...IKEA IN CHINA INTRODUCTION TO IKEA HISTORICAL CHAIN OF IKEA BRIEF INTRODUCTION OF IKEA IN CHINA IKEA entered China in 1998 through a joint venture and started its first in Shanghai. This was followed a store in Beijing in 1999. Since 1980s, several economic trade and investment reforms have enabled the growth of furniture industry in China by 2004, Chinese furniture production was $24 billon and its exports were $7 billion. CONCEPT: SIMPLICITY IS BEAUTY. YI JIA-COMFORTABLE HOME Q1: WHAT MAKES CHINA AN ATTRACTIVE LOCATION FOR IKEA TO INVEST IN? Market: emerging market; small to high size market; customer quality is low but shows an increasing trend Competition: intensity of rivalry is strong; facing some entry barriers; bargaining power is high; a longterm profitable business Country market & industry opportunities Resources: raw materials from China Incentives: declining of the duty rate Q1: WHAT MAKES CHINA AN ATTRACTIVE LOCATION FOR IKEA TO INVEST IN? ? 1. 2. 3. Political The reform of China since 1980?s Entered through a joint venture In 2005, first wholly owned store in Guangzhou.(China entered WTO in 2001) Q1: WHAT MAKES CHINA AN ATTRACTIVE LOCATION FOR IKEA TO INVEST IN? ? 1. 2. 3. 4. 5. Economical Emerging market Basic need updated to sophisticated wants New market space for newcomers Cheap labour cost Wood industry (top supplier) Q1: WHAT MAKES CHINA AN ATTRACTIVE LOCATION FOR IKEA TO INVEST IN? Social 1. Updating of the basic needs(urbanisation) 2. Large...
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...Marketing Improving E-marketing Strategy for IKEA in China Topic Reasons: 1. Poor response rate on IKEA social websites (Weibo, Douban) and the official community Though IKEA has their official online community and accounts on the most popular social websites; neither has got enough attention and effective interaction. 2. Good online product presenting on IKEA.com but lack the featuring experience of IKEA. The official website is designed in a simple way. The main purpose of it is to present the products in a 360 degree way to consumers online. IKEA.com excels at giving clear information and vivid view like exactly what they do in their paper catalogues. However, we were expecting more on the website. They allow consumers to design their own closet, but the app runs promptly. They feature on their on-site experience, but no such experience is given online, and you cannot even buy the piece online in China. With technologies advanced every day, how can IKEA.com just be a catalogue online? It’s a challenging work, but we believe it can be better. Introduction: IKEA is a Swedish company registered in the Netherlands that designs and sells ready-to-assemble furniture (such as beds, chairs, and desks), appliances, and home accessories, featuring Scandinavian modern style. IKEA is now operating more than three hundred stores in more than 40 countries. The IKEA website contains about 12,000 products and is the closest representation of the entire IKEA range. There were over 470...
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...Introduction………………………………………………. 1.1 Scope 1.2 Objective 1.3 Company Background 1.3.1 Company vision and mission 1.3.2 Company products and services 1.3.3 Corporate and business strategy 1.3.4 Sales and profit of the company Chapter 2 Business and corporate strategy…………………………. 2.1 IKEA business and corporate strategy 2.2 Micheal Porter’s Five Forces Model 2.3 IKEA as a competitive advantage Chapter 3 Why IKEA failed in USA………………………………….. 3.1 Cause of the failure 3.2 Different management styles in USA 3.3 Different consumer decision process 1.0 INTRODUCTION 1.1 Scope 1.2 Objective 1.3 IKEA Company Background IKEA is a Swedish furnishing company and was founded by Ingvar Kamprad 1943. It started as a one-man mail order company in a farming village in Southern Sweden called Smaland. (IKEA, 2011a) Today IKEA has become a big international company which has stores in 44 countries worldwide. The IKEA Group has grown into a major retail experience with 123,000 co-workers and is generating annual sales of more than 21.5 billion Euros. (IKEA, 2011b). The sales growth is shown in Appendix 1. The IKEA concept started in the 1950’s with catalogue marketing combined with a showroom where customers could see and touch IKEA products. The company’s three distinct features were function, quality and low price. Problems with suppliers led the company to start purchasing from foreign producers in Eastern...
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...standardised approach to the world? IKEA in China Ulf Johansson Department of Business Administration, Lund University, Lund, Sweden, and Standardised approach to the world 199 ˚ Asa Thelander Department of Communication Studies, Lund University, Helsingborg, Sweden Abstract Purpose – The purpose of this paper is to analyse the marketing strategy in China of the furnishing retailer IKEA in the context of standardisation and adaptation of marketing activities. IKEA’s strategy in China is compared to its corporate strategy throughout the rest of the world. Design/methodology/approach – The four P classifications are used as a framework to compare the central marketing strategies of IKEA with marketing strategies used in China. The paper builds on both primary and secondary data. Interviews with senior managers at IKEA are conducted and studies on business and retailing in China are used. Findings – The marketing strategies used by IKEA in China are found to be different from the standardised strategies it uses throughout the rest of the world. Several of the changed strategies are central to the business concept of IKEA. Research limitations/implications – The present paper shows the challenges for a standardised marketing concept and its implications. Originality/value – The paper provides, in the context of the standardisation and adaptation of marketing activities, a more nuanced and up-to-date picture of the strategies used by IKEA compared to previous studies. Keywords...
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...“IKEA – A Long March to the Far East” Global Strategic Marketing Case Study Table of Contents 1 Introduction to the case 2 2 Critically and systematically analyse the global strategic advantages of IKEA 3 2.1 Branding , designer appeal 3 2.2 Critical mass, low cost, low price 3 2.3 Quality, green credentials 3 2.4 Global appeal, local sensitivity 3 3 What were the key challenges that IKEA faced in a) China and b) Japan? 4 3.1 Key challenges faced by IKEA in China 4 3.1.1 Cultural 4 3.1.2 Structural 4 3.2 Key challenges faced by IKEA in Japan 4 4 Critically discuss the marketing strategies used to address the challenges the company faced in China and in other markets. 6 4.1 China 6 4.2 Other markets 7 5 Discuss and justify what IKEA’s marketing strategies should be in the future in these two markets. 8 5.1 China 8 5.2 Japan 8 6 Conclusions 9 7 Bibliography 10 1 Introduction to the case From humble origins in the woods of Sweden in 1926, IKEA has developed into a major retail experience in 41 countries / territories around the world, with a current turnover of €23.1 Billion (IKEA, 2010). This case study explores the establishment and development of IKEA’s retail ventures in China and Japan – its first moves outside westernised countries and its first significant retail activity in Asia, despite substantial sourcing activity in the region, and discusses how IKEA might continue its market development...
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...Executive Summary Background IKEA, the world’s largest home furnishings retail chain, was founded in 1943 by a Swedish entrepreneur Ingvar Kamprad. IKEA offers standardized products worldwide that are Scandinavian in design worldwide. The unique idea of this famous brand is to offer the option of assembling products to customers. The design of the furniture is very modern and light as it is made of particleboard. The products are of contemporary design and function with the concept that is based on low price. High quality, convenience, affordability, consistency, functionality and good design are the essence of this world class home furnishing retailer. Challenges IKEA faced many challenges in terms of culture and business practices as well as socio-economic and political conditions in China. The biggest challenges were pricing, copycat producers and cheap labor cost for assembled furniture. Alternatives To make the price more affordable for Chinese consumers IKEA has developed manufacturing units in China and collects raw materials locally. Due to country specific environment IKEA chose franchising in China. Because of cheap labor cost of Chinese assembled furniture IKEA offers reasonable fee-based assembling services. IKEA has built its stores near public transportation lines inside cities since only 20% of customers own cars in Shanghai. Recommendations IKEA needs to find more local suppliers to keep price lower. To understand local culture and purchasing habit,...
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...marketing strategies in retailing? IKEA’s marketing strategies in China, Sweden and the UK Steve Burt University of Stirling Department of Marketing, Institute for Retail Studies STIRLING FK9 4LA, Scotland, the UK. Ulf Johansson* *Contact author Department of Business Administration Lund University P. O. Box 7080 SE-220 07 Lund, Sweden e-mail:ulf.johansson@fek.lu.se Åsa Thelander Department of Communication Studies Lund Universitety, Campus Helsingborg, P O Box 882 SE-251 08 Helsingborg, Sweden Paper accepted for presentation at the 1st Nordic Retail and Wholesale Conference in Stockholm (Norrtälje), 6-7/11, 2008 Abstract 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 marketing literature, as well as empirical evidence, argue convincingly for the more adaptation (to different markets) in different national markets. But is IKEA so standardized in marketing strategies? So far there are quite few, and very dated, empirical studies of IKEA marketing strategies (yet many refer to IKEA as having a standardized marketing strategy). Here marketing activites are conceptualized to concern: Merchandise - putting together an assortment of products (e.g., national and retailer brands, pricing and pricing strategy, assortment...
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...Case study : How IKEA adapted its strategies to expand & become profitable in China Executive Summary: IKEA is known globally for its low prices and innovatively designed furniture. In China, however, it faced peculiar problems. Its low-price strategy created confusion among aspirational Chinese consumers while local competitors copied its designs. This case study analyses how IKEA adapted its strategies to expand and become profitable in China. It also assesses some lessons the company learnt in China that might be useful in India, where it plans to open its first store by 2014 and 25 stores in 10 to 15 years. Swedish furniture giant IKEA was founded by entrepreneur Ingvar Kamprad in 1943. He began by selling pens, wallets and watches by going door to door to his customers. When he started selling his low-priced furniture, his rivals did everything to stop him. Local suppliers were banned from providing raw material and furniture to IKEA, and the company was not allowed to showcase its furniture in industry exhibitions. What did IKEA do? It innovated to stay in business. It learnt how to design its own furniture, bought raw material from suppliers in Poland, and created its own exhibitions. Today, IKEA is the world's largest furniture retail chain and has more than 300 stores globally. In 1998, IKEA started its retail operations in China. To meet local laws, it formed a joint venture. The venture served as a good platform to test the market, understand local needs...
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...com/locate/jretconser Standardized marketing strategies in retailing? IKEA’s marketing strategies in Sweden, the UK and China ˚ Steve Burt a, Ulf Johansson b,n, Asa Thelander c a University of Stirling, Institute for Retail Studies, Stirling Management School, Stirling FK9 4LA, Scotland, UK Department of Business Administration, Lund University, P.O. Box 7080, SE-220 07 Lund, Sweden c Department of Communication Studies, Lund University, Campus Helsingborg, PO Box 882, SE-251 08 Helsingborg, Sweden b a r t i c l e in fo Available online 29 September 2010 Keywords: IKEA Retail internationalisation Retail marketing mix Standardisation Sweden the UK China abstract IKEA is often cited as an example of a ‘global’ retailer which pursues a similar ‘standardized’ approach in every market. This paper systematically assesses the degree of standardisation (and adaptation) of four commonly identified retail marketing mix activities – merchandise, location and store format, the selling and service environment, and market communication – within three countries. These countries – Sweden, the UK and China – represent different cultural settings and are markets in which IKEA has been operating for different lengths of time. The data upon which the comparison is based was generated from personal interviews, in-country consumer research, company documentation and third party commentaries. The conclusions drawn suggest that whilst IKEA operates a standardized concept, degrees of adaptation...
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...firm-specific advantages? Country - specific advantages? IKEA’s firm and country specific advantages could be the following: IKEA sells the same furniture all over the world, so IKEA rips huge economies of scale from the size of its stores and the big production runs necessary to stock them. IKEA also offers a low competitive price because of the economies of scale (30% lower than competitors) Exclusive relationship between IKEA and its suppliers, offering modern and exclusive designs for IKEA. Designers also work closely with suppliers, keeping the costs low. Ready-to-assemble kits help to stack products in shelves in order to maintain larger inventories. The cash and carry shopping formula; you can go to the rack directly to collect the product and go home to build it by yourself. Successful use of the word of mouth and the use of catalogues in order to reduce the advertising costs. IKEA has simple and plain staff levels, lowering the fixed costs and giving more freedom to its employees. This management structure also helps making decisions in a faster way. 2. What are the cultural factors that make expansion abroad in retailing difficult? What has made it possible in IKEA’s case? Ikea has encountered many problems when entering the U.S. market because it had to adapt its products and its shopping style to the American standards. IKEA had to redesign its beds because the American citizens were not buying the European size beds (Beds in America are wider than...
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...assignment before submitting. | Declaration: | I declare that, to the best of my knowledge and belief, this assignment is my own work, all sources have been properly acknowledged, and the assignment contains no plagiarism. This assignment or any part thereof has not previously been submitted for assessment at this or any other University.Signature: (Representative) ……….………………………….. (Lavannya Moorthy)Date: 22ND NOVEMBER 2015 | | Table of Contents CASE STUDY 01: IKEA – THE GLOBAL RETAILER 3 Question 1: How the globalization of market benefited IKEA? 3 Question 2: How has the globalization of product benefited IKEA? 3 Question 3: What does the IKEA story teach you about the limits of treating the entire world as a single integrated global marketplace? 4 CASE STUDY 03 : DHM- Shanghai 5 Question 1: Why do you think that it is so important to cultivate guanxi and guanxiwang in China? 5 Question 2: What does the experience of DMG tell us about the way things work in China? What would likely happen to a business that obeyed all the rules and regulations, rather than trying to find a way around...
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...Global Sourcing Development at IKEA – a Case Study Paper prepared for the 25th IMP conference Jens Hultman1, Susanne Hertz1, Rhona Johnsen2, Thomas Johnsen2 1: Jönköping International Business School, P.O Box 1026, SE-551 11 SWEDEN E-mail: jens.hultman@ihh.hj.se, susanne.hertz@ihh.hj.se Tel: +46 0(36) 10 10 00 2: Audencia Nantes School of Management, 8 Route de la Joneliere, BP 31222 – 44312 Nantes Cedex 3, France. E-mail: tjohnsen@audencia.com; rjohnsen@audencia.com Tel: + 33 (0)240 37 46 25 Abstract This study explores the dynamic process of global sourcing development through a case study of the Swedish home furnishing giant IKEA and its supply network concerning the PAX wardrobe system. The paper provides a synthesis of the existing global sourcing literature by dividing this growing body of research into three major themes: globalization processes and stages, motives/drivers, and organizational design and management. Moreover, the paper integrates the global sourcing literature with the established literature on the internationalization process of firms. Comparing the existing research on global sourcing and internationalization, we propose two research questions focused on: (1) the ways in which the IKEA global sourcing and supply chain development process resembles a linear stages process, and (2) the principal drivers of the development of global sourcing within IKEA. Relating the findings of the global sourcing process in the case of IKEA, the paper suggests that the...
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...into stage and change aspects interacting with each other in a circle. Uppsala model defines two perspectives of learning in international activities: general knowledge and market-specific knowledge. General knowledge focuses on marketing method or types of customers while marketing-specific knowledge concerns with business climate, cultural pattern, structure of market system. (Johanson and Vahlne, 1977). IKEA uses Uppsala model to expand its internationalization strategy from 1974, especially in Japanese market and Chinese market. According to Uppsala internationalization model, “companies appeared to begin their operations abroad in fairly nearby markets and only gradually penetrated more far-flung markets” (Global Marketing, Hollensen, page 63). IKEA started to expand internationally from the nearest countries, such as Norway in 1958, Denmark in 1969, Switzerland in 1973, Germany in 1974 and so on. After entering successfully in those countries, IKEA decided to enter Asia area. Japan was the first country that IKEA entered in 1974 and the internationalization strategy used for Japan was not much different from what is used in its nearest markets. The degree of adaptation was low. IKEA’s small-size...
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...IKEA: A Long March to the Far East case study analyses From its humble beginning as a small general retail store in a village situated in the south of Sweden, IKEA has grown into the world’s largest furniture retailer with 279 stores in 36 countries today. Specializing in furniture and home decoration, IKEA has an annual turnover of 19.8 billion euros (source: IKEA, www.ikea.com, accessed 25/03/2012). The IKEA catalogue is printed in 52 editions with 25 languages, with a global distribution in excess of 160 million copies. Armed with its international experience in Europe and North America, IKEA took the company into the third phase of its development by embarking on a major expansion into the Far East, in particular Japan and China. IKEA sees the Far Asia as an emerging market still in its infant stage. Its number of retail outlets in Malaysia, Singapore, Taiwan, Beijing, Shanghai and Hong Kong are very small and comprises a mere 3% of the company’s total sales. These stores were expected to be more successful in the near future. IKEA’s imminent strategic expansion into this region exemplified its ambitions to dominate this emerging market. IKEA’s entry into Mainland China started in 1998 when it opened its first store in Shanghai, followed by Beijing in 1999. IKEA took its time to get to know the Chinese customers. This prudent approach to market entry took IKEA the following 5 years before it opened its first full-scale standard IKEA store in Shanghai in 2003. The store...
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...IKEA The Impact of Globalisation Definition of Globalisation Globalisation is the process by which organisations or businesses start operations on an international scale by committing facilities and resources in foreign countries. The International Monetary Fund, (IMF) continues to believe that this will lead to global convergence through aspects of trade and transactions, capital and investment movements, migration and the movement of people and dissemination of knowledge. Mission Statement - “to create a better everyday life for the many”. Focus Areas & Goals:- Children: IKEA believe that children are the most important people in the world. By supporting their local communities, they hope to assist in children to achieve their fullest potential through development and learning. IKEA has experience in this area and can make a difference. Environment: “Low Price, but not at any price”. IKEA aim to have a positive impact on the local environment and how their business may impact upon it. Their store effectiveness, is measured on how environmentally responsible they are. (IKEA.com (2012). About IKEA, The IKEA Way) Introduction Ingvar Kamprad was born in 1926 on a farm called Elmtaryd, in the small Swedish village of Agunnaryd. At the young age of just 5, he was already showing that he was to become a successful entrepreneur by selling matches to his parent’s friends and neighbours and within two years was selling further afield by travelling to other villages on...
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