...9-906-415 REV: NOVEMBER 14, 2006 CHRISTOPHER A. BARTLETT VINCENT DESSAIN ANDERS SJÖMAN IKEA’s Global Sourcing Challenge: Indian Rugs and Child Labor (B) After more than a decade spent struggling with the issue of child labor, Marianne Barner felt good about how IKEA had responded. But occasionally, she found herself wondering whether the progress the global furniture retailer had made was real and durable. Just as it had in the mid-1990s, in 2005 the company could still find itself on the defensive in dealing with the issue. Even more troubling to Barner was that after 10 years of working to prevent child labor among IKEA’s suppliers— introducing a clear code of conduct, developing internal controls and third-party audits, training its suppliers, supporting their corrective actions, and instituting stiff sanctions against offenders—the company was still finding cases of child labor in its supply chain. The latest issue had been drawn to Barner’s attention by Kaisa Mattson, the head of IKEA’s compliance office in south Asia. Like Barner herself a decade before, Mattson was facing the decision of whether to terminate a relationship with a long-standing major supplier. This one, however, had violated not one but several items in IKEA’s detailed code of conduct, known as “The IKEA Way on Purchasing Products”—or IWAY for short. Venkat Industries was a textile mill with over 10,000 workers, and a recent audit had shown that it had stopped using the water treatment plant it had...
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...9-906-414 REV: NOVEMBER 14, 2006 CHRISTOPHER A. BARTLETT VINCENT DESSAIN ANDERS SJÖMAN IKEA’s Global Sourcing Challenge: Indian Rugs and Child Labor (A) In May 1995, Marianne Barner faced a tough decision. After just two years with IKEA, the world’s largest furniture retailer, and less than a year into her job as business area manager for carpets, she was faced with the decision of cutting off one of the company’s major suppliers of Indian rugs. While such a move would disrupt supply and affect sales, she found the reasons to do so quite compelling. A German TV station had just broadcast an investigative report naming the supplier as one that used child labor in the production of rugs made for IKEA. What frustrated Barner was that, like all other IKEA suppliers, this large, well-regarded company had recently signed an addendum to its supply contract explicitly forbidding the use of child labor on pain of termination. Even more difficult than this short-term decision was the long-term action Barner knew IKEA must take on this issue. On one hand, she was being urged to sign up to an industry-wide response to growing concerns about the use of child labor in the Indian carpet industry. A recently formed partnership of manufacturers, importers, retailers, and Indian nongovernmental organizations (NGOs) was proposing to issue and monitor the use of “Rugmark,” a label to be put on carpets certifying that they were made without child labor. Simultaneously, Barner...
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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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...school 1 2 st nd 6 ECTS; 36 hours of class work, 126 hours of self-study Prof. Dr. Hemant Merchant hemant.merchant@yahoo.com Marketing, International Marketing; Programme requirements (pre-reading) Consecutive (Evenings & Online) English COURSE ANNOTATION This course is designed to facilitate a more “applied/practical” understanding of contemporary issues facing companies who market (or intend to market) their products/services across national boundaries. The course focuses on real-life challenges that companies encounter in the context of their international marketing function (broadly defined). In general, these challenges relate to identifying, evaluating, and making tradeoffs across national, organizational, and personal contexts. Thus, we will discuss formulation- and implementation-related challenges as well as generate solutions to ‘international marketing’ dilemmas. COURSE LEARNING OUTCOMES Learning Methods: Case discussion; Role plays; Mini-debates; Mini-lectures Assessment methods: Class participation; Case presentation; Final exam CLO1. Understand the international marketing environment; Contemplate and analyze international marketing opportunities. CLO2. Gain an understanding of international marketing effort related to the market entry and marketing mix strategies CLO3. Identify, interpret and evaluate information sources related to multinational marketing with the emphasis on information technologies (Internet). CLO4. Understand the principles of global retail...
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...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 in these territories. 2 Critically...
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...Journal of Retailing and Consumer Services 18 (2011) 183–193 Contents lists available at ScienceDirect Journal of Retailing and Consumer Services journal homepage: www.elsevier.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...
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...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 Retail management, Marketing strategy, Standardization, China Paper type Research paper 1...
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...Standardized 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...
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...Abstract preview 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...
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...Case Report Marketing 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 ...
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...Executive Summary TABLE OF CONTENTS Chapter 1 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...
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...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 backyard company to one of the world’s largest furniture retailers, which has to deal with the issues of child labor and how they should behave considering economical issues and the company’s policy. Business Manager Marianne Barner has to face tough decisions on How to effectively...
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...Cases A 477 IKEA in 2013: Furniture Retailer to the World ~ INTRODUCTION IKEA is one of the world's most successful global retailers. By 2012 IKEA had 320 home-furnishing superstores in 40 countries and was visited by some 776 million shoppers. IKEA's low-priced, elegantly designed merchandise, displayed in large warehouse stores, generated sales of €27.5 billion in 2012, up from €4.4 billion in 1994, and €4.2 billion in net profit. Although the privately held company refuses to publish detailed financial data, its net profit margins were rumored to be around 10 percent, high for a retailer. The founder, Ingvar Kamprad, now in his 80s but still an active "adviser" to the company, is rumored to be one of the world's richest men. COMPANY BACKGROUND IKEA was established by Ingvar Kamprad in Sweden in 1943 when he was 17 years old. The fledgling company sold fish, Christmas magazines, and seeds from his family farm. It wasn't his first business- that had been selling matches, which the enterprising Kamprad had purchased wholesale in 100-box lots (with help from his grandmother who financed the enterprise) and then resold them individually at a higher markup. The name IKEA is an acronym, I and K being his initials, while E stood for Elmtaryd, the name of the family farm, and A stood for Agunnaryd, the name of the village in southern Sweden where the farm was located. Before long Kamprad had added ballpoint pens to his list and was selling his...
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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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...good customer relationship management of IKEA is enabling IKEA to cover the demand of powerful customer. 1. Background of the IKEA IKEA was establish in 1943 is the world’s largest furniture retailer which specializes in stylish. IKEA organization takes advantages in strictly management function (internal control) and expertise in superior telecommunication networks (external approaches) which create the competitive advantage for IKEA. Therefore IKEA had expanded its business in 26 countries over 128 fully-owned stores. First and foremost, IKEA use a catalog to tempt people to visit an exhibition then develop it by storing the store among whole world. IKEA spread the business globally by advanced telecommunications networks. IKEA’s attributed to its vast experience in the retail industry, in product differentiation and cost leadership. In addition, IKEA fostering close supplier relations through technology – transfer, large supply contracts and even low interest loans. IKEA soon gained a SCA over its competitors through cost-cutting and close supplier relations while placing an emphasis on the design process. In conclusion, IKEA added value though display store which offered a wide range of home furnishing...
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