Ikea China Marketing Analysis

* 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.

The rapidly growth in sales of IKEA in its own country thanks to its innovative new concept in furniture and its reinforcement with polish suppliers, during the 1950s and 1960s, gave to IKEA the option to consider in going further of Swedish borders. Thus, in 1963 was opened the first Store in Oslo capital of Norway. This first step was a guideline to continue the expansion process IKEA has started, and helped to strengthen the internal market in Sweden with the opening of the biggest store in Stockholm in 1965, and the second international store in Denmark in 1969.

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.

In IKEA’s history two different modes of entry were used. Both were met with big success and allowed IKEA to enter new markets very easily, and in a secure way.

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 considered to be a low cost, high quality producer in the furniture industry, therefore it is important to

Founded in 1943 by Ingvar Kamprad, IKEA is, over 60 years later, the world largest furniture retailer, providing products in a flat packing concept and at low prices. They have 226 stores in Europe, Asia, and America with revenues of $17.7 Billion as of August 2005. 70% of their marketing communication is based on their famous annual catalog. There are many environmental factors that affect IKEA’s global and domestic marketing decisions. An analysis of those factors, the influence of the global economic interdependency and the effect of trade practices and agreements, the demographic and physical infrastructure, the cultural differences, social responsibility and ethics versus legal obligations, the effect of political systems and the influence of international relations and the Foreign Corrupt Practices Act of 1977, and finally the effect of technology are discussed herein.

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)

The IKEA Group, one of the world’s top furniture retailers, has emerged as the fastest-growing furniture retailer in the US. Its unique business strategy has given it its strengths for its success today. However, like all strategies, IKEA’s strategy has its own flaws that can pose as weaknesses. IKEA also has a lot of opportunities in the marketplace such as expansions of their company and threats such as competitors in the same industry.

For IKEA the step into the Chinese market was a big step, maybe as big at the first

In PEST analysis, we will look into what will be affect by the business environment. It includes political environment, economical environment, social environment and technological environment.

In august 2008, IKEA had total 253 stores where 560 million people visited. Here the total sales became 23 billion Euros. Considering 20% sales profit here IKEA’s average customer per store and cost per store are given below:

At the outset, it may be useful to characterise IKEA in terms of the characteristics of demand (also known as the four Vs, see Slack et al. p 20). First, IKEA is clearly a high volume operation – as indeed most international retailers are – which lends to systematising operations but which implies capital intensive processes and therefore cost considerations will be crucial. Second, IKEA offers a large number of products (up to 14000 depending on the country/store) so there is high variety in the

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.