Case 3: Ikea

1225 Words5 Pages
1. From the start it was determined that IKEA would be a price leader, offering sleek well designed furniture at nearly 50% of the cost of its competitors. As the strategies succeed, IKEA grew into international markets. With each additional stage in growth, IKEA had to reevaluate the way it did business. What I believe allows IKEA to be successful is the speed and flexibility with the company adapts. IKEAS strategy is emergent, as it is the result of unpredicted change that was necessary for the company to flourish in new markets. Although, IKEA has been flexible in the manner in which it operates it has stayed true to its planned strategy and ultimately values of offering well-built furniture at low price which was able to be afforded by most people, oft referred to as “democratic design. 2. The Swedish furniture industry was largely fragmented during the 1950’s; dominated by small retailers who were not able to take advantage of economies of scale. The direct result of this was many manufacturers offering expensive items to retailers, who then further marked up the products so that they could turn a profit. This business model appears to have been present in many of the nearby European markets. Due to the enormous expense of furniture during this period in time, many pieces of furniture were passed down from generation to generation. To change the price structure Kamprad designed sleek functional furniture which was able to be produced on machines and thus cheap to assemble. Furthermore, he utilized factories and workers in Poland which offered a 40% savings over production within Sweden. This pricing strategy allowed nearly unhindered growth for the furniture giant within countries of what I would consider the European Union. As growth continued, IKEA took advantage of the fragmented furniture industry within the Western European furniture markets. Instead
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