...Case 8: IKEA’s Global Strategy: Furnishing the World I.Situation Analysis IKEA is a privately-owned international furniture manufacturer known for its low prices and unique style. The company’s vision is to create a better everyday life for its customers by offering a great selection of well-designed, practical home furnishings. Since IKEA has chosen this sort of affordable and distinctive marketing strategy, the company has been very successful in its expansion throughout the world. IKEA has been successful with a relatively standardized product and product line in a business with strong cultural influence. This is because: The founder formulated IKEA’s mission which states that IKEA offers wide variety of home furnishings of good design and function at prices so low that the majority of people can afford them. Such wide variety could fit a wide variety of cultures and tastes. The case studies also states that the assortment of goods are universally accepted. The principal target market of IKEA is similar across all countries and regions and is composed of people who are young, highly educated, liberal in their cultural values,white collar workers, and not especially concerned with status symbols.Most people in the IKEA target market are liberal in their tastes,preferences and cultural norms hence making them easy to accept and appreciate IKEA’s standardized products. II.Problems Found in Situation Analysis 1. What are IKEA's firm‑specific...
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...CONTENT Introduction – IKEA’s background……………3 IKEA’s Supply Chain Analysis……………….3-4 IKEA’s Logistics Activities……………………4-6 IKEA’s Internal Environment…………………6-7 IKEA’s External Environment…………………8 Problems and Solutions……………………….8-10 Conclusion…………………………………….11 References…………………………………….12 Introduction Since first founded in 1940s, with its mission statements to “create a better everyday life for the many people”, IKEA’s business idea has achieved great success. In this report, we would mainly focus on IKEA’s logistics function, We begin by analyzing IKEA’s supply chain, adopted strategy, the internal and external environment. Second, we investigate into IKEA’s logistics operations. At the last part, we discuss the problems of business and logistics aspect IKEA faces, and give our advices to solve them. IKEA’s Supply Chain Analysis For the IKEA’s supply chain, it includes suppliers, manufacturers, retailers and customers. Firstly, IKEA has thousand amounts of suppliers provide raw materials and components for the manufacturing acticities globally. It also has cooperation with a number of suppliers as joint owners or financiers in Poland, Slovakia, Russia and China such as Konakovo factory (Russia) providing four different items for IKEA’s Moscow store, Priozersk factory (Russia) providing five different chair models, RPOFIm (Poland) providing three different types of office chairs etc. This can ensure the continuous flow of manufacturing services...
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...grammar and mechanics - Excellent |15 | | |Description of the Organization – good detail |20 | | | Opportunities for Global Expansion – great research |30 | | |Challenges to Global Expansion |30 | | |Expansion Options and Recommendations – team did a great job with the analysis and support |30 | | |APA citations & references page |15 | | |TOTAL |140 | | IKEA in India: An Opportunity for Success IKEA has become one of the most recognized and profitable home furnishing brands throughout the world. The name “IKEA” is representative of its Swedish beginnings. The “I” and the “K” stand for the initials of the company’s founder’s, Ingvar Kamprand, and the “E” and the “A,” respectively, stand for the first letter of the farm (Elmtaryd) and village...
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...successful global retailers in terms of profitability. IKEA is a home-furnishings company from Sweden. In 2010, IKEA had more than 310 stores worldwide in 38 countries, employed around 127,000 people, and earned revenues of 32 billion euros (Rothaermel, 2013). IKEA has recently shifted from an international strategy to a global-standardization strategy. IKEA has many challenges, but the two that throw up the biggest threats are the ecological factors and rivalry among competitors. Ecological factors concern broad environmental issues such as the natural environment, global warming, and sustainable economic growth. Managers can no longer separate the natural and the business worlds because they are linked (Rothaermel, 2013). Wood is one of IKEA’s main input factors; however, consumers are becoming more sensitive to the issue of deforestation and its possible link to global warming. The issue is that IKEA needs to find low-cost replacement materials for wood. To address this challenge, I would make sure IKEA has a specific team working on finding wood substitutes. Perhaps the team can look into wheat straw sunflower hulls. These are two materials that companies are using to replace hardwood to fabricate cabinets and furniture. Also, particleboard, oriented-strand board (OSB), medium-density fiberboard (MDF), and other composites that were formerly made from wood are now manufactured from agricultural wastes. These new composites can make home furnishings (Lees, 2004)...
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...furniture retailer and it is also internationally known as home furnishing retailer. IKEA always concern for people and the environment. Besides that, it also responds to the public and customer’s rising concern for sustainability in its choice of product range, suppliers, stores and communication. However, there are still problems faced by IKEA from the aspect of organization development that requires changes to take place in order for the organization to improve efficiency and effectiveness of its existing operations and also to ensure that goals and objectives of the organization can be achieved. The first problem encountered by IKEA is the size and scale of its global business. IKEA is known as the world’s largest furniture retailer and carries a range of 9,500 products, including home furniture and accessories. It also means that IKEA’S outlet is widely establish in many other countries. Thus, this could make it extremely hard to control in terms of its standards and quality. So they must figure out some solutions to deal with the problem which will bring benefits to whole organization. Also, the quality of the products in each country may be slightly varied from others. For example, some countries where IKEA products are manufactured do not implement the legislation to control working conditions. Hence, this could represent a weak link in IKEA’S supply chain and also affecting consumer’s view towards IKEA’S products. In terms of that, IKEA has to come out with something...
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...life for the many people. This includes doing what we can to help create a world where we take better care of the environment, the earth's resources, and each other. We know this continuous improvement is a never- ending job, and that we are sometimes part of the problem. But we work hard to be part of the solution". You are required to explain how IKEA is able to implement its vision and mission statements in its work processes? Vision At IKEA our vision is to create a better everyday life for the many people. Our business idea supports this vision by offering a wide range of well-designed, functional home furnishing products at prices so low that as many people as possible will be able to afford them. Our business idea supports this vision by offering a wide range of well-designed, functional home furnishing products at prices so low that as many people as possible will be able to afford them. The IKEA product range focuses on good design and function at a low price. It offers home furnishing solutions for every room in the home. It is co-ordinated so that no matter which style you prefer our designers and product developers work hard to ensure that our products meet your day-to-day needs and eliminates the unnecessary. Low prices are the cornerstone of the IKEA vision and our business idea. The basic thinking behind all IKEA products is that low prices make well-designed, functional home furnishings available to everyone. We are constantly trying to do everything a little...
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...selling furniture and published a catalog in 1951. With its Scandinavian and contemporary style, IKEA's business model of furnishing simplicity and do it yourself furniture has taken the company from a catalog based company to a multimillion dollar company. The company has grown to over 253 outlet stores in 37 countries and making itself known as a global brand of do it yourself furnishings at a lower cost than most furniture retailers Marketing strategies IKEA’s success is based on principal marketing strategies that remain the same throughout the world, which include a catalogue that is printed in 52 editions in 27 languages and has a worldwide circulation of 200 million copies, and the use of the colors of the Swedish flag blue and yellow in the IKEA logo. This is combined with an emphasis on customer freedom and choice with regard to buying and taking home products, and low prices intended to create a “sale” mentality amongst customers. This aggressive price strategy coupled, with a wide product range catering for every potential lifestyle and life stage of a consumer, can best summarize the company’s recipe for success. The fact that IKEA targets all age groups and households makes it an attractive proposition to a wide spectrum of most countries’ consumers, especially amongst depressed retail markets, such as Europe at the moment. Problem: How can IKEA balance global standardization and local adaptation? Alternatives Keep its contemporary and simplistic look and...
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...is a global furniture brand inspired by the egalitarian society of its Swedish heritage and appears to the public to be forever Swedish. It expands its retail stores all over the world including North American, European Middle East and Asian countries but also spreads a kind of its own a highly strong business culture and values with a strong Swedish image to other countries through the establishment of business there. History: IKEA was founded in 1943 in Sweden by Ingvar Kamprad. Kamprad was born in 1926 as the son of a farmer in Småland, a region in southern Sweden. At the age of five Ingvar Kamprad starts selling matches to his nearby neighbors and by the time he is seven, he expands to selling flower seeds, greeting cards, Christmas tree decorations, pencils and ball-point pens. In 1943, at the age of 17, Kamprad became an entrepreneur and created a commercial company called "IKEA." The word IKEA was an acronym of his name and “Ingvar Kamprad” and the address, the name of his farm and village: “Elmtaryd, Agunnaryd”. Company initially sold fish, vegetable seeds, and magazines to customers in his region. Then in 1950 IKEA added furniture and home furnishings to the product line. IKEA entered new markets around the globe in the 1980s. IKEA expands dramatically into new markets such as USA, Italy, France and the UK. Operating Environment: Ikea is the world's largest furniture retailer which specializes in stylish but inexpensive Scandinavian designed furniture. Ikea's success...
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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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...BACKGROUND INFORMATION IKEA is an internationally known home furnishing retailer. It has grown rapidly since it was founded in 1943. Today it is the world's largest furniture retailer, recognized for its Scandinavian style. The name IKEA comes from the first letters of IKEA’s founder Ingvar Kamprad and the names of the farm and village where he grew up Elmtaryd Agunnaryd. Although the soil was thin and poor in Ingvar’s village, people had the reputation for working hard making the most out of limited resources. Ingvar applied the lessons learned from his village to the home furnishing market. Nowadays, IKEA’s vision is “to create a better everyday life for the many people by offering a wide-range of well designed, functional home furnishing products at low prices so as many people as possible will be able to afford them”. IKEA had a turnover of 26 billion Euros in 2011 and is present in 35 countries with more than 300 stores. PROBLEM DEFINITION IKEA had faced only successes when expanded from Swedish market in other European countries. The first attempt was in 1973 in Switzerland, followed by Germany in 1974. Since then it expanded across much of Europe with very good results. The issue raised in this case is how a giant like IKEA with a success story all over Europe tries to enter vast markets like the one in USA. So, the problem is how to sustain the corporate culture and brand identity together with the existing cost structure when entering new big markets with the...
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...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 occupies 33,000 square meters and retails more than 7,000 products. A record of 80,000 visitors flocked to the store on the opening day. This new Shanghai store represents an important landmark for IKEA’s business development in China. It is the largest of its stores not only in China, but also in Asia. In the same year, the president of IKEA...
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...Kathryn England Brenna O’Regan John Hudson IKEA’s Global Strategy: Furnishing the World IKEA is a privately-owned international furniture manufacturer known for its low prices and unique style. The company’s vision is to create a better everyday life for its customers by offering a great selection of well-designed, practical home furnishings. Since IKEA has chosen this sort of affordable and distinctive marketing strategy, the company has been very successful in its expansion throughout the world. In 1943, Ingvar Kamprad founded what is now known as IKEA in Almhult, Smaland, Sweden (Johansson, J.K. (2006) p. 85). Initially, the company sold such items as pens, wallets, picture frames, table runners, jewelry, etc., anything that Kamprad thought there was a need for (“IKEA” n.d.). Then, in 1947, furniture was added to their product selection, followed by personally designed pieces in the year of 1955 (“IKEA” n.d.). IKEA is also greatly known for its concept of selling disassembled furniture. Using this sort of strategy, in turn, has considerably reduced costs and their use of packaging, creating another great advantage for the company (“IKEA” n.d.). IKEA continues to use the same warehouse store design and layout as it has in the past. This design consists of “knockdown” inventory kits being stacked on large racks throughout the store, with an assembled version available for display (Johansson, J.K. (2006) p.85). Having their items packaged and stored in...
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...informative report about IKEA. IKEA is a company that’s internationally known as a retailer for furniture and home furnishing. IKEA was founded in 1943 in Sweden by Ingvar Kamprad. IKEA started out as solely a retail operation, until Kamrad bought his own small furniture factory in 1953. IKEA then started to design its own furniture line in 1955 and opened its first store in 1963 near Oslo. By now IKEA is one of the world’s top retailers of furniture and home furnishings and has more than 361 stores spread around 45 different countries around the globe. (this information comes from http://franchisor.ikea.com/FranchisingtheIKEAway/Pages/All-IKEA-stores.aspx) IKEA is historically known for its high quality items for affordable prices and for their self shopping stores. Customers can come into the stores, buy the furniture they like and take it with them right away. They then have to put it together themselves when they get home, or in some cases IKEA staff would even come to the customers home to help them assemble the furniture. This IKEA concept immediately became a success, mainly for kitchenware and children’s furniture. In 1973 the first store outside of Scandinavian territory was opened in Switzerland and in 1974 in Germany. After this began the expansion into all the markets on a global basis and by 1990 there were 17 stores situated in Western-Germany, 1 in Australia, Canada and Singapore and those...
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...SUPPLY CHAIN MANAGEMENT TERM PAPER ON IKEA’S SOURCING, DISTRIBUTION STRATEGY AND ITS GREEN SUPPLY CHAIN MANAGEMENT BY: SUBMITTED TO: KANIKA MURARKA Dr. P R S SARMA 1226113122 MBA-IB IIIrd TRIMESTER INTRODUCTION IKEA Group (IKEA) is a global retailer of Scandinavian designed furniture and accessories founded in Sweden in 1943. It has operations in 44 countries across Europe, North America, Asia and Australia and is headquartered in Delft, Netherlands. It employs 13000 people and sells 9500 home furnishing products in 298 retail stores worldwide. IKEA recorded revenues of $36101.5 million during the financial year ended in August 2012, an increase of 9.8% over 2011. IKEA offers a range of furniture for living rooms, bedrooms, kitchens and children’s rooms. Its emphasis on providing home furnishing products at low prices has been the main reason for the widespread customer acceptance of its products which, in turn, has facilitated its growth in various geographies. The company designs, manufactures, transports, sells and assembles its merchandise to minimize cost at each level. To help keep prices low, the group ensures that production equipment and raw materials are used efficiently. Customer involvement also contributes to low prices. IKEA relies on customers to choose, collect...
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.............. 3 First question: .......................................................................................................................................... 3 IKEA’s business model: ........................................................................................................................ 3 IKEA’s strengths and weaknesses:....................................................................................................... 4 IKEA’s competences: ........................................................................................................................... 5 Summary about IKEA’s successful: ...................................................................................................... 7 Conclusion: .......................................................................................................................................... 7 Second question: ..................................................................................................................................... 7 The drivers of their internationalization: ............................................................................................ 8 IKEA’s internationalization strategy: ................................................................................................... 9 IKEA’s opportunities and threats: ....................................................................................................... 9 Conclusion: ............................
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