...Management IKEA Case Study Sharleen Suwaris-SUSND11 Sharleen Suwaris Executive Summary The following is an analysis of the IKEA case study found in the Strategic Management Text book. This analyses the strategies used by IKEA to gain competitive advantage in markets outside its original area. The report begins by providing a background into IKEA. It studies International Business Level Strategy and the three international corporate level strategies. The case study goes into informing its target market and pricing strategy, which is already discussed. This case study further says how different people in different parts of the world thinks about IKEA, how elegant their designs are and how affordable for them to purchase IKEA products. Some of IKEA’s main markets are in three of the fastest growing markets such as Russia, US and China. IKEA store bring out products such as furniture to small product like a scented candle. IKEA has over 1300 suppliers in about 53 countries. They further have 12 full time in- house designers with 80 free lancers and other production workers to identify the correct raw materials and produce products efficiently and cost effectively. Primarily, IKEA produced standardized products however; this international strategy did not work for one of its vital markets that is, US. Therefore, they had to emphasize on taking corrective actions. The report also analyses the entry methods used by IKEA and its sustainability. IKEA Case Study ...
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...The reason behind choosing the IKEA is because IKEA is one of the world’s most successful retailers. IKEA 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...
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...unexplored geographies. This is also touted as the reason why many governments were initially and many still are opposed to the idea of allowing large retail companies to set up shop especially if they are from abroad. One of such large retailer is IKEA which has of late managed to enter the Asian market. IKEA is known all over the world as a low cost high quality provider of ready to assemble furniture. This is about what the company does and not what it stands for. IKEA is a symbol of excellence that serves as an inspiration for entrepreneurs and business houses alike. There are no two views about the successful business model adopted by IKEA which also has a strong value system. There are fewer controversies and lot more accolades for IKEA as compared to other large retail giants. What is more fascinating however is the fact that in spite of being a large and powerful entity IKEA does not abuse its dominant position to extract any benefits from its partners and suppliers. It is this characteristic that differentiates IKEA from other large retail companies. It is not surprising to find large corporations taking advantage of cultural and legal loopholes to expand their businesses. When a company like IKEA manages to expand its business in around 38...
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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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...Management IKEA Case Study Sharleen Suwaris-SUSND11 Sharleen Suwaris Executive Summary The following is an analysis of the IKEA case study found in the Strategic Management Text book. This analyses the strategies used by IKEA to gain competitive advantage in markets outside its original area. The report begins by providing a background into IKEA. It studies International Business Level Strategy and the three international corporate level strategies. The case study goes into informing its target market and pricing strategy, which is already discussed. This case study further says how different people in different parts of the world thinks about IKEA, how elegant their designs are and how affordable for them to purchase IKEA products. Some of IKEA’s main markets are in three of the fastest growing markets such as Russia, US and China. IKEA store bring out products such as furniture to small product like a scented candle. IKEA has over 1300 suppliers in about 53 countries. They further have 12 full time in- house designers with 80 free lancers and other production workers to identify the correct raw materials and produce products efficiently and cost effectively. Primarily, IKEA produced standardized products however; this international strategy did not work for one of its vital markets that is, US. Therefore, they had to emphasize on taking corrective actions. The report also analyses the entry methods used by IKEA and its sustainability. IKEA Case Study ...
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...IKEA’s Global Sourcing Challenge IKEA, one of the world’s largest specialized furniture retailers, has been presented with a large issue within their operations. In 1995, a German TV station released an investigative report which exposed one of the suppliers for IKEA rugs for exploiting child labor in their factory. A recent addendum was signed by all IKEA suppliers which forbid the use of child labor (Bartlett & Sjoman, p. 1, 2006), so this incident has called the company to make an action based on the accusations at hand. The amount of turnover that is accounted from Indian rugs for IKEA is small on the full scale, and made the company question whether or not the product line was worth the profit potential. The following will be an analysis of the history of IKEA’s manufacturing, external forces related to the presented issue, rising issues, and recommendations for the company’s future moves. History of IKEA’s Manufacturing Though IKEA is one of the largest brands in the furniture industry, the company has been involved with some environmental issues related to their manufacturing. In the 1980s, IKEA’s products were subject to investigation as they were observed to emit more than allowed levels of formaldehyde (Bartlett & Sjoman, p. 5, 2006). The issue occurred from suppliers buying materials from sub suppliers, which resulted in the product not passing the regulations placed by legislation. The company began to change the way they worked with their suppliers...
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...expand its business into several cities and also around the world. A company who has a similar background is IKEA. IKEA has expanded its business to around the world branding itself as a household name. One way IKEA has a better competitive advantage over Riordan Manufacturing Inc. is the cost leadership strategy. IKEA has managed to sustain its operation by creating a product that is unique and which appeals to the masses but yet it is very cost effective to the consumers. Riordan Manufacturing has been able to stay in business due to the differentiation strategy but it could continue to grow globally and ensure its long term success by focuses on how it can reduce costs and pass that savings to the end users. IKEA has also used the cost focus strategy which has propelled its popularity and success globally. Using this method, IKEA has been able to identify a certain need in specific areas of the world and designed its furniture according to the style preference of that area while still keeping costs low and providing the savings to the end user. Riordan Manufacturing, Inc. could use this strategy to expand its products or manufacturing capabilities to specific groups of clientele around the world and beat out the competition cost wise. References Wheelen, T. L., & Hunger, J. D. (2010). Concepts in strategic management and business policy: Achieving sustainability (12th ed.). Upper Saddle River, NJ: Pearson/Prentice Hall. History - IKEA. (n.d.). Retrieved...
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...IKEA MARKETING CASE 1. 1. Until now IKEA international marketing strategy has been tightly and centrally controlled by corporate headquarters. However, high local' pressures emerging due to demographic and cultural differences might force the local IKEA shops to take strategic initiatives to respond to local market needs. In this connection discuss the regional headquarters and transnational organization (presented in Chapter 12) as hierarchical 'entry mode' alternatives to the very centralised strategy emanating from IKEA's headquarters. The advantages of having regional headquarters ( feature of divisional structure) are : flexible reaction to local conditions, accountability and be more competitive. However, this implementation could face some problems: strategic focus, economies of scale, loss of efficiency and costs, and finally large commitments. If they pass from regional headquaters to a transnational organization they will obtain differents advantages related to focus on global integration: efficient resource allocation, knowledge Exchange, economies of scale, local focus. But some disadvantges would appear like corporate identity and complexity of the process. 2. IKEA has not yet explored joint venture and strategic alliances strategies. Evaluate the pros and cons regarding these two entry strategies versus the traditional IKEA entry mode of franchising. As we know, strategic alliances appear when parterships between firms where their resources and capabilities...
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...Author Author Strategic Marketing Plan for IKEA in INDIA [Document subtitle] Strategic Marketing Plan for IKEA in INDIA [Document subtitle] Contents Introduction 2 About IKEA 2 1.0 Analysis of Indian Market 3 1.1 Micro Analysis 3 1.1.1 PESTEL Analysis 3 1.2 Micro Analysis 4 1.2.1 SWOT Analysis 4 1.3 Impact on Hofstede Culture Dimension 5 a) Collectivism vs Individualism 6 b) Femininity vs Masculinity 6 c) Avoidance of Uncertainties 6 d) Power Distance 6 1.4 Porter’s Diamond Model 7 2.0 Global Marketing Objective 7 2.1 Porter’s Generic Strategy Mix 8 2.2 Ansoff’s Marketing Strategies 8 3.0 Mode of entry 9 4.0 7 P’s of Marketing 10 a)Product 10 b) Process 10 c) Price 10 d) Physical evidence 11 e) Place 11 f) People 11 g) Promotion 11 References 0 List of Figure Figure 1: SWOT Analysis 5 Figure 2: Hofstede Dimensions 7 Figure 3: Comparison of Entry Mode 9 Introduction India is developing country, populated with 1.2 billion people. India’s economy is of very worthwhile. The current analysis shows India is expected to be considering in Top 5 economies in the world. Due to powerful economic development in past few decades, the living standards of Indian nation are improved and improving day by day. The people of India are establishing themselves in the field of information technology and in other industries. They also step up in urbanization and trend of using foreign band has increased much. The retailing...
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... The colors of Swedish National Flag. слайд 3 You can see short survey of History слайд 4 They make this possible 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. слайд 5 1） What are IKEA's firmspecific advantages? Countryspecific advantages? In China, IKEA has already gone beyond the corporeal concept of household goods, and become a fashion, life taste of live specimens. Many consumers like the decoration in their own homes before to take a look at the IKEA shopping, in the light of IKEA's design Style of dress to their small nest. IKEA’s products are, in fact, smooth, simple and practical follow-oriented features, the rational pursuit of the typical Nordic style, Ikea's design department well to combine art and the market, developed in line with the style of IKEA customers and meet the requirements of the product. In addition to the Chinese mainland IKEA prices somewhat on the high side, the other in the global market, IKEA has been low-cost high-quality image, that benefit from its economic procurement strategy. IKEA in the choice of suppliers for the product, as a whole to consider the lowest overall cost. Although the furniture in the assembly is nothing new, but Ikea is the first to put flat-packed into a mode of operation. It was one sudden inspiration of Ikea staff, he amputated legs of the table, so that not only can be loaded on the table...
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...Ikea in china For IKEA the venture into the Chinese market was a huge step. At first, IKEA executed its institutionalize strategies in China as IKEA actualized in Europe, subsequently IKEA confronted extraordinary issues in China. Case in point, IKEA is utilized to be seen as having low costs in Europe and U.S, this additionally one of the aggressive foundations of the entire idea of IKEA there. Be that as it may this is not the situation in China, here the observation is a genuinely selective western retailer, a store of expensive items for the higher working class. On account of it IKEA confronting the issue of adapting as numerous Chinese customers were drawing pictures of the furniture and jotting down descriptions of the items however not so much purchasing them. An alternate issue is that Chinese see IKEA items as imaginative and not traditional. In the wake of confronting a great deal of issues, IKEA chose to change their systems in China by considering Chinese society and Chinese consumer behavior. Ikea in india IKEA's looming passage into the Indian market has stirred scores of global furniture organizations to the potential here. Before it, Indians obtained IKEA item from online sites. The individuals who were either dawdling over putting resources into India or who were keeping out of sight in the Indian business are going up operations and putting resources into advertising to prop themselves for rivalry once IKEA arrives. Ikea in uk In the UK, IKEA has 23-year...
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...Environmental Factors: IKEA Ingvar Kamprad founded IKEA in 1943 and now it is the world’s biggest retail furniture provider. Its prices are very competitive and it was the first company to provide products in flat packages. IKEA has 226 stores around the globe, and earned over $17.7 Billion of revenue as of august 2005. Its famous catalogue that is released on annual basis, accounts for 70% of total marketing communication. IKEA’s marketing, both global and domestic, is affected by a number of environmental factors. We will be discussing all those factors, affect of global economic interdependency, affect of trade agreements and other business practices, and material road and communication networks. Topics like social responsibility, ethics and actual law, cultural differences, and foreign corrupt practices act of 1997 will be discussed. Finally, we will go through effect of political systems, pressure of international relations and effect of technology on overall business. Influence of Global Economic Interdependence & Effect of Trade Practices and Agreements Trade agreements, business practices and the economy help in understanding the purchasing power of the customers. It means they work with earnings, prices, reserves, loans and GDP. These factors should be kept in mind when any organization decides to go global. They should carefully plan their marketing mix in accordance to the target consumers. Pricing is of prime importance here and should be according to prevalent...
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...Background: IKEA was founded by Ingvar Kamprad who embedded his strongly held values and beliefs in IKEA’s culture. IKEA was created out of Kamprad’s family kitchen selling goods such as fountain pens, cigarette lighters and binders that later turned into a catalog business operations selling furniture. In developing IKEA’s furniture retailing business model, Kamprad was confronted with a cartel of furniture manufacturers that kept prices high by controlling the Swedish industry. This issue later became the vision of the company “creating a better life for the many people”. IKEA also introduced their key feature of self-assembled furniture where customers bought furniture in flat packages and put them together at home. This was known as the “knockdown” concept that allowed IKEA to save on transportation and storage costs. Conflict with the cartel of furniture manufacturers in Sweden forced IKEA to source materials from abroad. To maintain IKEA’s quality and delivery, IKEA taught their processes and provided machinery to their suppliers in Poland. After expanding their suppliers globally, IKEA created a general procurement principle that that stated IKEA should develop close ties by supporting its suppliers with a long-term relationship. By the mid-1990s IKEA worked with 2,300 suppliers in 70 countries. IKEA has 24 trading service offices in 19 countries that monitor production, test new product ideas, negotiate prices, and check quality. Since 1980’s IKEA has been looked upon...
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...Company’s presentation 1.1 History 1.2 Vision and Mission 2. Business model 3. Study of the competition 4. Marketing 4.1 Positioning 4.2 Differentiating values 5. Financial management 5.1 Financial facts and figures 5.2 Risk Analysis 6. Strategic development 6.1 SWOT Analysis 6.2 Future strategies 7. Conclusions 1. Company’s presentation 1.1 History IKEA is a multinational Swedish company that sells retail furniture and home furnishings and decor, at a low price and with a contemporary design. The word IKEA is made up of the initials of its founder Ingvar Kamprad (IK) plus the first letter of Elmtaryd and Agunnaryd, which are the farm and village where he grew up, respectively. It was founded in 1943 in the province of Småland, Sweden. It’s logo is blue and yellow, as it represents the colors of the Swedish flag. In 1943, Ingvar Kamprad started its business by selling goods by mail in a village in southern Sweden. The idea was to sell items that cover different needs, at affordable prices. Thus began selling pens, wallets, picture frames, watches, jewelry etc. In 1947, expanded his business to selling furniture and four years later published the first catalog IKEA furniture, then took the historic decision to focus exclusively on home furnishings, and leave the other articles. The catalog became a symbol of the company and its main marketing channel. By 1953, IKEA sells by catalog only, but the...
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...INTRODUCTION IKEA is a Swedish company registered in the Netherlands which was founded in Sweden in 1943 by Ingvar Kamprad, that designs and sells ready-to-assemble furniture (such as beds, chairs and desks), appliances and home accessories. Since its inception, the IKEA company Vision has been “To Create A Better Everyday Life for the People†by offering a wide range of well-designed, functional home furnishing at prices so low that as many people as possible can afford them because IKEA believes that home is the most important place in the world. IKEA work hard to achieve quality at affordable prices for their customers through optimizing their entire value chain, by building long-term supplier relationship, investing in highly automated production and producing large volumes. Their visions also goes beyond home furnishing. The IKEA website contains about 12,000 products and is the closest representation of the entire IKEA range. There were 470 million visitors to IKEA’s websites in the year 2007 to 2008. As of January 2014, IKEA owns and operates 349 stores in 43 countries and was visited by some 583 million shoppers. IKEA also run a Foundation for Fighting Child Labor and Promoting Education that oversees IKEA’s global philanthrophy to improve the lives of children living in extreme poverty. HISTORY IKEA was founded in Sweden in 1943 by 17-year old Ingvar Kamprad, who began by peddling useful items to neighbours on his bicycle. The company’s name is an acronym...
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