ikea Essay

2549 WordsOct 30, 200811 Pages
POINT OF VIEW Globalization brings countries “closer” to each other and variation in the companies’ product offerings is rapidly diminishing. But to be more competitive, companies should still acknowledge the countries’ differences and incorporate their preferences in marketing products. This is especially true for the home furnishing business like Ikea which the company’s management were just learning. PROBLEM/ OBJECTIVE How can Ikea succeed in other markets (countries) where it wishes to establish itself, given its relatively standard production approach in a business with strong cultural influence? ASSUMPTIONS Ikea follows a standardized product strategy with a universally accepted assortment around the world. Ikea’s strategy is based on cost leadership secured by contract manufacturers, mostly from low labour cost countries and close to raw materials, yet accessible to logistic links. High volume production of standardized items allows for significant economies of scale. Ikea wants to bring the Ikea Concept to as many people as possible. The international expansion of Ikea has progressed in three phases, all of them continuing at the present time: Scandinavian (1963), West European (1973) and North American (1976). Exhibit 2 shows worldwide sales share. From here, we can see opportunities of expansion in Asia & Australia. ANALYSIS The IKEA Group, a Swedish company founded in 1943, is a multinational operator of a chain of stores for home furnishing and house-wares. It is the world’s largest furniture retailer, specializing in stylish but inexpensive Scandinavian designed furniture. The IKEA group owns over 226 outlets in 33 countries. It has been hugely successful since its origin in 1943 as a mail order catalogue featuring locally produced furniture. In 1985, it decided to enter the US market. It believed that if it wants to be

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