Ikea Case Study

636 Words Jun 20th, 2014 3 Pages
IKEA case study
1. Firm specific advantages
IKEA has a variety of firm specific advantages since its business approach appeared to be very unique for the furniture industry. First, IKEA’s most important specific advantages were its good value for the money. IKEA used this advantage for its expansion plans all over the world. IKEA when they failed in the USA had to highlight this specific advantage to bail them out of the financial difficulty they had gotten into.
Second, the most innovative decision of IKEA is to reduce merchandise costs through involving customers in the assembly cycle. This idea allows saving on warehouse costs and helps to reach another economy for customers on transportation costs. As a result of new store layout
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IKEA also embraced its advantage of its heritage, focusing on quirky advertising in North America. IKEA has done an extraordinary job for creating its country specific advantages.
Another country specific advantage is the factor related to suppliers. They are located in low-cost regions with access to raw materials and distribution channels.
Moreover from the beginning of global expansion, IKEA did not address cultural and local differences and this approach worked fine within the European countries as a basis for an economy of scale. However this selection of merchandise didn’t have success at all in USA. For example, the European-style of beds sold by IKEA in USA was narrower and longer than standard American market. Therefore, IKEA adopted a different country specific approach which in large markets with significant differences compared. Traditional Swedish needs subsidiaries of IKEA are given more autonomy and then can order customized merchandise for these markets. Using this region-specific approach, IKEA finally managed to succeed at US market.
3. How IKEA’s expansion has re-energized mature markets around the world and changed the competitive situations
First of all, IKEA perform strategy in the globalization of the production and the market, which made it get more raw materials and customers to enhance their market competitiveness. IKEA not only sells the furnishings, but also the lifestyle. Due to the…

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