Business Research: Outsourcing Functions in Multinational Companies

This business research report examines the advantages and disadvantages of outsourcing business functions, focusing on multinational organizations. The report begins with an introduction highlighting the impact of globalization and the role of outsourcing in modern business, setting the objectives to establish the advantages and disadvantages of outsourcing and the reasons why businesses outsource. It covers the scope of the project, which is limited to multinational corporations (MNCs). A comprehensive literature review analyzes the current state of research, including outsourced tasks, advantages (increased efficiency, focus on core functions, cost reduction), and disadvantages (hidden costs, data security risks, weak management, cultural clashes). The report justifies the need for research, identifies gap opportunities, and formulates a hypothesis about the impact of outsourcing on quality, efficiency, and control. The research design includes grounded theory and a case study approach, with the methodology detailing both qualitative and quantitative data collection methods, sampling strategies, and approaches to reliability and validity. The report concludes with a time schedule and a discussion of research limitations.

Running head: BUSINESS RESEARCH 1
BUSINESS RESEARCH
Student Name
Institution

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Table of Contents
Introduction.................................................................................................................................................3
Project Objective.........................................................................................................................................3
Project Scope...............................................................................................................................................4
Literature Review........................................................................................................................................4
Outsourced tasks......................................................................................................................................5
Advantages of outsourcing business functions....................................................................................5
Justification.........................................................................................................................................7
Gap opportunities....................................................................................................................................7
Hypothesis...................................................................................................................................................8
Research questions......................................................................................................................................8
Research Design..........................................................................................................................................8
Methodology...............................................................................................................................................9
Approaches to reliability and validity......................................................................................................9
Sampling and sample size......................................................................................................................10
Data collection methods........................................................................................................................10
Variables and specifications..................................................................................................................11
Research Limitations.................................................................................................................................11
Time Schedule...........................................................................................................................................12
Conclusion.................................................................................................................................................13
References.................................................................................................................................................14

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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

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 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.

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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

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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.

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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

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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

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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-

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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

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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:
 Labor. 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 offices.
 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

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 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