THE FUNDAMENTALS OF LOW-COST COUNTRY SOURCING

Increased competition among firms and the threat of manufacturers in low-cost countries (LCCs) has forced many companies to pursue sourcing in LCCs. Low-cost country sourcing can cut expenses substantially, and as many companies consider themselves forced to choose this strategy, others regard it as an opportunity, sourcing high-tech products or even moving their R&D activities to these countries. However, sourcing in low-cost countries is a difficult task and firms need to conduct a thorough feasibility study before entering a market. By studying 4 international companies; (IKEA, Ericsson, Electrolux and Powerwave), this book investigates 3 basic questions that companies on the verge of starting their LCC sourcing activities would want to know. This work investigates what the types of products that are most suitable to source from low-cost countries, what type of contractual business forms which are more suitable when establishing production or sourcing activities in LCCs, and how companies organization structure is affected by their low-cost sourcing strategy.