The Effects of Foreign Currency Shortage on Performance of Ethiopian Brewery Companie (BGI Ethiopia PLC)
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Date
2022-11-08
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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.