...Innovation Strategy of Retailer: From the View of Global Value Chains Yongquan Hu, Huifang Jiang Abstract-Retailing running to high-value-added-end is a more visible trend, which attracts lots of attention from researchers or practitioners. This paper tries to explain this with the theory of Global Value Chains(GVCs). After literature review on GVCs and innovation strategy, this paper analyzes the global value chains of 7-11, IKEA, Wal-Mart and PPR separately. Then some com parisons is done to analyze the respective characteristics of the global value chain model of the four from ten angles, so as to build retailer's innovation strategy on GVCs. As a result, some advices are given to Chinese retailers for their developing. their competitiveness on value chains and develop so quickly? Since coming down to the status of retailing on global value system, the researches for such questions, as above, tum out to be meaningful both in theory and practice. So, applying the dynamic theory of global value chains, this paper analyzes four global value chains driven by four multinational retailers, in order to explain the phenomena of retailing running to high-value-added-end, and provide retailers with a global perspective, Multi-Dimensional model for innovating and competing. Index Terms-retailer, global value chains, business strategy, innovation, innovation strategy I. INTRODUCTION As a presentation of the terminal industry, there's a more visible ...
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...Current Event Report IKEA Ikea wants to enter the Indian retail market by selling its Billy bookcases. The Indian government beat a “hasty retreat” to allow foreign retailers into the country with minority Indian partners. Under their new rules, an outside retailer can only own 51 percent of their Indian operations. The rest will have to be owned by local partners. The Indian Finance Minister, Pranab Mukherjee explained his decision to suspend the operation of the retail proposal, but he did not report whether it would affect multi-brand retailers or just single-brand retailer. Ikea will benefit greatly if the decision is approved. They have wanted to set up stores in India. Many political parties and shopkeepers protested against the government’s plans to permit foreign retailers. So, Ikea decided to cancel their new conferenced that they had scheduled to introduce plans of setting up stores in India. Ikea already buys a great amount of their furniture and other items from India. There has been great opposition to big and general merchandise retailers, such as Wal-Mart. India these them as a huge threat to small stores in India since it would threat their existence. Whereas, Ikea may not be such a huge threat because they are only planning on implementing on selling a specific brand of furniture. Ikea is a self-assembly furniture store which was founded in Sweden. Right now they have about 300 stores in more than 35 countries. Ikea also has a strong brand...
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...COMPANY PROFILE Ikea Group REFERENCE CODE: 6878C795-4BCB-4C85-A319-6F33C508FD80 PUBLICATION DATE: 14 Aug 2014 www.marketline.com COPYRIGHT MARKETLINE. THIS CONTENT IS A LICENSED PRODUCT AND IS NOT TO BE PHOTOCOPIED OR DISTRIBUTED. Ikea Group TABLE OF CONTENTS TABLE OF CONTENTS Company Overview..............................................................................................3 Key Facts...............................................................................................................3 SWOT Analysis.....................................................................................................4 Ikea Group © MarketLine Page 2 Ikea Group Company Overview COMPANY OVERVIEW Ikea Group (Ikea or 'the group') is an international home products retailer. It sells furniture, accessories, and bathroom and kitchen items. Ingka Holding BV, a wholly-owned company by Stichting Ingka Foundation, is the parent company for the Ikea group of companies. The foundation is owned by the Kamprad family. As of August 31, 2013, the group had operations in 43 countries across Europe, North America, Asia and Australia. Ikea is headquartered in Delft, the Netherlands, and employed 135,000 people as of August 31, 2013. The group recorded revenues of E28,506 million (approximately $37,280.1 million) during the financial year ended August 2013 (FY2013), an increase of 3.2% over FY2012. The operating profit of the group was E4,011 million (approximately...
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...IKEA Case Study IKEA Case Study The founder of IKEA, Ingvar Kamprad, established the IKEA brand in Sweden when he was only 17 years old. It was 1943, and the IKEA brand started its enterprise journey by selling items such as seeds from Kamprad’s family’s farm and Christmas magazines. By 1948, the IKEA furniture line came to life. Kamprad’s concept was “good furniture could be priced so that the man with that flat wallet would make a place for it in his spending and could afford it” (Hill, 2013). Today, IKEA is one of the world’s largest furniture retailers. This essay will discuss the legal, cultural, and ethical challenges that confront IKEA; determine the various roles that the host governments played in IKEA’s business operation; and will summarize the strategic and operational challenges facing global managers illustrated in IKEA: “Furniture Retailer to the World.” Legal, Cultural, and Ethical Challenges IKEA faced obstacles with a culture of disjointed, established Swedish furniture retailers that sold an expensive line of furniture that was to be passed down in families as heirlooms. IKEA’s self-assembly, less expensive furniture concept led to ethical and legal implications for them. Kamprad was able to undercut prices of the established retail outlets by cutting retailers out of his process (Hill, 2013). Because Kamprad cut the retailers out, they countered by coercing furniture manufacturers to not make sales to IKEA...
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...IKEA’s Global Sourcing Challenges Professor’s Name [optional] University The stakeholders of IKEA- Stakeholders are groups or individuals (customers, employees, suppliers, communities, and shareholders or other financiers) who can affect or be affected by the successes and failures of a business. In case of IKEA, their customers who bought furniture form them in 70 nations, all the employees who work for IKEA in 70 countries all over the globe, their suppliers all over the world who supply IKEA with the raw-material as well as furnished furniture, and all those who financed the company to open its stores and make primary investments in the 70 countries, for its geographical expansion are the “real stakeholders of IKEA”. IKEA was founded in the early 1950s, but in the mid of the 1960s it became a global furniture manufacturing company. During its expansion all around the globe, Ingvar Kampard (the founder of IKEA) opened multiple stores in different countries, some of them were self-financed by him while others were assumed to be opened as the tie up between the company’s and their stockholders (for finance) in that company, especially, those who financed the company to open the chain of stores on the foreign land. Also, when some problem arises in the indigenous market when Sweden’s local large furniture retailers threatened and all the sourcing and suppliers were blocked and even small retailers were ordered not to sell IKEA’s product, under that circumstance, IKEA has to...
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...Strengths * IKEA has maintained long-term partnerships with its suppliers. This ensures that the company has access to high-quality materials at reasonable prices. * IKEA has a global reach * IKEA provides designer furniture at lower costs. * IKEA enjoys economies of scale. * Highly focussed on quality. * IKEA’s flat packaging reduces costs and makes it easier for customers to transport * The company culture matches its external image of cost saving. * Strong in-store experience – unique, experiential, “modern theme parks”. Weakness * IKEA was trying to sell Scanvadian designs which were initially not accepted in U.S. * Lower level of customer service * Niche market * Too much emphasis on cost-saving. * Product and style selection is limited. Opportunities * International expansion: IKEA are moving from International to global status through the development of Asia and Eastern European models. * E-commerce: Will reduce pressure from stores to a certain degree and hence will improve service quality. * Traditional product for IKEA has been within value, low price high volume product however the movement into mid and higher price points with more stylish image opens up a new segment for IKEA. * The budget shopper market is growing, especially among college students and in metropolitan areas Threats * Within growing competitive retail markets mainstream retailers are beginning to mirror the model of low cost...
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...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 can be observed in customer facing elements, and in the supporting ‘back office’ processes which support these elements. These adaptations arise from differences in consumer cultures and the length of...
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...Strengths * IKEA has maintained long-term partnerships with its suppliers. This ensures that the company has access to high-quality materials at reasonable prices. * IKEA has a global reach * IKEA provides designer furniture at lower costs. * IKEA enjoys economies of scale. * Highly focussed on quality. * IKEA’s flat packaging reduces costs and makes it easier for customers to transport * The company culture matches its external image of cost saving. * Strong in-store experience – unique, experiential, “modern theme parks”. Weakness * IKEA was trying to sell Scanvadian designs which were initially not accepted in U.S. * Lower level of customer service * Niche market * Too much emphasis on cost-saving. * Product and style selection is limited. Opportunities * International expansion: IKEA are moving from International to global status through the development of Asia and Eastern European models. * E-commerce: Will reduce pressure from stores to a certain degree and hence will improve service quality. * Traditional product for IKEA has been within value, low price high volume product however the movement into mid and higher price points with more stylish image opens up a new segment for IKEA. * The budget shopper market is growing, especially among college students and in metropolitan areas Threats * Within growing competitive retail markets mainstream retailers are beginning to mirror the model of low cost value flat packed...
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...IKEA Research Paper Team Members: Kevin Agbulos Chandni Shah Francis Mendo Raymond Cheng Ting Yu Course: International Business Professor Alex Settles Date: December 5th, 2013 Table of Contents: I. Introduction (pgs. 1-3) II. International Expansion (pgs. 3-5) III. The IKEA Concept and Business Model (pgs. 5-7) IV. Organization and Management (pgs. 7-8) V. SWOT Analysis (pgs. 9-10) I. Introduction In 1943 Sweden, a Swedish 17-year-old man named Ingvar Kamprad established IKEA. IKEA stands for Ingvar Kamprad Elmtaryd and Agunnaryd. Elmtaryd is the family farm’s name and Agunnaryd is the name of the village where the farm is located. It started off as being a retailer for selling matches, seeds and fish and Kamprad slowly added items such as ballpoint pens, furniture and other household designs. As he started expanding his product portfolio, Kamprad started adopting business strategies such as selling his products via mail order, using a milk truck as transportation, making a furniture catalog and hiring a furniture designer. This designer was Gillis Lundgren who also came up with the self-assembly, flat-packaging technique. This flat-packaging design allowed for more efficient transportation as it cut down on unnecessary space and prevented product damage. The self-assembly technique Lundgren had developed allowed IKEA to essentially forward integrate, cutting out outside retailers. Big retailers responded by turning manufacturers against IKEA...
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...pose the greatest threat? Why? While Ikea is moving from an international strategy to a global-standardization strategy, there is the threat of possible limited resources and the change in consumer taste. Recently there has been an increasing awareness of preserving the forests and a concern for global warming. As a result, Ikea needs to develop an alternative to wood as a source of furniture and goods. The problem is the uncertainty of when that shift will take place. It could be within the next 10 years or maybe the next 100 years. Regardless, Ikea needs to consider these external factors. Currently, they need to focus on how to meet the demands of the customers so they’re able to keep up with competition. From this point the debate could be whether Ikea should look into alternative resources for wood so not only are they able to keep up with the competition, they’re also prepared for future changes. Or, rather put those expenses into finding a new supplier to add onto their current supply to keep up with the expansion. Ikea alone uses almost 1% of all wood used commercially around the world. The company said it plans on becoming “forest positive” by 2020, meaning that, despite its continuing high demand for timber, it intends its business to have overall positive effect on the world’s forest. What does this mean? The commitment of this approach means it will be growing at least as many trees as it uses to make products by 2020. Ikea also intend to become of the biggest and...
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...Executive Summary IKEA is a “privately held, international home products company that designs and sells ready-to-assemble furniture such as beds and desks, appliances and home accessories”. The company was established in Sweden in 1943 by a 17-year-old Ingvar Kamprad, who is one the world's richest people in 2013, the company's name is an acronym that consists of the initials of Ingvar Kamprad, Elmtaryd (the farm where he grew up), and Agunnaryd (his hometown in Southern Sweden). IKEA is currently the world's largest furniture retailer and arguably the most successful global retailer. Being one of the biggest global retailers, IKEA benefited a lot by the globalization of its business; IKEA’s target market is the global middle class who is looking for low-priced but attractively designed furniture and household items. The company started as a home-furniture retailer in Sweden over 60 years ago. Throughout the years with the use of effective globalization, “IKEA managed to increase its business revenue and profit by selling and making home-furniture in different countries all over the world, and it has over 300 retail stores in more than 30 countries”. Other than that, they sell roughly 10,000 different products, which attract customers from different places all over the world. The basic assumption behind IKEA's global strategy was “one-design-suits-all”. This case “IKEA’s Global Sourcing Challenge: Indian Rugs and Child Labor ” is about IKEA’s development from a...
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...Contents Executive summary: 2 Historical Background: 3 IKEA Viaion and Mission: 3 Production Strategy: 4 Promotion strategy: 4 IKEA Expansion worldwide 5 Expansion into Europe: 5 Expansion into North America: 5 IKEA’s Marketing Mix 6 Price 6 Products 6 Promotion 6 Place 7 Environmental Analysis 7 Issue identification, discussion and strategic alternatives 8 Why IKEA wanted to penetrate the US market? 8 Issue identification, the problem IKEA faced in America? 8 What caused these problems? Mistakes that IKEA made while entering the US market: 9 How do some of the American customers perceived IKEA and its marketing strategies? 9 How can IKEA solve its problem? What are the strategic alternatives? 9 Recommendation 11 Alternative Implementation 11 Conclusion 12 Appendixes 12 Executive summary: IKEA is a Swedish company which specializes in manufacturing furniture and selling them throughout the world. It has got large retail stores located on the outskirts of the major cities. IKEA is well known for attracting customers who are looking for modern designs at good value. IKEA is a Swedish furniture chain that has drawn large opening crowds to its stores as it has pushed into Europe, Asia, and North America. It has built something of a cult following, especially among young and price-conscious consumers. But the expansion was not always smooth and easy, for example, in Germany...
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...the success of IKEA? The IKEAs success is derived from three factors. * Low price – 30% - 50% lower than market prices * Scandinavian design and style - good design and functional * Well-designed shopping area to be immensely appealing to customers– cheerful decorated model room, bright and inviting atmosphere, childcare centers, restaurant, etc. 2. What do you think of the product strategy? The product strategy of IKEA is to provide low price products but have meaning at well-designed shopping areas. In other words, IKEA provides cheap products with good design which will not make customers feel cheap at the place where they can enjoy shopping with their families. To provide cheap products, IKEA has global sourcing network. In addition, IKEA has a rigid cost saving culture. 3. Despite the success, what are Ikea downsides? * American Culture - Americans are notorious for their reluctance to buy new furniture. To expand in the US market, IKEA needs to sell product as much as possible and thus, IKEA needs to change the fix idea in the US. * Scandinavian design and style - There is no doubt that the Scandinavian design and style are attractive. However, IKEA needs to adopt some American style (Colonial American, American Country, Mission, Southwestern and Shaker) to meet American needs. * High-end Retailers – Competition with high-end retailers could be the downside factor. High-end retailers offer exclusive services which IKEA does not have...
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...IKEA INVADES AMERICA. CASE STUDY Abstract Success is sometimes intriguing as it can be part of a combination of luck and hard work, or maybe one or the other, but IKEA’s unreadable formula for business success has been revealed; it’s simple: “great designs for the masses…” It is always easier to offer a unique product to those willing to spend any amount necessary, than to provide customers with complete solutions for little money. It is in the perfect combination that IKEA has found its niche, which has now apparently, spread globally. This case study examines IKEA’s role in the American market, its possible growth and everything else that could come ahead. IKEA Invades America IKEA is the world’s largest furniture retailer with sales approaching $12 billion with 154 stores in 22 countries. IKEA is a very unusual furniture retailer given the large physical size of the stores, the self-service features including self-assembly of furniture, limited product and style selection, but with customer amenities such as a playroom for children and a restaurant. Despite limitations, IKEA has been very successful and plans to open more store in the United States. In answering the questions for this case, DO NOT do any research on the company and its progress since the case was written. You must only use the information presented in the case. Adding outside information beyond what is in the case will reduce your grade! Questions What do you think of the company’s...
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...IKEA’s Global Strategy: Furnishing the World 2014-2015 submitted by Brian Albanese April 26, 2014 Executive Summary This author has provided an analysis of the IKEA case study found in the Marketing Management textbook. It analyzes the strategies used by IKEA to gain competitive advantage in markets outside of its original market. The report provides a background of the organization, recognizes IKEA’s main markets and examines corporate level strategies by identifying its target market and evaluating its pricing strategies. This case study will further analyze how culture, design, and price play significant roles in determining IKEA’s success. In addition, IKEA’s “global sourcing network of more than 2300 suppliers in 67 countries” (Peter & Donnelly, 2013, p. 411) allows its suppliers to provide furniture of all kinds to its customers. IKEA produced standardized products, however, this international strategy did not work for the United States. Therefore, the company has to take corrective actions. Table of Contents Executive Summary i Situational Analysis 1 Environment 1 Economic conditions and trends 1 Cultural and social values and trends 1 Political and legal issues 1 Technological factors 1 Summary of environmental opportunities and threats 2 Industry 2 Classification and definition of industry 2 Analysis of existing competitors 2 Analysis of potential new entrants...
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