Performance assessment using value‐chain analysis in Mozambique

Abstract

PurposeHospitality and related service industries represent growing components of Mozambique's increasingly service‐oriented economy. Its government is emphasizing hospitality and tourism as a leading source of economic growth, diversification and poverty alleviation. However, inefficiencies in primary and support business activities of such services could be obstructing value creation for the customer. The purpose of this paper is to evaluate the value creation process in hospitality services and its impact on business performance and product/service prices.Design/methodology/approachThe paper uses value chain analysis to evaluate the sequential chain of primary and support activities. It includes qualitative observations, and assessment of field‐surveyed quantifiable indices and operational and market factors influencing these performance indices.FindingsKey operational factors contributing to low value creation include low employee productivity and management inefficiency. This is largely due to a lack of trained employees. Market factors impacting low value creation are: the high level of business taxes; high import duties, and the high cost of compliance with government regulations, licenses and permits (consultants are hired to make submissions to obtain approvals).Research limitations/implicationsPolicy recommendations are presented for the private sector and government. They include a comprehensive human resource policy for hospitality and related industries; a list of import‐exempt key production inputs; and reevaluation of regulatory procedures and the business tax burden. Future research could further quantify these effects and also look at a broader set of factors, beyond firms' institutional environment.Originality/valueThis paper is amongst the few in the literature that have used value chain analysis to evaluate hospitality services. It is the first such analysis of hospitality services in sub‐Saharan Africa where availability of both quantifiable time series and cross‐sectional data remains an obstacle to research. Value chain gaps of hospitality services in the sub‐Sahara region identified in this paper could also be associated with other service sectors such as business, financial, and other consumer services.