Application of Outsourcing Strategy at East African Breweries Limited, Kenya

Abstract

Organizations in today’s dynamic world must stay competitive for which outsourcing strategy is a viable option. As such, outsourcing has become a common practice in the business field and managers have begun to understand that in some instances it is better to bring in services from outside to achieve quality services than to do everything on their own. The operating environment of the breweries industry in Kenya has changed considerably such that there is need to understand the outsourcing strategies of activities in the industry. This led to the analysis on the application of outsourcing strategy at East African Breweries Limited, Kenya. Specifically, the study sought to determine: the application of outsourcing strategy at East African Breweries Limited, Kenya; and the challenges associated with outsourcing strategy at East African Breweries Limited, Kenya. The study adopted a case study research design. Qualitative data was derived through semi-structured interviews and collected data analyzed using content analysis. The study revealed that EABL had outsourced transportation of products from the factory to the depots, clearing and forwarding of all international shipments, Catering, Security, Drinking water, Contracted Staff, Travel, Courier Services, Payroll Processing and IT help desk. Among the benefits of outsourcing included cost cutting, increased productivity and efficiency, spread the risks that are associated with doing business and improved customer service and operational control. However, outsourcing can lead to loss of control of the function that is outsourced by the management. The study concluded that outsourced activities are non-core to the business while some are core to the overall operation therefore outsourcing gives the company enough time to focus on the core functions of the organization to be able to meet the company objectives. The research also concluded that EABL benefits from the outsourcing strategy. Among the benefits include increased productivity and efficiency, spread of risks and improved customer service. The study recommended that the company conduct a cost benefits analysis of outsourcing process before engaging in outsourcing. The organization should develop clear criteria on the choice of the service provider and should be ready to address in details the challenges and how to overcome those challenges. The study suggested that more time should be given into this study in future in various organizations and allow comparative case study on more than one firm of similar nature and magnitude.