INTERNATIONAL SOURCING IN EMERGING MARKETS - A CASE STUDY OF ICA NON-FOOD IN CHINA AND LATVIA

Abstract

Global sourcing is becoming increasingly important, and is currently a top priority by many firms. The increased globalisation and the dynamic environment, like the EU Enlargement and Chinas’ membership in the WTO, makes the sourcing process complex but it also generates opportunities of creating a competitive advantage in sourcing strategy. WTO is changing the trade pattern and influencing the sourcing decision. Within the retailing industry purchasing has always been a priority but the increasing numbers of private labels makes the sourcing activities even more important. This study investigates how retailing companies should conduct and balance their sourcing activities in order to respond to new operating conditions and utilize the dynamics of emerging markets. A case study of ICA Non-Food is conducted with focus on the Home Textile department. The study provides a proposal of how sourcing activities within home textiles can be balanced in China and Latvia, two markets with differing competitive advantages. A Supplier Selection Model is developed, which shows important stages in the sourcing process and analyses the product characteristics, supplier relationships and the risks and opportunities of the markets. The conclusions can be applied to the retailing industry, and will show the importance of a balanced sourcing and how and why a main sourcing market like China can preferably be complemented by a market like Latvia.