IKEA: Managing Cultural Diversity
P. Grol, C. Schoch, and CPA
After firmly attaining leadership within Sweden, where it holds more than 20 percent of the overall market, IKEA has succeeded over the last 25 years in doing what 110 furniture distributor has ever attempted: to become a global player in an industry formerly considered by na¬ture to be local.
Today IKEA delivers low-priced quality furniture to key markets throughout the world. It is the only distributor in its field to have successfully established itself in all parts of Europe, including south¬ern and eastern Europe, and more notably in North America, includ¬ing the USA. It has stores today in the Middle East, Singapore, and Hong Kong and is preparing to enter the Chinese
…show more content…
IKEA’S successful development, particular organizational capacities, and the bold and inspired leadership of its entrepreneur-founder have all been largely written up and commented. Its organization, communication, marketing, product range, and store layouts, all tell the same story - the story of the “IKEA. Way.” A way strongly rooted in the personality of founder Ingvar Kamprad and the Swedish (regional) culture that he grew up in.
The “IKEA Way”: Doing Things Differently
What is it that makes IKEA so different? Is it just a matter of “quality goods at affordable prices”? Or is there a deeper explanation? When asked these questions, IKEA managers and personnel become mystical and somewhat vague. “It is really a winning combination of price and a merry feeling, a feeling of delight,” a Dutch marketing manager answers. This feeling and a conscious awareness that, in addition to the competitive advantage, there is something strong and intangible at IKEA that drives and motivates its success, is shared by Ikeans throughout the organization. Could it be that the “IKEA Way’s” combination of vision, charismatic leadership, sound business principles is subtly reinforced by the influence of Swedish culture? Could it be that Swedish, or Scandinavian, culture contains elements that facilitate international expansion?
North America
Number of active articles: 1 1,400 Number of
The philosophy states “ Our vision is to create a better everyday life for the many people. Our business idea is to offer a wide range of well-designed, functional, home furnishing products at prices so low that as many people as possible can afford them.” IKEA needs to create products following this motto but have these products molded to the tastes and styles of the U.S. population. The prices must still be low but IKEA must force the message that even though the price is low that does not mean the quality of the product is poor. This message will be key for expansion in the U.S. to be a success. IKEA must maintain their shopping experience as that is a strong competitive advantage, and tweak their philosophy so it fits the American lifestyle. If they do this then they will have success in expansion.
IKEA is a world famous furnishing company known for selling Scandinavian-style furniture and other home-based goods. The company has over 230 stores, with operations carried out in over 42 countries with well over 70 000 employees. The stores themselves can occupy 410 million shoppers per year. It is a Swedish based company built on the idea of offering a wide range of well-designed, functional home furnishing products such low prices, that a majority of people will be able to afford them. The IKEA group is currently solely owned by the INGKA Foundation through a holding company, unlisted on any stock exchange.
IKEA’s main competitive advantage derives from low costs, which in part are achieved due to standardized products (JUREVICIUS, Ovidijus, 2013). IKEA has been setting up many new stores in different countries all over the world. While most purchases are still done in the European market (59%), the Asian market has expanded quickly (currently 35%) (IKEA, 2014). This expanded market, caused by growing wealth in Asia, created the option to lower costs even more due to economies of scale. The ability to keep selling standardized products however is decreasing quickly with this expansion of the company. IKEA has experienced first-hand that cultures differ too much to keep the old system of ‘one-size-fits-all’
As explained in the “bargaining power of consumers”, it is hard to substitute the products that are offered by IKEA. This is further intensified by the fact that IKEA has formed a brand perception that makes it stand out amongst its
IKEA-products are extremely popular, there are very few people that never heard about the yellow-blue brand. Moreover, it will (even) be hard to find people that have no products from IKEA in their houses. This makes us wonder: “Why is IKEA so successful?” We will analyze IKEA’s marketing department to answer this question. We think IKEA’s marketing strategies are very unique and therefore an important factor causing IKEA’s success. Our main belief was that IKEA is a company with a great proficiency in pricing. However, after some readings about the company we discovered all the 4p’s of the marketing mix are very well developed and still very innovative. IKEA’s marketing strategies are based on its democratic design statement; “Democratic design brings good design to the many
In 1951, to reduce product returns, he opened a display store in nearby Älmhult village to allow customers to inspect products before buying. It was an immediate success, with customers traveling seven hours from the capital Stockholm by train to visit. Based on the store’s success, IKEA stopped accepting mail orders. Later Kamprad reflected, “The basis of the modern IKEA concept was created [at this time] and in principle it still applies. First and foremost, we use a catalog to tempt people to visit an exhibition, which today is our store. . . . Then, catalog in hand, customers can see simple interiors for themselves, touch the furniture they want to buy and then write out an order.”2 As Kamprad developed and refined his furniture retailing business model he became increasingly frustrated with the way a tightly knit cartel of furniture manufacturers controlled the Swedish industry to keep prices high. He began to view the situation not just as a business opportunity but also as an unacceptable social problem that he wanted to correct. Foreshadowing a vision for IKEA that would later be articulated as “creating a better life for the many people,” he wrote: “A disproportionately large part of all resources is used to satisfy a small part of the population. . . . IKEA’s aim is to change this situation. We shall offer a wide range of home furnishing items of good design and function at prices so low that the majority of
IKEA is a multinational group founded by Ingvar Kamprad in 1943. A production oriented firm in the retail industry, IKEA designs and sells a range of functional and durable, self-assembled ‘flat-pack’ furniture, appliances and home décor at low prices (Rodionova, Z. 2017). IKEA originated in Sweden and has 370 stores in 47 countries, mainly in Europe, Asia, North America and Australia (IKEA 2014).
IKEA Company was founded in 1943 by Ingvar Kamprad. The name of IKEA is originally formed from the first letter of the founder’s name and the names of the property and the village where he grew up. At the beginning, IKEA produced and sold simple things (such as pens, wallets, table, pictures frame, watches and jewellery) in the base of low price. The production of furniture in IKEA began during 1947 and in 1955 IKEA Company started to design its own furniture. Based on the company’s motto “Well designed and affordable quality furniture for everybody,” IKEA has been able to grow into fame company
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 an international company which designs house products and sells them in the form of ready to assemble furniture. It is one of the world’s largest furniture companies. It is founded by17 years old Ingvar Kamprad in Sweden in 1943. The most important fact about the company is the attention to control the cost of the products, which allows them to lower the prices. Even today they are continuing to expand in the world by looking forward to new product developments. The number of stores of IKEA in the United States is 14 at the moment and they aim to have 50 stores by 2013.
IKEA is a unique Swedish furniture company. The company we so widely recognize today for selling good quality budget friendly Scandinavian style furniture began in 1943 as merely selling pens picture frames and wallets. Ikea was founded by a then 17year old Ivor Kampard, of the farm Elmtaryd near the small village of Agunnard in Smaland, hence giving rise to the name IKEA. This area is know for its thrifty and hard working ethos and Kampard very much incorporated this into his business venture. His innovative idea was to offer home furnishing products of good function and design at prices much lower than competitors by simply using cost-cutting solutions that did not affect the quality of products.
IKEA is the largest furniture chain in the world, and in 2011 the Swedish company operated over 270 stores in 25 countries. In 2011 IKEA sales soared to over $35 billion, or over 20% of the global furniture market. Most of its stuffs believed IKEA will massive growth throughout the world in the coming decade because IKEA could provide what customer wanted: good design, and good made contemporary furniture with an affordable price. In one word, IKEA’s global approach focuses on simplicity, attention to detail, cost consciousness, and responsiveness in every aspect of its operations and behavior. (Jones, 2013)
All the products are designed so it would be easy to transport and assemble. Moreover, the company offers the widest product range and positive shopping experience. All of these factors are aligned with what customers want and need and which results in higher sales. Without such extensive customer knowledge and best practices to benefit from that knowledge, IKEA would be unable to outcompete its current competitors. Constantly using innovations to drive costs
Management and owners are responsible for maintaining IKEA’s global values and norms. Management are not spoilt with lavish executive perks and most of top management have risen from within the company. Each year managers are required to work a week in either a store or
IKEA established itself as the largest furniture retailer in Sweden by the early 1970s by reinventing the wheel of furniture manufacturing at that time. Majority of furniture manufacturers in Sweden produced expensive products with designs that were basic or passed down generation to generation, additionally other manufacturers stores where located in downtown congested areas. IKEA’s strategies which consisted of low cost low priced furniture, brave intricate designs, self-assembly,