MGM102H5 Lecture Notes - Lecture 10: Rug Making, Ikea, Impulse Purchase
Document Summary
Outsourcing: businesses will look at foreign investment opportunities in order to be more cost. Chose india due to low price and expertise in rug making. Lower wage rates, lower cost allowing them to use their money for other purposes. Encourages to move operations to low cost regions. But we face barriers such as culture language, turnover time, exchange rate and political and transportation risk. Low price compared to other more high end stores but not cheap. Lots of styles and colors so a broad range of customers are attracted. Originally for workers and to promote swedish culture. Compete on lower prices greater selection unique items. Doesn"t sell other people"s products while other stores contain many brands. It"s not about buying and item it"s about the shopping experience and building relationships between customers. Outsourcing to india covers up their swedish roots. If their target market has different expectations, they may have different views on the rug issue.
