IKEA Invades America Essay

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IKEA Invades America a Case Study submitted to: BUS 599: Strategic Management By Spring 2009 IKEA Group is a privately owned Swedish furniture retailer. As of 2002, they were the world’s top selling furniture retailer, with sales of more than $12 Billion. They design Scandinavian style furnishings and home items at competitively low prices. In any one of their 14 U.S. based stores, the 15,000-35,000 sq meter Guggenheim-esque facilities allow customers to peruse merchandise and enjoy amenities like child-care to in-store cafes and restaurants. Items purchased are collected, and pack the items conveniently in their cars, and bring the items home where they can be assembled. The product strategy lies in creative style and consistent cost cutting. A product strategic council finds a product priority. The products style and target retail price is set with the use of a “matrix”. Within the selected price range a benchmarked competitor’s price point is undercut by 30% to 50%. A target cost for production as well as specifications for the product are sent to manufacturers around the globe to be bid upon. Meanwhile engineers assess the most cost efficient materials required for the production of the item. Once the supplier and engineering aspects are covered, then the design process is undertaken; where in-house and sometimes free lance designers pitch plans for a disassembling product that be shipped flat. After initial shipping, product re-designing is performed to maximize space efficiency and lower costs. Management strategy is just as cost focused, as employees are encouraged to save on company and office resources. Managers fly coach and use public transportation. As work environment goes, equality is encouraged; all levels of staff converse on a first name basis. From a marketing perspective, the

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