The Effects of Foreign Currency Shortage on Performance of Ethiopian Brewery Companie (Bgi Ethiopia Plc)
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Date
2022-11-04
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A.A.U
Abstract
Shortage of foreign currency is one of the characteristics of developing countries. Exchange
rate changes affect the production level of industries through trade channel effects and
variation of the prices of inputs and outputs. One of the major areas which is affected by
shortage of foreign currency is the performance v of an organization. The aim was to explore
the effect of foreign currency shortage on performance of Ethiopian Brewery companies. Mixed
research design was implemented to explore the effect of foreign currency shortage on
performance of Ethiopian Brewery companies; data were collected from focal persons through
Likert scale and open–ended questionnaires. Qualitative data was also collected and analyzed
with TAC Data collected from focal persons were analyzed qualitatively whereas data collected
from closed ended survey questionnaires analyzed quantitatively by descriptive analysis to
examine the effects of foreign currency shortage on the selected company’s performance. Study
participants (survey, interviewees and Key informants) were selected purposefully and included
in this research. Thematic Content Analysis (TCA) technique was used to analyze the data. A
total of 22 individuals participated in the study. The triangulated findings (from Survey,
document review, interview) showed that the company suffers from high (84.6%) cost of
production that can confirm poor company performance. The study found that among the
dominant transaction, the company spent more for raw material cost (38.8%) and labor cost
(15.4%) which affects seriously the performance of the company. A number of factors are found
out but 2 main categories of factors (Internal & External) identified that affect company
performances in such a way that shortage of foreign currency affected the performance by
declining the company’s productivity, machinery efficiency and the profit margin. Overall, the
performance of the company found to be relatively low. The study found out higher level of
severity company performance was found to be poor as it spent high cost of production
indicating foreign currency shortage has effect on the parameters. The firm supposed to revise
its plan and devise effective mechanisms to be more competitive as well as resist the dynamic
changes as result of shortage of FC in the country. Also, the concerned bodies supposed to give
an opportunity of tax reduction and holidays on the imported items and services, on the brewery
companies to reduce the effect of foreign currency shortage on industry’s performance.