Benefits for Ikea by Globalization of Markets and Production Essay

407 Words2 Pages
The most well know purpose of a corporation would be getting profits with low cost, so most of companies use their strategies to expand their boundary to gain more margins. One of strategies companies perform has been as well the most effective one for international furniture company, IKEA. Found in Sweden with one store and 15 workers, it is now one of the most powerful and globalized companies in the world having 129 outlets in 27 countries with 33,400 workers. IKEA has developed through globalization. Even though it started with furniture of Swedish style at the beginning, it now provides various types of furniture for worldwide customers. The outcomes of globalization have been visible through several decades. Despite the world economy crisis, IKEA gained $7 billion of profit in 2011. One of the reasons that contributed to its global success was global sourcing of component from all over the world. Because of the high cost of branching new stores in different regions, IKEA first decided to transfer production to lower-cost suppliers in Poland. With Poland as a beginning of expansion of sourcing market, IKEA began to work with various suppliers from many countries where IKEA could develop supply chains with low cost, avoiding shipping, stock and distribution cost and the risk of stock-outs. By gradually expanding its supply boundaries from close regions like Romania and Hungary to distant regions like China and Indonesia, it successfully gathered 2,353 suppliers in 65 countries with 14 distribution centers all around the world. This global sourcing strategy was fulfilled successfully by organizing the features of regions. Similar group of markets were investigated upon the preferences of customers based on culture and languages. Using the knowledge of similar features of suppliers and market places, appropriate strategies were given to suppliers to gain the

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