The IKEA case provides an excellent opportunity to apply strategic management concepts to a large privately-held company that is expanding into India. It is the largest furniture retailer in the world but did not enter India untildespite the fact that it has been sourcing from India since the s.
The IKEA Group, a Swedish company founded in with its headquarters in Denmark, is a multinational operator of a chain of stores for home furnishing and house-wares.
It hasemployees. It has been hugely successful since its origin in as a mail order catalogue featuring locally produced furniture. The IKEA brand is associated with simple, low cost, stylish products. The concept was furnishing products and house-wares that had wide appeal to a variety of markets and segments, both consumer and the business market exclusively.
Both markets were looking for well styled, high quality furniture that reasonably priced and readily available. Initially, IKEA did not customize its products to local markets, but kept to standardized products and operations worldwide. This standardized strategy of internationalizing minimized costs.
IKEA developed a model for the business, where it was able to keep costs low. From the customer point of view, they were able to buy low cost furniture, however they had to assemble and collect the flat-packed furniture from stores.
IKEA to was able to reduce costs, as this costly part of the value chain was carried out by the customer. IKEA had excellent international procurement.
IKEA was successful at i identifying worldwide suppliers and ii managing quality and iii prices with suppliers, to keep margins low.
It had excellent supply chain management and utilized the latest IT infrastructure. Due to the sheer number of orders and components required by the company - IKEA developed an efficient system for ordering from suppliers, integrating them into products and delivering them to stores. This was achieved by a world network of 14 warehouses.
Inventory was stored - and the IT system managed supply and demand to stores, keeping inventory costs low.
"Ikea: How The Swedish Retailer Became A Global Cult Brand IKEA is a well-known global brand with hundreds of stores across the world. In order to improve performance, it must assess its external and competitive environment which will reveal the key opportunities to analyze there advantages and threats. Ikea's opening in India – and its subsequent success or failure – is likely to become a case study for other international retailers. India's retail landscape is complex. A test case in retail FDI Swedish home-furniture giant IKEA’s decision to invest about billion euros (Rs 10, crore) in India through 25 stores, comes with a set of conditions.
Anticipating the needs and wants of customers. IKEA was successful in product design and ensuring ranges were modern and of good quality. Challenges and outlook for IKEA: Its expansion into the US market.
It adopted an ethnocentric strategy for going international - where it had standardized products and standardized operations. This helped to keep costs low, but ignored the different tastes and preferences of the US market and the way they purchased furniture.
IKEA had to change the model of operating, giving greater ownership to its US subsidiary, to become polycentric - stores in the US had the ability to adapt furniture and customize to suit the local market.
Costs increased as a result, but this localization approach was necessary for sales. IKEA has looked towards emerging markets e. Further adaptation to products has been necessary - including pricing strategy.
Income levels of consumers is lower and stores needed to be located within the cities as car ownership is lower. IKEA has experienced greater competition from national brands.The biggest IKEA in Canada will open in Ottawa on Dec.
7, a ,square-foot temple to furniture and housewares. IKEA a temple? Think of it this way: Ottawa’s IKEA is bigger than any other. Many wonder if Ikea's almost cult-like dedication to consumer-friendly retailing, with its obsessive focus on the tiniest details and its humor-driven marketing, will continue.
6] "IKEA: How the Swedish Retailer Became a Global Cult Brand," BusinessWeek, November 14, 7] Icon is an international design and architecture magazine. It interviews top architects and designers in the world, visits the best new buildings, analyses interesting new cultural movements and technologies and reviews a range of .
In February, fashion retailer Gap became the latest brand name to join the row over unpaid taxes in Europe when reports surfaced that the San Francisco-based company had paid almost no tax in.
(IKEA: how the Swedish Retailer became a planetary cult trade name). This instance survey is an abridged version of an article from Business Week online (N.
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