Globalization of production refers to the sourcing of goods and services across the world. This advantage involves taking advantage of national differences in the cost and quality of production factors such as labor, energy, land and capital. IKEA had concentrated its production at four main suppliers in China and Europe to reduce the cost of cotton covers. Between 1999 and 2005, the price of the Klippan was reduced by approximately 40 percent as a result of these global sourcing decisions allowing IKEA to achieve efficiency gains. This is because labor is cheaper in China and Europe than in other countries. Thus, IKEA chose China because it has cheaper labor and lower source prices to take advantage of national cost differences. By doing so, IKEA hopes to reduce its overall cost structure or improve the quality or functionality of its product offering, thereby allowing it to be more competitive than others. The globalization of production has allowed IKEA to focus on efficiency. IKEA relies on some 1,300 suppliers in 53 countries. I...