Ikea Invades America

1264 Words Oct 30th, 2006 6 Pages
IKEA is the worlds largest furniture retailer (in 2002), with sales approaching 12 billion dollars. They operate in 22 countries and have 154 full service distribution stores. IKEA is a highly differentiated service and product provider, emphasizing high-quality product at the lowest prices via non-traditional positioning strategies. In order to provide these low costs, the product came with virtually no customer service and ‘put it together ' and ‘transport yourself ' directions. In addition to these "strictly self-service" outlets, IKEA offered various amenities including, Swedish cafes and playgrounds for kids.

IKEA 's decision to enter the US market was an easy one, especially with 67 billion dollars a year in sales and highly
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Once IKEA identified and understood the consumers (i.e. abandoning metric measured appliances and beds for American standards of size and comfort), they were able to double revenues, from $600 million in 1997 to $1.27 billion in 2002. From this analysis, it is possible to infer that IKEA combined their already successful cost leadership strategy with the properly identified needs of its target market, the American consumer. With this modification of the value chain, IKEA increased revenues and is pointed in the right direction to achieve their growth goals for 2013. As seen in Appendix 1, their projected growth is well into 8% per year, in relation to total projected growth.
In order to achieve these projected figures, it is possible that an even deeper understanding of the American consumer and possibly changing the organizational structure of the company might be crucial for success. First the following challenges need to be addressed and taken into account when strategizing:
• The increase in complexity of logistics
• The difficulty to respond to national needs and cultural issues
• Changing customer bases

Possible Solutions for US Expansion
Strategic Alliances While addressing these concerns, the possibility of franchising or executing a joint venture-type model could increase efficiency and take into account the local and cultural issues in the United States, as well as other foreign markets.

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