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IKEA’S GLOBAL STRATEGY: FURNISHING THE WORLD
Introduction
IKEA is a furniture manufacturer and retailer, well known throughout the world for its modern, quality and affordable furniture. ... Therefore, in retailing, the strategy of the product, the price, the location, and the promotion is links with the culture of the country.
Having presented the factors that make the expansion in retailing abroad difficult, we are going to refer to specific cultural reasons, which make IKEA’s expansion abroad not easy:
- Cultural specific strategy:
· The use of the Swedish flag
· Swedish style of the furniture
- Lack of cultural adaptation:
· Before its difficulties in the US, IKEA didn’t make specific adaptation when it entered into a new market, but followed always the exactly same strategy than in others countries. ... Indeed, the brand positioning strategy is global consumer culture positioning, the brand is a symbol of a given global consumer culture, as well as foreign consumer culture positioning, the brand has been built around a specific foreign culture, Swedish culture, with the Swedish names of the furniture, Swedish restaurants, the colors of the Swedish flag, etc. ... All sold expensive products for delivery up to two months after a customer’s order, companies didn’t lead a strategy of expansion. ...
Nevertheless, IKEA, with its competitive advantage, its size and resources, has changed the global markets: many small furniture retailers have disappeared, and there is now a trend for growth of larger-scale retailers, and for an increased number of international retailers.
The mature markets are re-energised firstly, with more competition, more aggressive strategy (promotion, advertisement, distribution strategy), but IKEA has also changed the consumer behaviour. ...
One other strong advantage of IKEA that energised the market is also the innovation: IKEA innovates all the time, with always new products, new styles, each year a catalogue where all the products are presented is launched, and the innovation is also for the marketing strategy, tools, with recently TV advertisement in Europe for instance. ... This strategy allowed IKEA to accumulate experience first, before moving into other markets one after the other. ...
Advantages Disadvantages
The company -Objective to be global leader of furniture retailerStandardised products-Already implemented, with an adaptation of its activity-Rich enough to invest heavily -Need to be always flexible- Expensive to import furniture from Europe (shipment)- Threat to loose its concept, and competitive advantage, with too much adaptation. ...
Indeed, an adaptation of the strategy of IKEA ( 4P) is obviously necessary, therefore, IKEA needs to conduct extensive a market research, and make use of local expertise. ...
IKEA has to follow the strategy of differentiation and the cost leadership, to keep being the leader of the market, and has to be flexible to adapt itself to the market conditions. ...
To reach this flexibility, IKEA can allow local centres to take its own decisions, to be independent, but in the same time, local stores have to keep following the main concept of IKEA to maintain the global brand. ... A joint venture approach could replace Ikeas franchising concept and increase cultural sensitivity and operational controls through the establishment of strategic networks. ... ( 2001), Global Marketing Strategies, 5th Edition, Houghton Mifflin
Johnson Scholes and Gerry Kevan (1999) Exploring corporate strategy ,Prentice Hall
Kotabe M. ... (2001), Global Marketing Management, 2nd edition Wiley Publishers
Kotler (2000) Marketing Management, Prentica Hall
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Approximate Word count = 2752
Approximate Pages = 11
(250 words per page double spaced)
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