Benefits Of Globalization Of Production

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The globalization of production refer to the sourcing of goods and services from location around the globe. This benefit is to take advantage of national differences in the cost and quality of factor of production such as labor, energy, land and capital. IKEA had concentrated production in four core suppliers in China and Europe to reduce the cost of the cotton slipcovers. Between 1999 and 2005, the price of the Klippan by some 40 percent are reduce from these global sourcing decision enable IKEA as the resulting efficiencies. It is because, the labor of cost in China and Europe are more cheaper than another country. Thus, IKEA choose the China because in there have cheaper labor and lower price of sources to take advantage of national differences in the cost. By doing this, IKEA hope to lower their overall cost structure or improve the quality or functionality of their product offering, thereby allowing them to compete more effectively than others. The globalization of production has enabled IKEA to focus on efficiency. IKEA relies on some 1,300 suppliers located in 53 countries. I...

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