Ikea Essay

576 WordsFeb 12, 20133 Pages
Trey Duggan MGT 4315-02 IKEA Invades America Practice Case To achieve the kind of growth that IKEA is hoping for, should the company change its product strategy? If so, in what way(s)? What about the product range; are there limitations to the matrix approach? Should the company expand its product lineup to include greater number of styles and price points? In what other ways should the company consider changing its product lineup? Option 1. Do not change the product strategy. Doing this will still allow for continued growth at a similar rate currently enjoyed, since IKEA has developed the superior supplier network and pricing power with various suppliers. However, this will not address any possible limitations from regional desires in the U.S. Their east coast stores and west coast stores, for example, will have a different desire from their customers for style and design, and while the matrix gives good variety for each sub sect of items, it fails to identify region specific desires. Sticking with this ‘status quo’ strategy will not achieve their overall goal of profitability to open more stores in the U.S. As of 2002, only three stores had been opened in the past 5 years, and simple calculations suggest that their goal of 50 would fall short by 25, optimistically, assuming greater risk is not taken to finance a surge of building. Option 2. Keeping the matrix approach, but with a modification for regional flair. With the supplier resources enjoyed by IKEA, a little research into regional taste can be added to their product mix, allowing their stores in each region of the U.S. to stock something specific for the design styles in each area. Adapting this product strategy will allow IKEA to expand into less populated areas with a focus on their style. With the knowledge of each regions flair would allow IKEA to put stores in other large cities not

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