MGNT 3650

June 12, 2011

Chapter 1 Closing Case-IKEA

How has the globalization of markets benefited IKEA?

Globalization of markets has benefited IKEA by making it easy to expand into different countries. Now that the whole world has excess to the internet, everyone is basically wearing and listening to the same things. This is very beneficial to IKEA because there isn’t a lot the company has to do with the style they originally started in Sweden. With the globalization of markets it makes it easier for customers to buy products from IKEA online or at the warehouse with their country “social” demographics and culture in mind. “The worldwide success of a growing list of products that have become household names is evidence that consumers the worlds over, despite deep-rooted cultural differences, are becoming more and more alike - or, as the author puts it, "homogenized." In consequence, he contends, the traditional MNC's strategy of tailoring its products to the needs of multiple markets may put it at a severe disadvantage vis-a-vis competitors who apply marketing imagination to the task of developing advanced, functional, reliable standardized products, at the right price, on a global scale.”

How has the globalization of production benefited IKEA?

This has saved IKEA time and money. IKEA has producers to supply each of its big markets; it helps by knowing the styles of each market. For example the producer for the American market knows that Americans like everything “Super Sized” and the producer of European markets know Europeans like little items compared to Americans so these markets would not share the same supplier. Most of IKEA Producers are in China because they have cheap and it’s faster to export similar products from one place its more efficient.
“Understanding the link between trade, industrialization, and geographic concentration is important because globalization and the spread of digital technologies hold the potential to dramatically alter where people live and work. If lower communication costs free individuals from having to work in cities, then advanced countries could de-urbanize. Further, if globalization continues to change national patterns of industrial specialization, it could also reorient the location of economic activity inside countries.”
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What does the IKEA story teach you about the limits of treating the entire world as a single integrated global marketplace?

The IKEA story has taught me that power is in technology the faster and easier customers are able to access your product the more popular it will become. IKEA is willing to change the style of its products to meet the demands for that item for those customers no matter where in the world that customer lives. With the variety of IKEA products middle- class all over the world are having a lot more in common with each other. IKEA as made its warehouse stores and online services a “one stop shop” for homes all over the world.
“IKEA is a king of globalization compared to the many local competitors in the furniture industry (Capell et al., 2005; Hollensen, 2007b), if we understand globalization as a process leading to greater interdependence and mutual awareness among economic, political, and social units in the world, and among actors in general (Guillen, 2001). As such globalization means that big global players like IKEA are exposed to an increased global awareness and interdependence, which is recognized when IKEA promotes the reason for considering IKEA as a future employer.”
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Bibliography Page

Hanson, Gordon H. "The Globalization of Production." (2001): 1-20. National Bureau of Economic Research. Web. 12 June 2011. .

Levitt, Theodore. "Globalization of Markets." The Mckinsey Quarterly (1984): 1-20. Web. 11 June 2011. .

Korsgaard, Steffen, Morten Rask, and Jakob Lauring. "The Diversity Management Paradox in Globalization-the Swedish IKEA Way." Diss. Department of Management, Aarhus School of Business, 2007. Web. 8 June 2011. .