Question

How does an MNE use innovation to a)create value, and b)increase revenue. Please give at least TWO specific examples for (a) and (b).

Answer 1

Innovation, be it in any field adds value to the current system the company has in place. For example, innovation through the development of AI and Deep Learning-based recruitment process would not only make it easier for the company to review the most volume of employees, but also allow the systems to ratify mistakes that could otherwise go unnoticed till the later stages where it would have become a waste of time and resources. Not only will the process of integration allow better decision making systems and protocols, but it can also prevent individual biases that have a tendency of creeping into the interview process eventually.

This is just one particular example, where an automated system can provide better results, quicker, allowing the company to then select the most suitable candidate through the final interview process, reducing the need to train them in the job and therefore, make the implementation more productive as well as more suited to project situation, where the requirement for fresh talent while also being a strong fit can be high.

This example could also be used as a case of revenue enhancement because HRM functions represent the key capital spendings of a company. Reducing the need for training would also significantly reduce the cost. Another argument can be presented where the company experiences less turnover due to better job matching from the very beginning, reducing the cost of acquisition and reducing the need for constant recruitment as a result.

However, we can say that an MNE would be able to make use of the material and labor present in the host country while choosing to enact the structure that is developed at the home base. This provides unprecedented levels of flexibility to the company to then hire managers from the host country and be more understanding and inclined with the prevalent culture. As a result, the company can invest in innovation in the field of Information systems that might already be present or, in the case new technology is available to them. This form of innovation would provide the benefit of information and data collection at a large scale, providing analytical and statistical reasoning behind every decision, providing the necessary metrics for comparison and benchmarking and allow integration of systems like inventory management, automatic ordering systems, use of concepts such as vendor managed inventory, etc. all leading to higher productivity, waste reduction, reduction in redundant inventory, safeguard against inventory or demand uncertainty and a record of every transaction which is useful in market analysis and processes like vendor analysis. Although it cannot be correlated directly to an increase in revenue, increasing the capacity of the current systems would increase the output, while minimizing any loss of input, essentially providing a net increase in revenue, especially over a long term horizon.

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