ABSTRACT
This research work specifically takes a look at the effect of outsourcing on business competitive positioning in the Nigeria Business Environment. A study of Nigerian Breweries Enugu. Outsourcing is defined as a management strategy by which an organization delegates majors, non-core functions to specaiilzed and efficient service providers. It is one practice that is currently shaping the way companies do business around the world. The main objective of this study is to find out if there are problems common with outsourcing as a business practice and also to find out the core reasons why companies outsource the production of some of its goods and service in their bid to achieve competitive advantage. Using a descriptive method, the result from the findings revealed that outsourcing could spur innovation. It can equally positively influence cost and quality. Outsourcing could equally be a strategic option for keeping tab with the latest developments in technology. Based on the results obtained, a number of recommendation were put forth by the researcher. Chief among them remained that companies must not outsource its strategically relevant processes. Key processes that hold keys to its competitive advantages must be performed in house. Moreover, strategic mutually benefiting relationships must be forged between the company and its service providers. In essences, outsourcing aids in business competitive positioning.
TABLE OF CONTENTS
Title Page i
Approval Page ii
Dedication iii
Acknowledgment iv
Abstract v
Table of Contents vi
Chapter One
Introduction
- Background of the Study 1
- Statement of the Problem 4
- Objectives of the study 5
- Scope of the study 5
- Research Questions 6
- Limitations of the study 7
- Definition of Terms 8
References
CHAPTER TWO
- Literature Review 14
- Rationales for Outsourcing 18
- Types of Outsourcing 20
- Pricing Decisions in Outsourcing 24
- Other Strategic Issues in Outsourcing 26
- Hidden Costs in Outsourcing 29
- Process of Outsourcing 31
- Key Skills in Outsourcing Arrangements 32
References
CHAPTER THREE:
Research design and methodology
3.1 Research Design 36
3.2 Area of the study 36
3.3 Population of the study 37
3.4 Sample and Sampling Procedure 37
3.5 Instrument for Data Collection 38
3.6 Validity of the Instrument 39
3.7 Reliability of the Instrument 40
3.8 Method of Data Collection 41
3.9 Method of Data Analysis 41
References
CHAPTER FOUR:
Data presentation and Analysis
- Presentation and Analysis of Data 44
- Summary of Findings 55
CHAPTER FIVE:
Discussion of Result, Conclusion and Recommendations
- Discussion of Result 57
- Implication of the Research Findings 61
- Conclusion 65
- Suggestion for Further Studies 66
- Recommendations 67
- Contribution to Knowledge 70
Bibliography
Appendix
CHAPTER ONE
INTRODUCTION
1.1 BACKGROUND OF THE STUDY
Every country has its own business environment, just as every organization has its own set culture and business surroundings. Nigerian is one of the country that has its way of business, as far as the economy and business of Nigeria is concerned, the country has a fastest growing economy and is an attractive business location. Nigeria has been one of the most prominent members of the common wealth nations and is listed among the other countries.
Nigeria is one of those countries which rely heavily on their natural resources especially oil. The country provides an attractive place for investments in its different business sectors.
Starting up a business is a very complex matter. These are many factors which need to be taken into consideration in order to improve the competitiveness of the business operations to many sensitive issues. For this purpose, businesses are set up in order to achieve a given set objectives. Business requires profit making, survival, social responsibility; profit is the main motive of business and survival becomes most paramount amidst stiff competition. There is now an exponential increase in competition. Organization are now charged with the responsibility to continually find better ways to compete against lower labour cost, lower material cost, faster invocation, greater efficiency, higher quality and responsiveness to customers. All these challenges follow the forces of free enterprises and competition that require organization to either change or cease to exist.
A company therefore, cannot talk of existence without due regards to achieving a form of competitive advantage or another over other companies within the same industry. A company achieves an advantage over others when it can produce desired goods and services effectively and efficiently. This in turn depend on how the company perform with regards to driving quality up, cost down, driving increased speed and flexibility companies now consider bench marking against world class. Outsourcing becomes one strategic option that a winning company must consider. A company outsource in order to save on production cost and time. This becomes a solution for companies faced with challenges relating to higher cost of obtaining required raw material, high labour cost – among other things. Outsourcing avails organizations the opportunity to concentrate her core competencies on definable preeminence business area and provide a unique value for customers. Companies now outsource everything ranging from office work to the production of its basic component parts. Apart from cost considerations, other companies outsource in a bid to ensure better quality as well as ensuring faster new product development. Outsourcing then becomes one effective means for ensuring sustained competitiveness especially for companies that want to compete against other global players.
1.2 STATEMENT OF THE PROBLEMS
Crafting a wining strategy has become very critical to the survival of any business today. In a five year study conducted by Nitin Nohura, Willam Joyce and Bruce Roberts on called the evergreen project. They concluded that companies that competitive advantages over others excelled in four primary management practices; strategy, execution, culture and structure. Strategy comes top because it clearly defines the means to the end. The growth and expansion of any business requires that the company achieve a competitive advantage. Outsourcing becomes one strategic way to position one’s company to complete successfully.
This research work specially takes a look at the effect of outsourcing on business competitive positioning in the Nigeria Business Environment. It seeks to find out the core reasons why companies outsource the production of some of its goods and services in their bid to achieve competitive advantage. To this end, the researcher would want to know; what really is outsourcing? how do they outsource? Are there some challenges to outsourcing? Are there any effect of outsourcing on business competitive positioning? Are there any pitfalls to outsourcing?
1.3 OBJECTIVE OF THE STUDY
In line with the core objective of this research work, the researcher would want to find out the following and many more:
- To know the core reasons why companies outsource.
- To know if there are problems common with outsourcing as a business practice.
- To know if there are peculiar challenge of outsourcing in the Nigeria context?
- To proffer solutions to such challenge if they really exists.
1.4 SCOPE OF THE STUDY
The success of any business rests on its ability to position itself competitively in the market place. Outsourcing remains one means to the end. Others could be by means of mergers and acquisition, joint venturing, integration, strategic alliances, low cost, differentiation – among others.
The work is however restricted to outsourcing as a means of achieving this competitive positioning in Nigeria business environment using a study of Nigeria Breweries in Enugu State, South Eastern Part of Nigeria.
1.5 RESEARCH QUESTIONS
To address this research problem, it is necessary to build a framework that will facilitate our understanding of what outsourcing is, as well as its effect on business competitive positioning in Nigeria business environment.
For the purpose of this study, the following research questions are asked:
- What are the core reasons why businesses outsource?
- Are there some inherent problems connected with outsourcing?
- Are there some challenges connected with outsourcing in the Nigeria
- If there are some identifiable problems, how can they be solved?
1.6 LIMITATIONS OF THE STUDY
This research work is however subject to some limitations that made the findings not as extensive as intended. These limitations affected the sample size as the relative thoroughness involved in the entire exercise. Briefly, these and many more are some of the them:
- Company Policies at Enugu Breweries: The policies at the breweries was quite challenging. As a policy, formal interview of any kind is never granted to anyone. This was a big challenge. But the researcher made all efforts necessary to ensure the success of the exercise. Informal oral interview were mostly used as only a few accepted to collect questionnaire at their own risk.
- Time: time too, was a big challenge to the researcher. Having to combine this project with regular academic work was very challenging. This factor affected the sample size used.
- Money: There was also the problem of lack of money. Because of this single factor, many things that could have been done were either not adequately done or entirely left out. It affected the number of times trip were made to the company to personally observe the respondents.
1.7 DEFINITION OF TERMS
During the course of preparing this thesis, a number of terms and terminologies used are worth giving their simple definitions. The various concepts used are defined as follows:
- Effectiveness: A measure of goals that manages set for themselves and how they are able to achieve the goals.
- Efficiency: An ability to achieve a given goal or set of goals with minimal resources. These resources comprising of man, machine, money and materials.
- Innovation; The process of creating new goods and services or improving existing goods and services.
- Benchmarking; A business practice of modeling a particular business process against the leaders within the industry or industry’s best practice.
- Outsourcing: the processing or business practice of contracting out previously in house produced goods and services.
- Competitive Advantage: An operative
advantage a company has over another with responsiveness to customers.
- Merger: A business practices whereby two formerly independent business entity comes together to form a single business unit.
- Acquisition: A takeover of one company by another bigger one to achieve a stated objective.
- Joint Venture: The pulling together of resources by two companies especially n international business to achieve a stated objectives.
- Integration: A business practice where a company extends its competitive and operative scope within the same industry- backward into input and component or forward into selling and distribution.
- Differentiate: A business practice of distinguishing a company’s product for those of another in order to achieve competitive advantage.
- Policy: A guide to actions and decisions that affects the organization and its goals attainment.
- Business Objective: An objective is a form of goal which a company has specified and is usually time bound.
- Competitive: Sellers and manufacturers of the same line of product within an industry.
- Strategy: A formal statement of long-term objectives and adoption of plans to achieve competitive advantages.
- Diversification: A business practice of extending the scope of a business beyond the industry where the business currently operates.
- Industry: A good of business involved in the production of a given kind of product and services.
- Product: A term used to denote goods and service produced by a company.
- Business: An organization that exists to produce goods and services to satisfy needs and wants.
- Restructuring: A business practice of reducing the number of workers in an organization in order to reduce operating cost.
- Empowerment: A business practice of expanding employees’ knowledge, task and decision making responsibility.
- Overhead: These are all expense not directly traceable to par unit output.
- Core competency: An activity that a company is particularly good at performing in which it must not contract out.
- Downsizing: A process of eliminating managerial and non-management position to achieve a cost reduction.
- Off shoring: Outsourcing the production of a particular goods services to locations outside the country of the business
- Near shoring: The contracting out of a business process or product location near the country of the business.
- Management: the planning and deployment of resources required to achieve a specific organizational goal.
- Constraints: A factor or thing that limits that ability of a manager in achieving his goals. They are boundaries within which the manager must make his decision.
- Risks: A possibility of chance that something other than the one planned will happen.
- Organizational Culture: That widely shared values that provide coherence and cooperation to achieve a common goal.
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