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Date Submitted: 04/01/2009 11:58 PM
Stockholm School of Economics
Department of Marketing and Strategy
LOW-COST COUNTRY SOURCING
- An introduction for companies on the verge
of starting their LCC sourcing initiatives -
Author: Shirin Javaheri
Supervisor: Professor Björn Axelsson
Examiner: Henrik Agndal
Assigner: ASSA ABLOY AB, Supply Management Group
Thesis Presentation Date: 2007-09-03
- I -
ABSTRACT
This thesis was originally written on behalf of ASSA ABLOY AB, a company on the verge of
increasing its low-cost country sourcing. The main purpose of this thesis was to investigate which
type of products are most suitable to source in low-cost countries and which type of contractual
business form that is most suitable for sourcing in low-cost countries. The thesis also examines
how the structure of the organization is affected by the company’s low-cost sourcing strategy.
Three propositions were made based on previous research findings within this subject.
In order to test the three propositions, four international companies; IKEA, Ericsson, Electrolux
and Powerwave, have been studied. The results of this thesis are therefore based on several cases
and different types of companies with a lot of experience from low-cost country sourcing. In
order to obtain more general results I have let the interview objects go outside their specific
companies and give their expert view on the area of low-cost country sourcing and comment
more general about what and how companies should source in low-cost countries.
The results show that products with high labor content are best suited to source in low-cost
countries. Heavy and bulky products are not as suitable to source from low-cost countries due to
high transportation costs, especially if the geographical distance is far from the sales market.
However, the results do not confirm the assumption that companies tend to source more noncritical
products in low-cost countries than highly strategic products. The findings in this thesis
show...