrated in areas of a firm's established competence to improve employee competence development related to the core business. To increase resources, to share risks or to lower costs, GlaxoSmithKline needs to collaborate with other firms or organizations in product development. This collaboration can be in the form of, for example, partnership, joint ventures, networks, research contracts or alliances. The GlaxoSmithKiine management needs to enhance technology and innovative work fonns as the successful improvement of products and services is inextricably intertwined with proficient and success and in a perfect world streamlined development of procedures that deliver them.
Description
Submitted to the faculty of Strathmore Business School in partial fulfillment of the Masters of Business Administration Degree