Ikea Case Study

In: Business and Management

Submitted By amwalwanda01
Words 1823
Pages 8
IKEA
Executive Summary
Founded in 1943 by entrepreneur Ingvar Kamprad, IKEA first began with sales of inexpensive products such as pens, watches, and jewelry. Soon after, IKEA started 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 focus on product placement
Expand product lines by including a higher quality line targeted at wealthier consumers
Focus on customer service
Analysis

1. Keep its contemporary and simplistic look and focus…...

Similar Documents

Ikea Case Study

...Running Head: MID-TERM ESSAY: IKEA CASE STUDY ​ 1 Mid-Term Essay: IKEA Case Study Emily Shinkle Indiana Wesleyan University Business, Analysis and Technology ADM-508 Rodney Swope July 29, 2012 Mid-Term Essay: IKEA Case Study ​​All companies share three characteristics – goals, people, and structure (Robbins, Decenzo, & Coulter, 2011). IKEA, a global furniture company, exemplifies these characteristics in an excellent way. Mikael Ohisson (2011), President and CEO, says, “We’re a values-driven company on a never ending journey to be the leader in life at home”(www.ikea.com) Mikael and his team have proved this truly is their goal by setting a great example when it comes to other topics within business such as social responsibility, decision making, and strategic planning. ​IKEA is considered a multinational corporation (MNC), which simply means is a consumer had four homes in four different countries they could all be furnished from ceiling to floor in IKEA because this company sells their products in many different places (Robbins et al., 2011). The Swedish-based company currently has 287 stores in 26 countries and maintains 1,018 suppliers in 53 countries (www.ikea.com). The simple and inexpensive furnishings are popular in many different social and cultural settings, giving IKEA a well-rounded approach at business around the globe. ​It was not until 1994 that IKEA decided to expand to China. One reason for the expansion was because...

Words: 1580 - Pages: 7

Ikea Case Study

...IKEA Executive Summary Founded in 1943 by entrepreneur Ingvar Kamprad, IKEA first began with sales of inexpensive products such as pens, watches, and jewelry. Soon after, IKEA started 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...

Words: 1823 - Pages: 8

Ikea Case Study

...IKEA Case 1) IKEA’s vision to “create a better life for the many people” defined IKEA as a company and separated them from their competitors. In the early years of the company, IKEA faced many hardships from the cartel of furniture manufacturers who controlled the Swedish industry to keep prices high. To counteract these hardships, IKEA created a unique business model that was different from competitors. This model included key features such as the use of a catalog and having self-assembled furniture, which saved the company on transportation and storage costs. Ingvar Kamprad, founder of IKEA, developed the strategy of selling affordable, good-quality furniture to mass-market consumers around the world. Another important part of IKEA’s vision was their relationship with their suppliers. Kamprad wanted to develop close ties by supporting its suppliers with long-term relationships. A manager in the case states, “We commit to doing all we can to keep them competitive—as long as they remain equally committed to us.” IKEA also serviced customers with features such as a playroom for children, a low-priced restaurant, and grocery store. All of these features were highly beneficial and profitable for IKEA while also helping everyone (suppliers, customers, etc.), as their mission strives for. Although IKEA had achieved success with their business model and vision, they experienced multiple environmental and social issues that tarnished to company’s image and...

Words: 1013 - Pages: 5

Ikea Case Study

...IKEA 1. What factors account for the success of IKEA? IKEA was founded in 1943, with an initial purpose of only selling basic household goods and furnishing at discount prices. 60 years later, in fiscal year 2003, the “IKEA group was the worlds top furniture retailer, operating 154 stores in 22 countries and servicing 286 million customers a year”(Moon, 2004). Despite the fact that IKEA has acted upon several smart actions in the past, there are certain factors that can account for their success today. These include their unique Scandinavian design, their low cost products or mentality, their broad segmented market, and their product strategy. As IKEA was founded in Scandinavia, the inspiration for design comes from their heritage comes through among IKEAs products. The designs are simple, yet unique, which allows IKEA to keep their promise to bring forth low priced, yet functional furniture. “Many competitors try to copy one or two of these things”(Moon, 2004), but “the difficulty is when you try to create the totality of what we have”(Moon, 2004). Not being able to imitate IKEA, makes its unique design and economies of scale a core competency that puts their company at a competitive advantage, stealing market share from their competitors. Another factor that has contributed to IKEAS success is their low pricing strategy by being cost efficient. The two major players that help maintain expenses down for IKEA is the self-service component and “flat packaging...

Words: 2688 - Pages: 11

Case Study of Ikea

...Case Study of IKEA’s Global Sourcing Challenge In 1995, IKEA met a problem that its main supplier, Indian rugs, used the child labor to produce products, although they had signed an attachment of the contract to ban employing child labor. In addition, a German documentary maker was about to broadcast the problem of child labor on German television and also invited an employee from IKEA to have a live discussion in the TV program. Marianne Barner, the leader of IKEA, must find a great solution to this serious issue to both save her business and the corporation’s brand image. In this issue, IKEA was not the one who produced products, so they might not realize the use of child labor in the process of production. In addition, child labor did not attract lots of attention from the society at that time, so they did not pay attention to the use of child labor when they were finding their suppliers. However, they sold terminal products so they were to blame. As a result, Marianne had to make several decisions, respectively about whether IKEA should accept the invitation to join the TV program, how to deal with the broken contract with Rangan Exports, how to deal with the child labor on the long term and whether IKEA should use Rugmark. To address this problem and make these decisions, IKEA has four choices. One is that IKEA could utilize its own relationship with its suppliers to solve the issue. The second choice for IKEA is to invite Rugmark Foundation on its behalf to monitor...

Words: 1445 - Pages: 6

Ikea Case Study Analysis

...Case Study IKEA’s Global Strategy: Furnishing the World. The inadequate marketing research done before entry into the North American market (US) militated against the fast market development IKEA had enjoyed in other market regions. Business globalization should involve flexibility of an organization to adapt to different business culture in diverse geographical market segmentation. IKEA had initially failed the transition test which resulted in slow market growth, the company further failed to anticipate the need of the American consumers. IKEA’s idea of using paperback catalogue and word of mouth advertisement would only be successful in familiar markets. Furthermore, the use of the traditional Moose image as a form of “one size fits all” promotional approach did not sell in the new market. Recommendation Promotion - The 21st century has changed the face of advertisement and relying on paperback catalogue would be grossly inadequate for the wide range of consumers the company targets. Apart from the restricted coverage of paperback brochure, there is a limit to the amount of information the consumer would get about the wide variety of product offered by the company. IKEA should be able to capitalize on various social media marketing medium which facilitate a two way communication between manufacturers and consumer, enabling them to efficiently satisfy the needs of their customers. Product – IKEA should increase their product line for consumers to have more varieties...

Words: 346 - Pages: 2

Ikea Case Study

...IKEA case study 1. Firm specific advantages IKEA has a variety of firm specific advantages since its business approach appeared to be very unique for the furniture industry. First, IKEA’s most important specific advantages were its good value for the money. IKEA used this advantage for its expansion plans all over the world. IKEA when they failed in the USA had to highlight this specific advantage to bail them out of the financial difficulty they had gotten into. Second, the most innovative decision of IKEA is to reduce merchandise costs through involving customers in the assembly cycle. This idea allows saving on warehouse costs and helps to reach another economy for customers on transportation costs. As a result of new store layout, IKEA has been able to allow sales clerk to focus more on in-store displays and fast moving lines. Another set of firm specific advantages of IKEA is related to the relationship with suppliers. IKEA has created global sourcing network of more than 2,300 suppliers in 67 countries. With these connections around the world, it has been able to cut price at many stores while maintaining sufficient quality standards. Because of these influences, IKEA experiences huge economies of scale, allowing it to match rivals’ quality while undercut prices worldwide. Lastly, IKEA has its legacy of quality in different countries. IKEA has always maintained the best quality in all the countries that it has opened outlets in. It’s creative business model and...

Words: 636 - Pages: 3

Ikea Case Study

... horrible to look at, but the assembly of it was so complicated and frustrating, I almost smashed it with my hammer. When I buy furniture, personally, I am willing to pay extra so I don’t have to mess around with the futile instructions that IKEA typically supplies with their unassembled furniture. My father is not a handyman, but he’s not ignorant when it comes to putting things together. The IKEA employee told us it would be moderately easy, and not take more than hour. I will tell you it did take more than hour, it took more than four hours, for a simple dresser. When I think about other problems that occur with IKEA, I once again, think back to that dresser. Once we finally figured out how to assemble that dresser, it was not long before the drawers broke. IKEA furniture may be very low priced, but in my opinion it is not really worth it if you have to pay for repairs, or replacement after only a year or two. What do you think of the company’s product strategy and product range? Do you agree with the matrix approach described in Figure B of the case? I think that the company’s product strategy and product range are great ideas. This is different than anything I have seen in other furniture stores, and I did not even know it existed. The variety of the product, including Scandinavian, Modern, Country and Young Swede styles, as well as the assortment of each style, which include the many price ranges of each style of product, are a great idea. With this strategy, you...

Words: 1476 - Pages: 6

Ikea Case Study

...IKEA CASE STUDY Ikea is a multinational company that grew from a small activity to the leader of the low price furniture market. Their success is not only determined by a lean supply chain and business know how but also by the loyalty of its customers. The company’s strategy to approach the consumers is to study their needs and likes to be able to offer the best possible product. As the case describes, IKEA, adapts its products depending on needs and preferences of different country customers. For example, noticing that U.S. customers were buying vases to use as glasses because the average Ikea glassware wasn’t big enough, the firm developed bigger glasses for the U.S. market. Through intense customer research (observation, focus groups and surveys) IKEA tries to satisfy the consumers, and through its strong brand and locations attracts more and more clients. IKEA’s value for its costumers is concentrated in founder Kamprad’s statement: “People have very thin wallets. We should take care of their interest” and this is what the company does, offering good quality and fashionable design at a low price. Consumers have some disadvantages in respect on what they would normally get from a normal furniture shop, having to transport and assemble the products themselves. IKEA builds and retains its customer’s loyalty by keeping a consistent image of style and quality, keeping low costs and offering a wide range of products adapted to the different customer’s needs, appealing to...

Words: 487 - Pages: 2

Ikea Case Study

...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...

Words: 1085 - Pages: 5

Ikea Case Study

...MAN3503-Strategic 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...

Words: 1187 - Pages: 5

Ikea - Case Study

...Case Study – IKEA 1. History (Explain) IKEA was founded in 1943 by 17-years old Ingvar Kamprad in Sweden. First two letters IK of IKEA were taken out of the founders name and last two letters EA symbolise the name of Kamprads parents farm ‚Elmtaryd’ and the village ‚Agunnaryd’ where the farm has been located. First the company sold various consume good such as pens, watches and wallets. In 1947 Kamprad started also selling furniture via distribution, especially to the poorer farmers in Sweden. 1951 the first IKEA catalogue ever was published just offering furniture. In the catalogues the furniture produced by IKEA was pictured as part of a complete furnished room, a thing that was unusual for the time then. In the 1950s Kamprad started hiring designers who designed furniture especially for IKEA. These were sold and shipped first in 1955 as building kits in order to keep the costs of assembly and shipping as low as possible. Three years later in 1958 the first IKEA store was opened in Sweden, followed 1963 by the second store in Norway. In the following 40 years ‚Ikea’ started building stores all over the world, mainly in European and Asian Countries and developed itself to a company with about 150.000 workers and sales about €25 billion in 2014 and 315 stores in 27 countries. 2. IKEA is considered one of the success stories. How have they achieved this success? What barriers have they overcome? They decided to side with the many. That means responding to the home...

Words: 1182 - Pages: 5

Ikea Case Study

...Strategic Management (BUS 411) Case study & analysis By Osama Albarrak osabbr@gmail.com 28/12/2011 Supervised by Dr. Sundaram Nataraja Introduction: In this case, I've studied the internationally known home furnishing retailer, which is (IKEA) the largest furniture retailer in the world. The purpose of the case study is to analyze the objectives and strategies used by IKEA, analyze the company financially, SWOT analyzing and discuss major issue that the company faced. About: IKEA is a privately-­‐held, international home products retailer that sells flat pack furniture, accessories, and bathroom and kitchen items in their retail stores around the world. The company, which pioneered flat-­‐pack design furniture at affordable prices, is now the world's largest furniture retailer. IKEA was founded in 1943 by 17-­‐year-­‐old Ingvar Kamprad in Sweden and it is owned by a Dutchregistered foundation controlled by the Kamprad family. The company that was originated in Småland, Sweden, distributes its products through its retail outlets. As of August 2009, the chain has 301 stores in 37 countries, most of them in Europe, North America, Asia and Australia. History: The IKEA Concept began when Ingvar Kamprad, anentrepreneur from the Småland province in southern Sweden, had an innovative idea. In Småland, although the soil is thin and poor, the people have a reputation for working hard, living frugally and making the most out of limited resources. So when Ingvar...

Words: 2665 - Pages: 11

Ikea Case Study

...IKEA CASE STUDY Jill E Keeney Capella University February 24, 2016 Fundamental of Human Resource Management 3040 Instructor: Professor Marni Swain Introduction With so many people working hard to make ends meet, the living-wage pay seems like an ideal solution to help. The living-wage allows employees to meet their basic needs. (Chapman & Thompson, 2006) IKEA is trying to create a better life for its employees by implementing the living-wage. The living-wage also creates a workforce that is higher skilled, provides better customer service, and less turnover. This is more cost efficient for a company. (Bell, 2014) Risk and Challenges Issues for a business implementing the living-wage is productivity, skill of workers, and employee financial issues. While IKEA is not raising prices with the living-wage, it might have to adjust the amount of employees it schedules and hires, so an employee might be doing the job of 2 to 3 instead of just one employee. IKEA might have make the workforce more productive, and this would lead to less jobs within the company. (Chan, 2015) Employees might also be working less hours than full-time due to the increase of pay and less jobs being created. The other factor is that employees may not be able to have yearly increases if the business profit/loss is not adequate. This might create a turnover in employees if the living-wage is not increased yearly. (Geiger, 2015) An issue that IKEA might be faced with is low-skilled employees...

Words: 760 - Pages: 4

Ikea Case Study

...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...

Words: 2482 - Pages: 10