Katarzyna Gawor
Soňa Halásová
Friedemann Polzin
International Business Strategy: IKEA
IKEA – Overwiev
Global business strategy
Generic Strategy Organizational structure Operational strategy CSR
Regional Strategy in CEE
Swedwood New markets – sourcing and customers
Local strategy in Slovakia
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IKEA – historic background
IKEA Svenska AB (1943) → Ingvar Kamprad Entering the Scandinavian market (1963) Expansion into Europe and first steps overseas Switzerland and Germany in the 1970’s Fall of the Iron Curtain → full entry into CEE → Swedwood Entry to the British market → aquisition of Habitat Further expansion → China and Russia
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Facts & Figures
The IKEA Group: 253 stores in 24 countries 41 trading service offices in 30 countries 27 distribution centres and 11 customer distribution centres in 16 countries
183 stores in Europe (the largest market) 46 in North America 11 in Russia 10 in China and Japan 3 in Australia
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Facts & Figures
Products: wide range of products including approx. 9500 standarized models of flat pack furniture avialable in IKEA stores all over the world Houses & flats – BoKlok in Scandinavia & in the UK (since 1996) Family Mobile in the UK (since 2008) Product names special naming system developed by IKEA
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Facts & Figures
Employees:
Coworkers by region
Asia and Australia: 7.650 North America:16.800 Europe:103.350
Coworkers by function
Purchasing, distribution, wholesale:14.500 Swedwood Group 17.100 Retail 96.200
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Facts & figures
Sales
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Facts & Figures
Sales:
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Facts & Figures
Purchasing:
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Corporate structure Stichting INGKA Foundation INGKA Holding B.V. The IKEA Group: Services B.V. IKEA Services AB Inter IKEA Holding S.A. Inter IKEA Systems B.V. IKEA stores
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Business strategy
Mission „to create a better everyday life for the many people” Target group young low to middleincome family Organisational structure centralized control over functional activities + low costs + enhenced quality from international suppliers
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Operating strategy
IKEA's success → based on the idea of keeping cost between manufacturers and customers down Innovative cost saving in both upstream and downstream R&D centralized in Sweden
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Global strategy
Generic strategies: costseeking diversification focus strategy Modified value chain: cut costs in both upstream and downstream twoway value system between customers, suppliers, and IKEA's headquarters forward integration Swedwood
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Marketing & Communication
How does IKEA achieve it? Standarized products – selfassembly flat pack furniture Catalogue & a loyalty program Good service: stores restaurants & food minimarkets children play areas Corporate culture
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IKEA’s internationalization
Expansion strategy: Subsidiaries – a common way Franchising Strategic alliances
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Social & environmental responsibility at IKEA
IWAY: internal policy external approach – Forestry policy Cooperation with other companies, trade unions and organizations : „UNICEF” „WWF” „Save the Children”
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Central and Eastern Europe
Strategy
Generic Strategy Next targets
Markets
Distribution Sourcing
Swedwood
Critics
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CEE – Where is IKEA?
Open retail stores: Czech Republic 1991 (4 stores) Brno 1998 11,800 Ostrava 2001 17,000 Prague (Cerny Most) 2004 23,500 Prague (Zlicin) 1996 22,700 Hungary 1990 (2 stores) Budapest 1990 26,100 Budapest (Budaörs) 1999 Slovakia 1995 (1 store) Bratislava 1995 21,500 Poland 1991 (7 stores) Gdansk 1993 11,500 Katowice 2000 23,400 Krakow 1998 11,800 Poznan 1991 14,600 Warsaw (Janki) 1993 23,700 Warsaw (Targowek) 2001 23,100 Wroclaw 1996 12,600 Plans for 2009: Poland (1 store) Lodz August 2009 33,100
19,800
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CEE – (Generic) Strategy
Costseeking – price leadership Suppliers (Poland, Slovakia Swedwood) Marketseeking Present in the biggest Cities/Countries (first in Poland 1991) Knowledge Seeking (Forest Industry & Training service offices)
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CEE Predictions
Prospects New outsourcing wave due to financial crises Increase efficiency and cut costs in CEE Ikea built subsidiary after subsidiary
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CEE Ukraine
Next Target: Ukraine 10 % increase in GDP Warehouses are built in the periphery of the cities Problem: not all Ukrainians have cars Consumption behaviour is different
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CEE Romania
21032007 officially inaugurated a unit in the Baneasa Shopping Centre. Moaro Trading operates the IKEA franchise in Romania decision to enter Romania was triggered by economic growthrates over past few years and recent EU accession Already a significant amount of IKEA products are made in Romania 20 % lower prices compared to foreign suppliers / competitors
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CEE Distribution
KISS – keep it small and simple Distribution Warehouse in Wels (Austria) for Central and Eastern Europe
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CEE Sourcing
Without Poland Ikea would be lost One of the most important production locations 600 Million € turnover Own production and over 90 suppliers 12 % of the whole IKEA production
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Swedwood
Business Area Forest and Sawmills East Business Area Components and Furniture East
Source: www.swedwood.com
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Swedwood History originally formed as a result of the political and economic upheaval that changed the face of Eastern Europe IKEA could not be sure it would be able to continue getting its important share of furniture from the affected region To safeguard itself against the loss of vital suppliers, IKEA formed Swedwood as a subsidiary on April 1, 1991 Initial task: participate, when necessary, in the privatisation of IKEA suppliers Today Swedwood has evolved into an IKEA supplier with advanced production facilities of its own, mainly in Eastern Europe
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Swedwood Figures
Steady growth 2000: Zbaszynek in Poland built 2002: Sawmill in Russia built
Source: www.swedwood.com
2005: new factory in Poland built
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CEE Critics
IKEA has social and ecological image Survey by Dutch Labour Unions (2003) Investigate in working conditions and working relations in IKEA suppliers Survey took place outside of the Company sphere Control of facilities Breach of IKEA Behaviour Codex: no free salary negotiations – very low salaries Insufficient external control
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IKEA in Slovakia two main reasons: 1. qualified labor force 2. material (wood) in good quality and quantity big challenge and advantage for bigger furniture producers in Slovakia threat for smaller producers new view on a system of living as a whole not just a separated units of the furniture IKEA force another producers on Slovakia to cut their costs and improve effectiveness
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IKEA in Slovakia Figures In the financial year 2008: Sales volume – rose by 16% Turnover – 2,1 milliards SKK Visitors – 2,3 millions
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IKEA in Slovakia Suppliers Suppliers in Slovakia: Covered by Ikea Group: Swedwood( Trnava, Závažná Poruba, Malacky II) and Ikea components (Majcichov, Malacky I) Slovak companies: Ekotech Fiľakovo, Lenos Levice, Sanas Sabinov International companies with production in Slovakia: Lind Mobler(Krupina)
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IKEA in Slovakia Competitors KIKA Möbelix Nábytok Galan Asko nábytok partially also Hornbach and Baumax
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IKEA in Slovakia Advantages Ability to cut cost and have lower prices Good position Special opening hours Avion Shopping Park – from 2002 Fast growth of the Slovak market
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The Final Slide
Thank you for your attention!
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Resources
Seminar Paper “International Business Strategy” by Katarzyna Gawor, Sona Halasova and Friedemann Polzin
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Licence
Copyright © 2008, Friedemann Polzin, Katarzyna Gawor and Sona Halasova the contents of this documentation may be used under the terms of either the GNU Free Documentation License 1.2 or the Public Documentation License. GNU Free Documentation License Notice Copyright © 2008, Friedemann Polzin, Katarzyna Gawor and Sona Halasova Permission is granted to copy, distribute and/or modify this document under the terms of the GNU Free Documentation License, Version 1.2 or any later version published by the Free Software Foundation; with no Invariant Sections, no FrontCover Texts, and no BackCover Texts. A copy of the license can be found at http://www.gnu.org/licenses/fdl.txt. Public Documentation License Notice The contents of this Documentation are subject to the Public Documentation License Version 1.0 (the "License"); you may only use this Documentation if you comply with the terms of this License. A copy of the License can be found at http://www.openoffice.org/licenses/PDL.html. The Original Documentation is "International Business Strategy IKEA". The Initial Writers of the Original Documentation are Friedemann Polzin, Katarzyna Gawor and Sona Halasova, Copyright © 2008. All Rights Reserved. Initial Writer contact(s): friedemann@fhj.de Contributors are:
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