Vol. 1 (2023): Effects of Transportation Outsourcing Costs on the Suitability of the Tanzanian Beverage Industries. A Case of TBL-Arusha

A B S T R A C T

Beverage industries have currently witnessed the increase of outsourcing transportation services. However, while beverage industries enjoy the benefits of outsourcing to some of their non-core activities, it has been established that the outsourcing of transportation service has cost implications which bring a debate to whether outsourcing of transportation impacts the profitability of the beverage industries or not. This study ventures in determining the effects of costs in outsourcing transportation on the profitability of the beverage industries in Tanzania. The study was governed by the Principle of Agency Theory and Transaction Cost Analysis. Case study research design was used for this purpose where TBL-Arusha branch was taken as the case study. Purposive sampling was used to select key informants for this study, while simple random sampling was used to select 30 staff for the study. Unit of analysis was the TBL company-Arusha branch operating in beverage sector and practicing outsourcing of transportation and unit of observation was the TBL staff whereby both qualitative and quantitative data were collected by using self-administered survey questionnaire and key informant interview guide. Collected data were analysed by using descriptive statistics. The study findings revealed that despite that outsourcing of transportation benefits the TBL, the costs associated with outsourcing transportation services impact the profitability of the company. It is therefore concluded that, costs in transport outsourcing affects the profitability of the beverage industry. The study recommends that cost elements of outsourcing transportation service should be reviewed and negotiated in order improve the profitability of the company.