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Impact of Cost Efficiency on Shareholder Value of Global Fast Moving Consumer Goods Companies Outsourcing Their Supporting Functions from Home Markets to Host Emerging Markets: the Case of Mondelez

Student: Elizaveta Romanova

Faculty: Faculty of World Economy and International Affairs

Educational Programme: International Business (Master)

Year of Graduation: 2021

Progress of globalization of the world economy, toughened up the competition, lower trade barriers, and empowering of emerging markets benefiting from lower labor costs result in increasing in outsourcing of supporting business functions such as information technology, human resources, accounting, procurement, etc. to emerging markets. The goal of the paper is to identify the impact of cost efficiency on shareholder value of global FMCG companies outsourcing their supporting functions from home markets to host emerging markets. Consequently, we hypothesize that the decision of global FMCG companies to outsource their supporting functions from home markets to host emerging markets has a positive impact on their shareholder value. To reach the established goal and test the hypothesis we conduct our research by an overview of academic literature and the business case of Mondelez International. In the first chapter, we describe explanations of outsourcing decisions from the point of the transaction cost theory and the resource-based views. Then we provide a classification of outsourcing, determine its overall effects on companies’ performance, and benefits of outsourcing to emerging markets. Moreover, we summarize previous research studying the impact of outsourcing on shareholder value of global companies, including the FMCG segment. In the second chapter we provide the case study of Mondelez International, which successfully outsourced its supporting functions to external vendors, operating on emerging markets. In the third part we propose recommendations on and the model of the outsourcing process for FMCG companies’ managers, discuss limitations of the study and suggest directions for further research.

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