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Product Category: Projects
Product Code: 00009673
No of Pages: 140
No of Chapters: 1-5
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ABSTRACT
The study focused on outsourcing and organisational efficiency, with reference to Dufil Prima Food Nigeria Plc and Tummy Tummy Food Industry Nigeria Ltd in the periods under review (2005-2016). The specific objectives were to; ascertain the impact of outsourcing (hiring of temporary staff, timeliness of deliverable and quality of services/products) on the profitability of Dufil Prima Foods Plc and Tummy Tummy Food Industry Ltd; find out the impact of outsourcing (hiring of temporary staff, timeliness of deliverable and quality of services/products) on the production output of Dufil Prima Foods Plc and Tummy Tummy Food Industry Ltd and ascertain whether factors such as; high product competition in the market, inadequate supervision of contract’ activities, poor social infrastructures, information leakage, poor remuneration of contract staff, etc. affect outsourcing as a strategy for organisational efficiency.The study adopted the expost facto and survey research design, the population of the study consist of all the employees of Dufil Prima Food Plc located at Port Harcourt and Tummy Tummy Food Industry Ltd located at Nnewi. The researcher adopted both primary and secondary data. The data collated for the study were presented and analyzed with descriptive statistics such as frequency table, percentages and mean while the three hypotheses formulated for the study were tested with multiple regression analysis and Chi-square test at 5% significance level. The major findings revealed that; outsourcing (hiring of temporary staff, timeliness of deliverable and quality of services/products) has a positive and non-significant impact on the profitability of Dufil Prima Foods Plc and Tummy Tummy Food Industry Ltd. Also, Outsourcing (hiring of temporary staff, timeliness of deliverable and quality of services/products) has a positive and significant impact on the production output of Dufil Prima Foods Plc and Tummy Tummy Food Industry Ltd. It was equally revealed that factors such as high product competition in the market, inadequate supervision of contract’ activities, poor social infrastructures, information leakage, poor remuneration of contract staff, etc. affect outsourcing as a strategy for organizational efficiency in Dufil Prima Foods Plc and Tummy Tummy Food Industry Ltd. The study concluded that outsourcing as an organisational strategy have a positive impact on organisational efficiency and recommends that organisations should always maximise their productivity by outsourcing their sub-functions to outsourcing providers with the required expertise and technology needed to deliver best in class services, and the need for organisations management to regularly examine and ensure that their outsourcing providers always complied with specified standard to enhance product pleasantness and aesthetics was accentuated.
TABLE OF CONTENTS
Title Page i
Declaration ii
Certification iii
Dedication iv
Acknowledgements v
Table of Contents vi
List of Tables ix
Abstract
x
CHAPTER 1: INTRODUCTION
1.1
Background to the Study 1
1.2
Statement of the Problem 3
1.3
Objectives of the Study 4
1.4
Research Questions 5
1.5
Research Hypotheses 5
1.6
Significance of the Study 6
1.7
Scope of the Study 7
1.8
Limitations of the Study 8
1.9
Definition of Terms 9
CHAPTER 2: REVIEW OF RELATED LITERATURE
2.1
Conceptual Framework 11
2.1.1
Concept of
organisational outsourcing 11
2.1.2
Concept of organizational efficiency 14
2.1.3
The beginning of outsourcing 15
2.1.4
Types of outsourcing 16
2.1.5
Organisational outsourcing drivers 22
2.1.6
Outsourcing decision criteria 26
2.1.7
The outsourcing process 30
2.1.8
Factors and risk to consider before
outsourcing 31
2.1.9
Focus on core competencies 33
2.1.10
Flexibility and competitive advantage 37
2.1.11
The Relationship
between outsourcing and organisational productivity 39
2.1.12
Outsourcing and organisational efficiency 42
2.1.13 Outsourcing
and cost efficiency 44
2.1.14
Outsourcing and organisational performance 45
2.1.15 Outsourcing
and quality of products 48
2.1.16
Outsourcing and profitability 49
2.1.17 Outsourcing
and organisational competitive advantage 51
2.1.18
Benefits of organisational outsourcing 52
2.1.19
Achieving success
or failure of outsourcing strategy 54
2.2
Theoretical Framework 57
2.2.1
Core competency theory 57
2.3
Empirical Framework 59
2.4
Summary of Review of Related Literature 68
2.5
Gap in Review of Related Literature 70
CHAPTER 3: RESEARCH METHODOLOGY
3.1
Research Design 72
3.2
Population of the Study 72
3.3
Sources of Data Collection 73
3.3.1
Primary data 73
3.3.2
Secondary data 73
3.4
Sample and Sampling Procedure 73
3.4.1
Sample size determination 74
3.5
Validity of the Instrument 75
3.6
Reliability of the Instrument 76
3.7
Model Specification 77
3.8 Methods of Data Analysis 78
CHAPTER 4: DATA PRESENTATION AND ANALYSIS
4.1
Data Presentation 82
4.2
Results
and Discussions 84
4.2.1 Descriptive statistics 84
4.2.2 Normality
test of variables 85
4.2.3 Unit root test of stationarity 85
4.2.4 Regression analysis 87
4.2.5 Challenges facing outsourcing as a strategy for organizational
efficiency
in Dufil Prima Foods Plc and Tummy
Tummy Food Industry Ltd 91
4.3 Hypotheses
Testing 92
4.4 Discussion of Findings 95
CHAPTER 5: SUMMARY, CONCLUSION AND RECOMMENDATIONS
5.1
Summary of Findings 98
5.2
Conclusion 98
5.3
Recommendations 99
5.4 Suggestion for Further Study 100
References 101
Appendices
LIST
OF TABLES
Table Page
3.1 Population and distribution of sample
size in both organisations 75
3.2 Coefficient of correlation of the
reliability of the
research instrument 77
4.1 Data
for the variables of the study 83
4.2 Total number of questionnaire sampled at both
organizations and the number that was return 83
4.3 Descriptive
statistics 84
4.4 Tests
of normality 85
4.5 Unit
root test for explained and explanatory variables 86
4.6 Multiple
regression analysis result on the relationship
between outsourcing strategy
and profitability of firms under study 87
4.7
Multiple regression analysis result on the relationship
between outsourcing strategy and output of firms under study 89
4.8 The challenges facing outsourcing as a strategy for
organizational efficiency in Dufil Prima Foods Plc and
Tummy Tummy Food Industry Ltd. 91
4.9 Chi-square result for hypothesis 3 94
CHAPTER 1
INTRODUCTION
1.10
BACKGROUND TO
THE STUDY
Organisations globally have never been in the milieu of competition as it is the case in our day, the progressive globalisation of economy caused by the lowering of trade barriers, and the emergence of new market players that benefit from significant labour cost advantages has amplify the situation, and in order to survive, organisations must always remain ahead of their competitors. Therefore, organisations must keep pace with the dynamic conditions and rapid changes, be innovative, and adapt to new systems, techniques and technologies, they have to look at efficiency and cost containment rather than relying strictly on revenue increase. In achieving these goals, organisations have discovered that they can cut costs and maintain quality by relying more on outside service providers for activities viewed as supplementary to their core businesses (Li and Barnes, 2008). In the words of Casale (2000), outsourcing has become a standard practice across all industries, it has evolved from being a controversial practice to a mandatory business strategy for organisations to compete successfully in today’s fast paced e-commerce enabled market environment.
Espousing this idea, Frayer et al., (2000) opine that organisations are increasingly viewing outsourcing strategies as a means of reducing service costs, improving operating efficiency, increasing quality, and enhancing a firms overall competitive position. Thus, organisations are focusing on their core competencies and capabilities, while outsourcing their non-core functions to outsourcing providers. This has led to structural changes in the management and production processes of organisations, were outsourcing providers are taking increasing responsibility in realms that have traditionally remained as in-house, such as corporate strategy, information management, business investment among others. Hence, organisational efficiency trends such as outsourcing are rationalisation efforts to create leaner work processes or avoid business closure.
Be it as
it may, during the last two decades, Nigerian business enterprises came under
intense pressure to restructure and improve their efficiency and
competitiveness in the domestic and international marketplace. This quest for
efficiency and improved productivity led to a more strategic approach of
outsourcing business operations, processes, and management practices. In view of these
developments, Dufil Prima Foods
1.11
STATEMENT OF THE PROBLEM
As organisations
face increasingly complex, dynamic, turbulent, and threatening business
environments, many managers consider outsourcing as the only way to keep a
business efficient and competitive. Nevertheless, to assume that outsourcing
leads to long-term benefits with respect to increasing efficiency,
competitiveness and capabilities of subcontracting companies is probably valid
for certain business organisations, but others may experience the opposite,
especially in Nigeria where outsourcing have different connotations, rather
than the conventional meaning where an organisation focus on their core
competency and lease out their sub-functions to other organisations that
perform those functions as their core competency, cases abounds where organisations’
managers takeover organisational activities which they claim to be among the
sub-functions of their organisation and hire unskilled labourers to perform
them with peanut as salary while they siphon the money mapped out for the
contract for their own selfish gain at the detriment of their oganisation’s
efficiency, (Sampson 2017). With this approach of organisational outsourcing,
products or service quality suffers, and efficiency depletes during outsourcing
and this affects customer satisfaction, as products or service quality is
directly linked to business processes ranging from the operations, production,
and support services to mention but few, which certainly affects the organisation’s
profitability and production output.
Dufil Prima Foods PLC and Tummy Tummy Food Industry Ltd, outsource some
of their non-core functions, such as human resource functions (contract staff
and training), production functions (packaging materials) and security
functions (contract security personnel), to outsourcing providers in order to minimize
cost and optimize organisational efficiency (profitability and production
output). However, outsourcing has its own challenges such as; high
product competition in the market, inadequate supervision
of contract’ activities, poor social
infrastructures, information leakage, poor remuneration of contract staff,
among others. These challenges facing outsourcing strategy, if not adequately
checked, could affect the organisational efficiency (profitability and
production output) of Dufil Prima Foods PLC and Tummy Tummy Food Industry Ltd. To that
end, the study, outsourcing
and organisational efficiency, with reference to Dufil Prima Foods PLC and Tummy
Tummy Food Industry Ltd Nigeria between the periods of 2005-2016, was
initiated.
1.12
OBJECTIVES OF
THE STUDY
The broad
objective of this study is to evaluate the impact of outsourcing on organisational efficiency, with reference to Dufil Prima
Foods PLC and Tummy
Tummy Food Industry Nigeria Ltd. The
specific objectives were to;
i. ascertain the impact of outsourcing (hiring of temporary staff, timeliness of deliverable and quality of services/products) on the profitability of Dufil Prima Foods Plc and Tummy Tummy Food Industry Ltd
ii. find out the impact of outsourcing (hiring of temporary staff, timeliness of deliverable and quality of services/products) on the production output of Dufil Prima Foods Plc and Tummy Tummy Food Industry Ltd
iii. ascertain whether factors such as; high product competition in the market, inadequate supervision of contract’ activities, poor social infrastructures, information leakage, poor remuneration of contract staff, etc. affect outsourcing as a strategy for organisational efficiency.
1.13
RESEARCH
QUESTIONS
The following
research questions were answered by this research:
i.
Does outsourcing (hiring
of temporary staff, timeliness of deliverable and quality of services/products)
have significant impact on the profitability of Dufil Prima Foods Plc and Tummy
Tummy Food Industry Ltd?
ii.
Does outsourcing (hiring
of temprory staff, timeliness of deliverable and quality of services/products) have
significant impact on the production output of Dufil Prima Foods Plc and Tummy
Tummy Food Industry Ltd?
iii.
Do factors
such as; high product competition in the market, inadequate supervision of contract’ activities, poor social infrastructures, information leakage, poor
remuneration of contract staff, etc., affect outsourcing as a strategy for
organisational efficiency?
1.14
RESEARCH HYPOTHESES
The following
hypotheses were tested in null form at 5% significance level:
H01:
outsourcing (hiring of temporary staff,
timeliness of deliverable and quality of services/products) have no significant
impact on the profitability of Dufil Prima Foods Plc and Tummy Tummy Food
Industry Ltd
H02:
outsourcing (hiring of temporary staff,
timeliness of deliverable and quality of services/products) have no significant
impact on the production output of Dufil Prima Foods Plc and Tummy Tummy Food
Industry Ltd.
H03: factors such as; high
product competition in the market, inadequate supervision
of contract’ activities, poor social
infrastructures, information leakage, poor remuneration of contract staff, etc. do not affect outsourcing as a strategy for organisational
efficiency.
1.15
SIGNIFICANCE
OF THE STUDY
This study
would contribute to theory in the aspect of outsourcing and organisational
efficiency as it will strengthen the theory of core competency as proposed by Prahalad and Hamel (1990). It would reveal
the importance of outsourcing as a panacea to the highly competitive business
environment and the prospect to increase organisational efficiency in terms of
productivity and profitability. The theory suggests that firm activities should
either be performed in house or by external service providers. It is centered
on make or buy decision. Non-core activities should be considered for
outsourcing to the best suited service providers who are experts in that field,
while few non-core activities which have a big impact on competitive advantage
should be retained in house. Thus, the
findings of this study will be of immense benefit to Dufil Prima Foods PLC and Tummy Tummy
Food Industry Ltd.
Empirically, this study would revealed
whether outsourcing, such as hiring of temporary staff, timeliness of
deliverable and quality of services/products, have significant
impact on the profitability and production output of Dufil Prima Foods Plc and
Tummy Tummy Food Industry Ltd. It would also reveal the effects of factors such as; high
product competition in the market, inadequate supervision
of contract’ activities, poor social
infrastructures, information leakage, poor remuneration of contract staff, etc., on outsourcing and organisational
efficiency. This
would help the organisations under study to evaluate their journey so far with
their outsourcing strategy and outsourcing providers to determine if the core objectives
of outsourcing their sub-functions are achieved. Hence, help them to re-strategise
and outline ways to ameliorate the negative impact of their outsourcing
strategy to ensure that their organisational goals and objectives are attained.
The findings of this study would also serve as an assessment tool to decision
makers and organisations in the manufacturing and service industry and public
sectors, to evaluate the economic, and human benefits of leasing their
sub-function to outsourcing providers, and the ways to harness the services of
outsourcing providers to increase efficiency, productivity and profitability
without jeopardising quality. Furthermore, the study will add to the scholarly
materials available on the research topic that will serve as a useful aid to
potential researchers and students embarking in similar research.
1.16
SCOPE OF THE
STUDY
This centered on the evaluation of outsourcing and organisational efficiency, with reference to Dufil Prima
Foods PLC and Tummy
Tummy Food Industry Ltd Nigeria between the periods of 12 years (2005-2016).
The stated 12 years period of the study would enhance a more robust assessment,
at least within the last decade, of outsourcing activities in the organisations
under study. The study unit scope involved all the employees of Dufil Prima Foods PLC
and Tummy Tummy Food Industry Ltd and the employees of their outsourcing
providers.
Dufil Prima Foods PLC is located at #68B UNIPORT Road choba Port Harcourt, Rivers State, while Tummy Tummy Food Industry Ltd is located at Nnewi, Anambra State. So Port Harcourt and Nnewi is the geographical scope of the study. Port Harcourt (Ikwerre: Ígúọ́cha; Pidgin: Po-ta-kot) is the capital and largest city of Rivers State, Nigeria. It lies along the Bonny River and is located in the Niger Delta. Port Harcourt was founded in 1912 by Frederick Lugard, governor of both the Northern Nigeria Protectorate and the Southern Nigeria Protectorate. Its purpose was to export the coal that geologist Albert Ernest Kitson had discovered in Enugu in 1909. The colonial government caused the people of Diobu to cede their land, and in 1912 the building of a port-town was started. Other villages that were later absorbed into the city included Oroworukwo, Mkpogua, and Rumuomasi. In the creeks to the south of the original port were the fishing camps and grounds of the Okrika-Ijaw group.
1.17
LIMITATIONS OF
THE STUDY
The study was
completed with noteworthy challenges. Being a nursing mother, traveling to
Rivers State where Dufil Pima Food Ltd is located
and Anambra State where Tummy Tummy Food Industry Ltd is located to distribute and retrieve
completed questionnaire was not a child’s play, coupled with poor road networks
that characterised the roads of South Eastern States of Nigeria. Also,
employees of both organisations keeping to the appointment of filling the
questionnaire within the agreed time frame was very difficult, leading to the
researcher visiting both organisations more than twice to share and retrieve
completed questionnaires, the researcher was also not permitted to see the
managing director of both organisations in order to sample their opinion. The
risk of traveling to both organisations and the distance involve from where the
researcher is residing in Abia State added to the challenges encountered in the
course of completing the research. In addition to this, the cost of
transportation, typing and printing was very high especially with the economic
situation of the country. All these added to the challenges encountered by the
researcher in the course of completing the study. Despite
these limitations, the researcher was be able to overcome them and projected an
accurate work that can be relied upon.
1.18
DEFINITION OF TERMS
The following
are the operational definition of terms as used in the study:
Organisational Efficiency: Organisational efficiency is the ability of organisational management to implement organisational plans using limited resources while maintaining quality. Organisation efficiency can be seen as the ability of an organisation to maximise output using minimum input while maintaining quality.
Outsourcing: Outsourcing is a management strategy through which an organisation delegates non-core business functions to outsourcing providers who specialised and are efficient in providing those services. Outsourcing is the process of replacement of in-house provided activities by subcontracting it out to external agents who have those functions as their core functions.
Outsourcing Providers: Outsourcing Providers are organisations in the outsourcing industry that perform most of the manufacturing organisations’ sub-functions as their core function. They accept contracts from organisations to perform their non-core functions like; information technology, logistics, maintenance, security, catering services etc.
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