Value Chain Analysis and Performance of the Kenyan Good Food Company

Abstract

The purpose of this research project was to determine whether value chain analysis led to increased organizational performance in food production companies in Kenya. The study shows the importance of this sector and the number of participants who can benefit from the findings on this research project. The study was carried out on the Kenyan Good Food Company which is in the food production sector. The research project examined the food production sector globally and locally. During this examination, it was noted that global food production companies are performing better than their local counterparts. The better performance was attributed to the fact that global food companies managed their value chains better. The research question for this study was ‘Does value chain analysis lead to increased organizational performance?’ The theories examined in the literature review were the Resource Based View theory and the Organizational theory. Literature on the value chain analysis was examined. Porter’s value chain model was chosen in this study as opposed to the value chain advanced by Hines. The reasons for choosing the value chain advanced by Porter have been outlined in this project. Other studies on the value chain were examined as well. These included local and international studies. For the research design, the case study approach was chosen as it allowed for a deeper analysis of the research question. In the data collection, the study made use of both primary and secondary data. The primary data collection was done through interview guide and observation. The respondents were the HODs of various departments in the company. This method of data collection was chosen as it allowed for further probing of respondents. The response rate was 100% as all managers availed themselves for the interview. The observation phase of the data collection involved observing the operations at the organization for a period of one week. Secondary data was extracted from the company’s financial reports and customer satisfaction surveys. The data was then analyzed using content analysis. The study findings show that the company did not have a formal value chain in place however there were elements of the value chain present. Further, the study shows that there is a relationship between value chain analysis and performance of an organization. In the case of the Kenyan Good Food Company, it was discovered that the company was not performing well and this was attributed to the management of the value chain. The financial reports reveals that the company’s cost of sales increased at a high rate from January – August 2016. This indicates that the cost control aspect of the value chain is not being managed well. The customer satisfaction survey revealed that out of 112 respondents, 36.61% felt that the meals were too expensive, whereas 45.54% felt that the quality of the food was low. This additionally indicates that the cost and quality aspects of the value chain are not being managed well. The study concludes that there is a relationship between VCA and performance of an organization. The study recommends that a formal value chain should be put in place at the company so as to manage the high costs experienced by TGFC. Finally, the study recommends that further research on VCA and performance should be conducted on the food production industry as a whole.