The effect of outsourcing decisions on organizational performance : a case study of the brewing industry in Kenya
Date
2013-08
Authors
Irumbi, Elizabeth Nyakaru
Journal Title
Journal ISSN
Volume Title
Publisher
Strathmore University
Abstract
This study is designed to examine the relationship between outsourcing and organizational
performance at East Africa Breweries Limited (EABL), a leading alcohol and non-alcoholic branded
company in Kenya. For the purpose of analysis, organizational performance in this study refers to
profitability, cost efficiency and productivity. Outsourcing is a management strategy by which an
organization delegates major, non-core functions to specialized service providers.
The main objective of carrying out this study is to establish the extent to which EABL's outsourcing of
non-core functions affects its organizational performance. The researcher applied a correlation
research design which is quantitative. The researcher analyzed the relationship between outsourcing
and organizational performance to establish whether there is a positive or negative correlation and
subsequently measured the effects on organization performance in terms of profitability, productivity
and cost efficiency.
The targeted population comprised of all senior management staff at EABL. The researcher collected
data from the population through questionnaires and interviews. The results from the data analysis
were interpreted and presented in the form of tables, graphs and continuous pros.
The results of the data analysis showed that outsourcing decisions are implemented mainly as cost
cutting business strategies. This is based on the respondents majority support for outsourcing decisions
to improve on cost efficiency and OLS results indicating correlation between outsourcing and cost
efficiency as most practical and achievable.
The researcher recommends that other than cost savings, companies should explore other strategic
reasons for outsourcing decisions including access to capabilities for instance human talent
(intellectual property), operational systems and processes, or physical resources.
Description
A thesis submitted in partial fulfillment for the award of Masters of Commerce Degree
Keywords
outsourcing, organizational performance, Brewing industry, Kenya