Ikea: Making Life Better for the World’s Many People

IKEA: Making Life Better for the World’s Many People

Questions for Discussion

1. Does IKEA have a truly global strategy, or just a series of regional strategies? Explain.

IKEA works with a truly global strategy. It is not purely an extension of its domestic strategy. It is clear that it does not reinvent its strategy for each and every market. Rather, IKEA is perhaps a perfect example of a company that has achieved the perfect balance between standardization and adaptation. IKEA’s marketing is centrally developed at it’s headquarter in Sweden, with an open implementation of local adjustments in marketing to suit language and catalogue.

1. Discuss IKEA’s global strategy in terms of the five global product and communications strategies.

This global strategy depends upon the line between adapting and keeping things the same. IKEA sells the same furniture and goods in every country, this means that its products strategy fit “Don’t change” column. However IKEA sells more than couches on their showrooms. As retailers the sell the complete package of goods, but it seems that the variety and selection from country to country. IKEA follow the adaptation strategy when it comes to promotion and presentation of the products, in this case IKEA uses “Dual adaptation” strategy. Standardizing whenever in necessary, 90% of product line is similar across in more than 12 countries.

1. If IKEA can sell a sofa in China for $160.00, why doesn’t it sell the product at that low price in all of its markets?

The perception of “Low price” varies from country to country. There is also a relationship between the price and the quality. Selling the Klippan sofa for $160.00 in USA or Europe could have a negative effect on the sales and buyers would have a negative perception of the product’s quality. Other issues that influence in the sell price from one country to other are the profitability and the expenses that are very different in each country. Pricing is all about achieving the optimal price point at which profitability is maximized. Operational expenses and shipping costs to set the sale prices are very important to get profit. All these point you have to keep in mind at the time to run a business or do any promotion.

1. Can competitors easily duplicate IKEA’s strategy? Why or why not?

For decades IKEA has been good for what it does. From a global perspective IKEA knows and controls what to do and how to do it. Creating thousands of products and combining them in a massive showroom that entertains, give decorating and designing ideas to customers and feed them all in one place it’s a very difficult thing to duplicate or do better.

1. Should IKEA expand more rapidly than 20 to 25 stores per year? Explain

These kinds of company are no everywhere and it’s not a place that you can go every day. The easy way for IKEA to adapt when necessary and modify its furniture to suit individual countries will help a lot in its expansion. This strategy has worked perfect for IKEA. The expansion of IKEA is fast enough to affect the quality of the products. There is a positive relationship between the quality and price. The rule is that the higher the price the better the quality. But also with this expansion will affect people’s opinion. Some customers think that the quality of IKEA’s products has decreased.