Case Study Of IKEA

* Diversification can be a good way that IKEA does to sustain growth after it loses some cache. Product innovation and market development such as IKEA’s expanding goal in U.S. market. It is a risky strategy but with careful selection of the right kind of businesses, considerable improvements in profitability can be experienced.  To try and maintain growth, IKEA is considering diversification outside of the furniture market.

This paper aims to demonstrate a detailed description of the elements of ‘IKEA’ company based on its famous name in the furniture industry.

The success of the industry was the huge experiences in the product differentiation, cost leadership and retail market. IKEA unique concept is that furniture is sold in kits that are assembled by the customers at home. The company remains one of the world most successful multinational retailing firms, operating globally. This report will explains IKEA internal and external environment using PESTLE, PORTER FIVE FORCE AND SWOT. Furthermore IKEA globalisation and localisation strategy breakdown will be examined, CSR and ethic and recommendation will be also examined.

IKEA is rumored to be a very standardized retailer, i.e., a certain set of marketing strategies is used that are the same around the world. This indeed sets IKEA, operating on markets in Europe, US as well as Asia and Australia, apart among international retailers. Often the theoretical conclusions in international

IKEA is one of the largest multinational companies in the world dealing with several products. The company sells and designs furniture appliances and home accessories at an affordable price. Ikea has over three hundred stores worldwide enjoying the good name it has created for itself. While they are one of the most profitable furniture companies in the world there are significant challenges and threats that have been overcome and are still needed to be tackled.

IKEA had to start designing more of its furniture in house and found a manufacturer who would produce IKEA-designed furniture. In this process, the manufacturer was in Poland where they found it is 50% cheaper than to manufacture in Sweden, allowing him to cut prices even more. Here the furniture industry continued to evolve with new technology and cost savings.

Manufacturing is not one of IKEA’s core competencies and therefore outsourced to countries with low factor costs.

The target group of IKEA is consumers with limited financial income. Therefore, this economic situation will impact and influence IKEA’s business due to a slow down consumer spending and income reduces.

In some instances IKEA’s expansion to a new country had lacked sufficient research. This is evident from its expansion to United States and Japan. IKEA entered Japan with a local partner but had failed to win over Japanese consumers as they had underestimated the significance of cultural differences. The rush into Japanese market and Japanese customers’ unacceptance for flat pack and self-assembling their own furniture were some of the reasons for failure. Whereas, in US, IKEA had initially replicates its existing business model and products when in expanded its business operations in that country. However, there arise need to customize its products to cater the local customers’ needs. For instance, American customers demand for bigger beds and closets. Hence, several marketing strategies were also changed for the American

Looking into the sourcing of a multinational company is very important as we would know risks of investing on that company well. Inter IKEA Holding S.A. is a fully owned by Interogo Foundation in Netherland, which is an enterprise foundation registered under Liechtenstein law. It has no listed their shares on any market in world, the company elaborates that, they wish to create ownership structure that stands independence and long-term approach. Their profit will only be reinvested into IKEA Foundation for charitable purposes and keeping purpose for future investment. As a result, they used Euro (€) as their main currency.

The debate about standardization and adaptation for international markets has continuously attracted more attention from multinational companies for several years. The case of IKEA has however tried to help me in understanding the argument involving these two marketing strategies as applied in the international markets.

As IKEA is expanding rapidly around the globe, it faces a number of challenges in terms of varied cultural, demographic and market specific needs. The 'one-design-suits-all' global expansion strategy might not be suited for the culturally diverse markets, yet the brand is perceived in a similar way by the customers around the globe exhibiting low price as the core brand value. As IKEA expands globally, the branding strategies revolve around providing value (quality and design) to the customers at affordable prices.

IKEA is a globally known home outfitting retailer. It has developed quickly since it was established in 1943. Today it is the world 's biggest furniture retailer, perceived for its Scandinavian style. The greater part of IKEA 's furniture is level pack, prepared to be gathered by the shopper. This permits a lessening in expenses and bundling. IKEA conveys a scope of 9,500 items, including home furniture and embellishments. This wide range is accessible in all IKEA stores and clients can arrange a great part of the range online through IKEA 's site.

POLITICAL FACTORS AFFECTING IKEA: Operating globally means IKEA operates in many stable and unstable political conditions, i.e. developed and developing

IKEA’s strategy before the mishaps in America could be characterized as going against the norm charting their own path to success using low priced manufactures to secure lower selling prices aimed to target those who were of older age and of middle class standing. Their new strategy was to target those of a younger demographic, young married couples, college students, and 20-30 something singles. By reemphasizing design, promoting through hip quirky advertisements, and encouraging consumers to do away with their old furniture, IKEA revenues doubled in a four-year period. IKEA today has adapted somewhat of a local customization strategy where their store layouts will resemble that of many local household layouts as proven by their success in China where they failed to expand beforehand. They also keep their prices extremely low in some areas as China by sourcing a large percentage of products in the area of operation.