IKEA: expanding through franchising to the South American market

4108 WordsNov 2, 201417 Pages
CASE STUDY III.2 IKEA: expanding through franchising to the South American market? It is the beginning of 2011, and Ingvar kamprad, founder of the Swedish furniture retailing giant IkEA, is concerned 'his' firm may be growing too quickly. he used to be in favour of rapid expansion, but he has now started to worry that the firm may be forced to close stores in the event of a sustained economic downturn. on the other hand, IkEA is active in nearly all the world's con- tinents, though to a lesser degree in South America. kamprad wonders if this continent, and in particular Brazil, could be a future growth market for IkEA. Although IkEA is one of Sweden's best- known exports, it has not, in a strict legal sense, been Swedish since the…show more content…
More important is the fact that the awareness of the IkEA brand is much bigger than the size of the company, because IkEA is far more than a furniture merchant. It sells a Scandinavian lifestyle that customers around the world embrace. the IkEA business idea is to offer a wide range of home furnishing items of good design and function, excellent quality and durability, at prices so low that the majority of people can afford them. the company targets customers who are looking for value and are willing to do a little bit of the work themselves, trans- porting the items home and assembling the furniture. the typical IkEA customer is young and from a low- to middle-income family. As mentioned earlier, IkEA's retailing is based on a franchise system. Inter IkEA Systems BV, located in Delft (the netherlands), is the owner and franchisor of the IkEA concept. the IkEA group is a private group of companies owned by a charitable foundation in the netherlands. It is active in developing, purchas- ing, distributing and selling IkEA products. the IkEA experience is about more than just products, however - it is a retail concept. for the concept to work, all aspects must be in place. IkEA products are there- fore sold only in IkEA stores franchised by Inter IkEA Systems BV. however, most of the global product policy (including product development) and the global marketing are centralized to the Swedish

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