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MNC Strategies For Growth And Innovation

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Question:

Discuss About The MNC Strategies For Growth And Innovation?

 

Answer:

Introduction

The main of this research is to establish the advantages and disadvantages of outsourcing business functions.  This would involve applying both qualitative and quantitative research designs and methodologies.  However, the primary source of information will be content analysis. This will help in interpreting what other authors have written on the topic. There is no doubt that globalization has had a great impact on the business sector since its invention. The impacts range from creating a global platform for learning, changing attitudes among businessmen, communication, creating instant access to products and services.

Business technology has grown to be the major facilitator and sustainer of economies in the contemporary society. It has helped some regions to be successful as well as helping others to survive hence transforming the manner in which business is carried out. Comparing the business sector today and how it was almost 20 years ago is like comparing day and night. Thanks to globalization, there has been a great revolution.  Apart from increased sales and partnerships, it has created new platforms for conducting business. For example, outsourcing in business enables a business to obtain goods and services from suppliers through contract. This has both advantages and disadvantages. For example, it leads to better efficiency being that the company has time to focus on core business functions. On the other hand, the activity harbors hidden costs that threaten business profits.

 

Project Objective

The following are the objectives that the study plans to meet:

  • To establish the advantages of outsourcing business functions
  • To establish the disadvantages of outsourcing business functions
  • To give reasons why businesses outsource functions.

One of the ways in which this study will meet the above objectives is through literature review. The process enables one to understand what other authors have discussed regarding the topic and the gaps.

Project Scope

This project is limited to the outsourcing of business functions in a multinational organization. This is an enterprise that operates in many countries but is managed from one point; home country. A company that gets more than a quarter of its revenue from operations outside the home country is classified under MNC. Coca-Cola, BMW, and Total are among the most common MNCs globally (Elo 13). Through investing in other countries, MNCs have led to the growth of the host country’s economy, the flow of capital, development of infrastructure, the introduction of new technologies and creation of employment opportunities (Luca, 2015). Because of its nature of operating n many countries, a multinational organization is more prone to business functions (Wlliams, 2015). Therefore, for adequate information and better understanding, this study shall review articles and reports on the advantages and disadvantages of outsourcing business functions in multinational business organizations.

Literature Review

Several studies have been conducted to establish reasons for outsourcing business functions n organizations.  While a section of them agrees that outsourcing is a noble course, there are people who do not agree and would not advise any serious business to explore the services of outsourcing business functions. Therefore, this section provides an analysis of what other authors have written regarding outsourcing business functions.

Outsourced tasks

According to statistics, the number of organizations outsourcing business functions has increased. For example, in the financial year 2016, private sector organizations spent $309 billion on outsourced business functions (Andelic, 2011). This was spent on various processes as shown in the following list:

  • Finance and accounting
  • Human resource management
  • Legal procedures

Apple Inc. is known for its partnership with Foxconn. The latter implements iPhone blueprint. This way, Apple saves money that would have been used had it employed people to do that. Apart from giving it time to concentrate on other core business functions like marketing, outsourcing business functions help Apple Inc., to improve quality in delivering products and services (Hattersley, 2017).

Advantages of outsourcing business functions

Outsourcing is a process of contraction another organization to provide products/services to a particular organization. It has been cited to save costs and time taken to perform tasks that could be carried out by another party at a less costly price (Clarkson, 2016). In this section, this study provides what other authors have written regarding the advantages of outsourcing business functions.

It increases business efficiency. Many organizations have turned to outsourcing functions because it has been proven that outsourced functions are helpful, meaningful and essential to the general functioning of the organization (Ling, 2015). For example, if a company is consulted for recruitment and hiring, it ensures that those chosen are qualified based on skills and experiences.

Similarly, it gives organizations time to focus on core business functions. Indeed, there are numerous tasks in business that need to be executed (MIchael, 2013). However, sometimes attending to them efficiently may be hard because of time constraints (Dhar, 2013). Therefore, if a business seeks the services of another group for some tasks, it gets adequate time to perform other equally important tasks.

Conversely, outsourcing has hidden costs that threaten the potential of a company to make profits. Organizations use this method to reduce business expenditures like labor costs. However, outsourcing also involves additional expenditures on legal processes (Wlliams, 2015). Moreover, is that the cost of outsourcing is not normally included in the financial report, it is hard to assess the extent to which this process affects the organizations.

Also, being that the process involves sharing of a company’s sensitive and confidential information, there exist data security risks in outsourcing business functions (Touboulic, 2016). For example, when a company contracts a firm to design its products, it may have to provide information that could damage it when leaked to competitors (Elo, 2015).  This can cost the company opportunities for making profits from its products.

Additionally, outsourcing business functions may lead to a weak management in a particular business. The main role of the business management unit is to make decisions on critical aspects of the functioning of an organization (Allen, 2012). Being that outsourcing involves another organization making decisions on behalf of the company, it makes the latter lose control.

Similarly, research has also shown that outsourcing business functions may not be successful because of difference in cultural values. Multinational organizations have been cited by most authors for preferring outsourcing (R Randall, 2014). In this situation, it may involve doing business with people from a different country with a different culture (Greenwood, 2013). A clash in culture threatens efficiency and productivity. Therefore, because of a difference in culture, outsourcing may not be as beneficial to a company as one would have hoped.

 

Justification

In business, it is not possible to perform all functions without compromising quality and maintaining the schedule. Hence it is necessary to issue roles to be performed by other organizations (Gruyter, 2015). For example, a business organization can contract another to train its employees at a cost. Similarly, it can use another consultancy firm to help develop marketing strategies (Boorman, 2016). Admittedly, outsourcing business functions seem as a relief to businesses. However, there have been concerns over the extent of which this is true. Being that outsourcing involves spending both time and resources (Dhar, 2013). This justifies the need for the research. Apart from establishing the advantages and disadvantages of outsourcing business functions, it also educates on the type of business rules to be outsourced (Graham, 2017). This can help business organizations in creating a plan for outsourcing business activities.

Gap opportunities

From the literature that was reviewed, it was clear that it inclined towards supporting that outsourcing business functions have both advantages and disadvantages. However, it was quite vague on the type of organizations that mostly outsource business functions. Further, there was not enough data on multinational companies that have outsourced business functions and incurred decline n profits.

Hypothesis

Outsourcing business functions increase quality, efficiency and focus on core business operations. However, it may lead to a company to lose control of the company, risk-sensitive confidential information contains hidden costs and depends on culture.

Research questions

The following are the questions considered to be important in tackling the topic on the advantages and disadvantages of outsourcing business function:

  • What are the advantages and disadvantages of outsourcing business functions n multinational organizations?
  • Why do businesses outsource business functions?

Research Design

The choice of the research design utilized in this study was informed by the nature of the data required in this case (Boorman, 2016). This section will contain a description of the qualitative research designs used in this study. Researchers have managed to develop various research designs like grounded theory, ethnographic studies, historical and case studies to be employed when conducting a qualitative research study. For this study to fully answer the two research questions stated above, it would be best to use the grounded theory and case study research designs. In the first instance, data collected shall be used to develop a theory. The Case study design will be used to collect information from top managers at Coca Cola offices. Information acquired here will be analyzed and interpreted to help in testing the hypothesis.

Methodology

This section presents details on the overall methodology used in carrying out the research exercise. The chapter also presents the sampling procedure which involves the research site, target population, sample study population with a clear explanation of the relationship between the sample population and the target population of this study. The chapter further provides the data generation techniques utilized in this study, data analysis, validity assessment criteria and the ethical considerations touched by the research before finally concluding the chapter

Scholars have defined qualitative research as a process of inquiry of human or socio-economical problems which are founded on methodological traditions (Zahra, 2016).  In the process of the study, the research seeks to answer questions on the ‘what’ and ‘how’ of the issue (Zahra, 2016). These questions help in limiting the study to a particular phenomenon, concept or problem. Also, they help the researcher establish the effects of the issue on stakeholders in a particular system (Clarkson, 2016)

Employing this methodology will help arrive at the best conclusion based on the existing information and conditions connected with the advantages and disadvantages of outsourcing business functions. Therefore the research tools to be employed will be both primary and secondary sources.

 

Approaches to reliability and validity

The trustworthiness of the study will be arrived at through a comprehensive assessment by the research supervisor and the collective insights to be collected from different co-researchers who were actually fellow students. Each respondent that will participate in the study will be sampled and data collected from them using hand-picked instruments that are not general to all the respondents. This will ensure that each respondent uses the most appropriate data collection technique under the circumstances (Zahra, 2016). The researcher was able to identify the most relevant items for each one of the instruments that were utilized in the study.

Sampling and sample size

For the purpose of this study, random sampling will be employed. Because of the scope of the research, it was relatively cheaper, easy and manageable to meet Multinational organization leaders randomly and convince them to participate in the process of giving data.

Data collection methods

This study will use both quantitative and qualitative data. A close examination of the research questions informed the selection of the instruments that were used to solicit data from among the study population which comprised of shop owners, business people, taxi operators, and office workers. As such, this study utilized the triangulation method of data collection (John & James, 2006). This involves using two or more research instruments in collecting the required data.

The data collection tools to be used by the researcher include; content analysis, questionnaires, and interview schedule. The observation was carried out randomly without following any systematic order since the trends in business functions would in most cases be spontaneous.

After obtaining permission, the questionnaires will be hand-delivered to the respondents in their respective offices/places of work. The objectives of the study will be clearly explained to the various respondents before allowing them a chance to respond to the questionnaires. These questionnaires were self-administered. There was a need to allow them the freedom to fix the questionnaires into their day’s schedule, given the busy nature of the time during which this study will be conducted.  The questionnaires had both open-ended and closed questions and provided for standardized answers that are easy to compile.

The interview method will also be used for a section of the respondents. They will be randomly interviewed and their responses tape recorded for the study. These interviews conducted on one- to- one basis. In essence, they enable a better understanding of the experiences of the respondents.

Variables and specifications

The following are the variables in the research:

  • Here, the research will focus on the labor costs, efficiency, roles and outsourcing costs.
  • Business organizations: From the literature review, t has been established that MNCs prefer outsourcing business functions. Therefore, this study will conduct interviews and questionnaires in Coca-Cola
  • Time: The study will compare the time taken by a company to perform a task and by another outsourced company to perform the same.

Research Limitations

Some of the perceived limitations that I am likely to encounter in this study include:

  • Lack of adequate time and other resources
  • Financial constraints
  • The lack of flexibility to use more methods
  • Problems in terms of content or geography of the place

Nevertheless, in spite of these limits, enough necessary steps will be taken to ensure the study still makes a worthwhile contribution to the business field.

 

Time Schedule

Conducting this research project will take a period of 5 weeks. This is because apart from taking time to review content on this topic, the researcher will also need to organize for interviews with managers of business organizations which outsourced functions.

Criteria

Week 1

Week 2

Week 3

Week 4

Week 5

Week 6

Week 7

Introduce the topic on advantages and disadvantages of outsourcing business functions

 

 

 

 

 

 

 

Forming research objectives, questions and hypothesis

 

 

 

 

 

 

 

Organize literature to be used

 

 

 

 

 

 

 

Review literature on the advantages and disadvantages of outsourcing business functions

 

 

 

 

 

 

 

Identify research design, methodology and data collection techniques

 

 

 

 

 

 

 

Accumulate data from questionnaires, interviews and content analysis. Data interpretation and evaluation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Conclusion and recommendations for future studies

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Conclusion

The purpose of this study was to give the advantages and disadvantages of outsourcing business functions. Here, we established that outsourcing leads to productivity, effectiveness, and enables businesses to focus on core business processes and conduct business in 24 hours. Conversely, outsourcing may lead to the management to lose control of the organization, hidden costs, risk data security and the difference in culture and pricing. The study utilized both qualitative and quantitative data collection methods. Therefore, it recommends that organizations conduct a cost-benefit analysis to establish risks involved.  This is because outsourcing business functions sometimes end up making companies spend more thus leading it to make losses.

 

References

Allen, R. C. (2012). Technology and the great divergence : Global economic development since 1820. Journal of Economic History , 1-16.

Andelic, G. (2011). The impact of Globalization on the Insurance and Reinsurance Market of Eastern Europe. South East European Journal of Economics and Business , 95-112.

Boorman, K. N. (2016). Assumptions beyond the science: Encouraging cautious conclusions about functional magnetic resonance imaging research on organizational growth. Journal of organizational behaviour , 13-20.

Clarkson, M. (2016). Communication training for scientists and engineers: A framework for highlighting principles common to written, orasl, and visual communication. Professional Communication Conference (IPCC) (pp. 1-8). IEEEInternational.

Dhar, S. (2013). From outsourcing to Cloud computing: evolution of IT services. From outsourcing to Cloud computing: evolution of IT services , 20-45.

Elo, M. (2015). Diaspora Networks in International business: A review of emerging stream research. Handbook on International Alliance and Network Research , 13-40.

Graham, J. (2017, May 3). Apple iPhone sales slip on next-iPhone hype. Retrieved May 18, 2017, from USA TODAY TECH: https://www.usatodaytech.com

Greenwood, M. (2013). Ethical analyses of HRM: A review and research agenda. Journal of Business Ethics , 355-366.

Gruyter, D. (2015). Starbucks Marketing Analysis. Journal of Case Research in Business and Economics , 220-253.

Hattersley, L. (2017, 20 January). The 17 best Apple ads of all time: Funny, weird and embarrassing Apple adverts. Retrieved May 18, 2017, from Mac World: https://www.macworld.co.uk

Ling, J. H. (2015). Emotional appeal in recruitment advertising and applicant attraction: Unpacking national cultural differences. Journal of organizational behaviour , 35-42.

Luca, N. (2015, October 9). Towards a service-dominant approach to social marketing theory. Retrieved 12 November 2016, from sage pub.com: https://www.sagepub.com

Michael, H. T. (2013). Information Technology Adoption in Small Business: Confirmation of a proposed framework. The Journal of Small Business Management , 25-40.

R Randall, B. L. (2014). India: MNC Strategies for growth and Innovation. Strategy & Leadership , 30-39.

Touboulic, A. (2016). Sustainable purchasing and supply. Journal of Marketing Channels , 85-87.

Wlliams, O. (2015, July 10). Apple has forgotten to sell the iPhone. Retrieved May 18, 2017, from The Next Web: https://www.thenextweb.com

Zahra, S. (2016). Developing theory-grounded family business research: Some suggestions. Journal of family business strategy , 3-7.

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