Ikea’s Global Strategy: Furnishing the World

In: Business and Management

Submitted By albo207
Words 3656
Pages 15
IKEA’s Global Strategy: Furnishing the World
2014-2015
submitted by Brian Albanese
April 26, 2014

Executive Summary
This author has provided an analysis of the IKEA case study found in the Marketing Management textbook. It analyzes the strategies used by IKEA to gain competitive advantage in markets outside of its original market. The report provides a background of the organization, recognizes IKEA’s main markets and examines corporate level strategies by identifying its target market and evaluating its pricing strategies. This case study will further analyze how culture, design, and price play significant roles in determining IKEA’s success. In addition, IKEA’s “global sourcing network of more than 2300 suppliers in 67 countries” (Peter & Donnelly, 2013, p. 411) allows its suppliers to provide furniture of all kinds to its customers. IKEA produced standardized products, however, this international strategy did not work for the United States. Therefore, the company has to take corrective actions.

Table of Contents
Executive Summary i
Situational Analysis 1
Environment 1
Economic conditions and trends 1
Cultural and social values and trends 1
Political and legal issues 1
Technological factors 1
Summary of environmental opportunities and threats 2 Industry 2 Classification and definition of industry 2 Analysis of existing competitors 2 Analysis of potential new entrants 3 Analysis of substitute products 3 Analysis of suppliers 3 Analysis of buyers 3 Summary of industry opportunities and threats 4 Organization 4 Objectives and constraints 4 Financial condition 5 Management philosophy 5 Summary of the firm’s strengths and weaknesses 5 Marketing Strategy 6 Objectives…...

Similar Documents

Global Strategy

...Global Strategy: An Organizing Framework Sumantra Ghoshal Strategic Management Journal, Vol. 8, No. 5. (Sep. - Oct., 1987), pp. 425-440. Stable URL: http://links.jstor.org/sici?sici=0143-2095%28198709%2F10%298%3A5%3C425%3AGSAOF%3E2.0.CO%3B2-L Strategic Management Journal is currently published by John Wiley & Sons. Your use of the JSTOR archive indicates your acceptance of JSTOR's Terms and Conditions of Use, available at http://www.jstor.org/about/terms.html. JSTOR's Terms and Conditions of Use provides, in part, that unless you have obtained prior permission, you may not download an entire issue of a journal or multiple copies of articles, and you may use content in the JSTOR archive only for your personal, non-commercial use. Please contact the publisher regarding any further use of this work. Publisher contact information may be obtained at http://www.jstor.org/journals/jwiley.html. Each copy of any part of a JSTOR transmission must contain the same copyright notice that appears on the screen or printed page of such transmission. The JSTOR Archive is a trusted digital repository providing for long-term preservation and access to leading academic journals and scholarly literature from around the world. The Archive is supported by libraries, scholarly societies, publishers, and foundations. It is an initiative of JSTOR, a not-for-profit organization with a mission to help the scholarly community take advantage of advances in technology. For more information regarding...

Words: 10708 - Pages: 43

Global Management and Strategy

...Global strategy and management Chapter 1: Understanding Global Strategy What is global strategy? Traditional global strategy is treating different countries as one worldwide all global market. Some companies are considering the world as one big country. For example Coke is distributed around the world. But that strategy has backfired repeatedly. For example, the Toyota Camry is the best-selling car in the U.S., but not even top five best-selling cars in Japan. A more balanced view covering both global and local (non global) aspects is necessary. Keys to a successful total global strategy: The total global strategy three separate components: 1. Developing the core strategy: developing the fundamental purpose of the organization and getting everybody and everything lined up to support that purpose. 2. Internationalizing the core strategy: it is the international expansion of activities and the adaptation of the core strategy. Companies need to have mastered the basics of international business before they can attempt the global strategy. 3. Globalizing the international strategy: by integrating the strategy across countries. Developing the core business strategy: Each separable business in a company needs its own core strategy. The core business strategy includes several key elements: * Type of products or services that the business offers * Types of customers that the business serves * Geographic markets served * Major sources...

Words: 952 - Pages: 4

Global Strategy

...As defined in the “Cultural Foundations of Global Business” [need appropriate citation], culture is defined as the “collection of beliefs, values, behaviors, customs, and attitudes that distinguish the people of one society from those of another” (page 121). Pierre Marcolini (“Pierre” or the “Company”) will face three primary cultural challenges in entering the Chinese market. First, and most significantly, Pierre will face culture differences with respect to modes of communication and expression. In terms of the Hall framework, cultures differ in the “extent to which the context of a message is as important as the message itself” (page 132). In China, the content of a message is often much less important than the person delivering the message, body language, gestures, and various other social cues. In Belgium’s contrasting, “low-context” culture, however, the content of the message is paramount; therefore, in entering the Chinese market and dealing with partners, employees, and customers, Pierre’s managers must pay close attention to the non-verbal, contextual means of communication inherent in Chinese society if they wish to communicate effectively with their Chinese counterparts. Second, Pierre will face culture difference with respect to the expectation of hierarchy within firms, or in the terms of the Hofstede framework, the power distance inherent in organizations. While leaders in Belgian and Northern European firms need not have substantial amounts of power......

Words: 480 - Pages: 2

Global Strategy

...Global Strategy and Leadership is the capstone segment for the CPA Program professional level. This segment consolidates your learning in the other three compulsory segments, Ethics and Governance, Financial Reporting and Strategic Management Accounting. In the increasingly complex business environment in which organisations operate, characterised by change, uncertainty and escalating competition, the disciplines of strategy and leadership have become critical to successful organisational performance. The aim of this segment is to link the knowledge of management and financial accounting to the concepts of strategy and leadership. Accountants use a variety of technical information to make decisions for the future of the business within an ethical framework of operation. This segment shows that accounting information, ethics, strategy and leadership are applicable to accountants working throughout the world in diverse organisations. As discussed in Ethics and Governance, accounting as a profession is respected internationally and CPAs are employed worldwide. The segment materials address the needs of candidates operating in different international markets in varying roles. This segment builds upon knowledge gained in the other three compulsory segments of the professional level. The concepts of professional ethics and good governance underpin the segment. Candidates who have previously undertaken the Advanced Audit and Assurance or Strategic Management Accounting segments......

Words: 1714 - Pages: 7

Israel in a Global World

...ISRAEL IN A GLOBAL WORLD “It has been said that arguing against globalization is like arguing against the laws of gravity” Kofi Annan As we know, since the early 1990’s the world has witnessed a new era that we call globalization. Since then different countries around the world have been adapted and integrated into this phenomenon in different ways. In the following paper it will be discuss the particular case of Israel and how that country has contributed to world’s globalization. For that, it is important to take into account Israel’s actual international status, it’s diplomatic relations (specially with the U.S), and it’s economy and the valuable products that offer to the world. First of all, here will be discussed the diplomatic relations and cooperation of Israel with other countries of the world, primarily talking about the importance of the relation with the U.S. “Since 1991, Israel's international status has greatly improved as many states decided to upgrade or to establish diplomatic relations with the Jewish state, partly due to the emergence of the United States as a hegemonic global power.” (Inbar, 2013) Here we can see that, as Israel were an ally of the United States on the Cold War and they partialy won then many states thanks to it’s good links were partially convinced to be potencially linked to Israel in a future. The close relations with U.S and having them as a background positioned Israel’s trade in a better place and also broght...

Words: 758 - Pages: 4

Ikea's Success

...successful global retailers in terms of profitability. IKEA is a home-furnishings company from Sweden. In 2010, IKEA had more than 310 stores worldwide in 38 countries, employed around 127,000 people, and earned revenues of 32 billion euros (Rothaermel, 2013). IKEA has recently shifted from an international strategy to a global-standardization strategy. IKEA has many challenges, but the two that throw up the biggest threats are the ecological factors and rivalry among competitors. Ecological factors concern broad environmental issues such as the natural environment, global warming, and sustainable economic growth. Managers can no longer separate the natural and the business worlds because they are linked (Rothaermel, 2013). Wood is one of IKEA’s main input factors; however, consumers are becoming more sensitive to the issue of deforestation and its possible link to global warming. The issue is that IKEA needs to find low-cost replacement materials for wood. To address this challenge, I would make sure IKEA has a specific team working on finding wood substitutes. Perhaps the team can look into wheat straw sunflower hulls. These are two materials that companies are using to replace hardwood to fabricate cabinets and furniture. Also, particleboard, oriented-strand board (OSB), medium-density fiberboard (MDF), and other composites that were formerly made from wood are now manufactured from agricultural wastes. These new composites can make home furnishings (Lees,......

Words: 454 - Pages: 2

Case 8-2 Ikea’s Global Sourcing Challenge

...Case 8-2 IKEA’s Global Sourcing Challenge. 1. How should Marianne Barner respond to the invitation for IKEA to have a representative appear on the upcoming broadcast of the German video program? I suggest Marianne Barner to refuse to appear on the upcoming broadcast of the German Video Program. Every coin has two sides. Accepting this invitation is the opportunity for IKEA to quickly response the child labor issue in public media. In this way, IKEA could assure that they will be more aware of social responsibility and potential upcoming social issues in the future. However, the German Video Program won’t allow the company to preview the video and that the program clearly “planned to take a confrontational and aggressive approach aimed directly at IKEA”. If they go to the invitation with no preparation of what kinds of issue and questions could probably be faced with, it might potentially mislead by the videos or questions they answered in the show. Therefore, Marianne Barner should politely refuse the invitation and respond the video when they have a chance to review and verify the truth in the video. While, in the meantime, IKEA have time to investigate the truth and assign more policies to against child labor issue for their suppliers. 2. What actions should she take regarding the IKEA supply contract with Rangan Exports? IKEA should sent out the investigation term to figure out the truth whether the Rangan Exports failed in compliance with the......

Words: 831 - Pages: 4

Global Strategy

...Chapter 11 Global Strategy and Organization International Business Strategy, Management & the New Realities by Cavusgil, Knight and Riesenberger International Business: Strategy, Management, and the New Realities 1 Learning Objectives 1. The role of strategy in international business 2. The integration-responsiveness framework 3. Distinct strategies emerging from the integration-responsiveness framework 4. Organizational structure 5. Alternative organizational arrangements for international operations 6. Building the global firm 7. Putting organizational change in motion International Business: Strategy, Management, and the New Realities 2 What Is Strategy? • Strategy is a plan of action that channels an organization’s resources so that it can effectively differentiate itself from competitors and accomplish unique and viable goals. • Managers develop strategies based on the organization’s strengths and weaknesses relative to the competition and assessing opportunities. • Managers decide which customers to target, what product lines to offer, and with which firms to compete. International Business: Strategy, Management, and the New Realities 3 Strategy in an International Context • Strategy in an international context is a plan for the organization to position itself vis-a-vis its competitors, and resolve how it wants to configure its value chain activities on a global scale. • Its purpose is to help managers create an international vision, allocate......

Words: 6005 - Pages: 25

Global Strategy

...Pattraporn Jaowatana Global strategy class3 January 19, 2015 Five Forces Model of Industry Environment 1. Threat of new entrants 2. Threat of substitute. * Availability of a product that the consumer can purchase instead of the industry’s product. * Substitute products are goods or services from outside a given industry that perform similar products and services. 3. Bargaining power of customers (buyers) 4. Bargaining power of suppliers 5. Intensity of competitive rivalry. What lesson do you learn from this video in light of strategic management? (Context of substitute) * Focus too much on yourself that you may miss out opportunities. * Company is priorities their products than the competitor. * Gorillized (different category that you might never interested), it could bring you the threat. * There is a goal and procedures to follow but in some case if there is no directive, employees could be more innovative and creative. * External factors may help company to fight with the substitute. Sometimes company doesn’t see yourself, you need some external people for guidance. What are the possible reasons that Kodak did not pay attention to digital camera? * Biggest part of the Kodak products and it well known for the film. If changing to the digital camera, it will contradict their core products. * It will change the mode of the company that they are well known since the beginning of the establishment of......

Words: 469 - Pages: 2

Global Strategy… in a World of Nations? (Summary)

...Global Strategy… In a World of Nations? (summary) Nomin-Erdene Ganbat / 甘諾敏 , A3140418 Companies are looking for a way to globalize by connecting their strategy which fit worlwide. This process is called multinational model or multidomestic strategy, which may be succesful than multidomestic strategy. In order to globalize, companies need to expand their market participation and choose a best way to develop their integrated worldwide strategy. Thus, there are three steps: Develop core business strategy, Intgernationalize the strategy and, Globalize the strategy.But most multinational companies follow the first two steps than the last step because of differences in each countries. Global strategy levers have five dimensions which include: Market participation, Product offering, Lacation of Value-Added activities, Marketing approach and Competitive moves. These steps are developed under a pure multidomestic strategy and a pure global strategy. From the cost reduction, improved quality of products and programs, enhanced customer preference and, increased competitive leverage companies can have benefits. Unfortunately, each global strategy lever has failing and they are market participation,product stardardization, activity concentration, uniform marketing and integrated competitive moves. In order to achieve......

Words: 451 - Pages: 2

Ikea's Global Sourcing Challenge - Indian Rugs

...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,......

Words: 6420 - Pages: 26

Ikea's Success

...------------------------------------------------- Corporate Strategy Critically examine how the success of Ikea has been supported by its organisational culture Mona Thorvaldsen, Kate Mulvana, Joan Kawalewale, Tom A. Trosterud, Jodie Evans MA Public Relation Management & MA Business Studies Semester Two Module Leader: Lawrence Bellamy Contents Page No Chapter 1 – Introduction | 3 | | | | | Chapter 2 – Background | 3 | | | | | Chapter 3 - Appraisal | 4 | | | | | Chapter 4 – Analysis | 9 | | | | | Chapter 5 – Conclusion | 14 | | | | | Bibliography | 15 | Executive summary This report examines the corporate culture of the global furniture leader IKEA and discusses the link between Ikea’s culture and its performance. The cultural web is used as a device for breaking up the complexity of organisational culture and for demonstrating that Ikea enjoys a strong and consistent culture. The report identifies synergy between Ikea’s culture and strategy, arguing that culture has given the organisation competitive advantage. Furthermore it points to the complex set of factors influencing performance, and how Ikea’s culture is one of several components in its success-formula. 1.0 Introduction Organisational culture is built on the assumptions and beliefs that construct purpose, guidelines and collectivism. In effect strategy reflects the organisational culture in......

Words: 3872 - Pages: 16

Global Strategy

...Hard Rock Café’s Global Strategy Hard Rock Café’s Global Strategy Identify the strategy changes that have taken place at Hard Rock Café since its founding in 1971. Hard Rock brings the concept of the “experience economy” to its café operation. The strategy incorporates a unique “experience” into its operations. (Heizer & Render, 2014, p. 53). According to Heizer and Render (2014), providing an experience or theme at the different Hard Rock Café’s that cannot be found anywhere else in the world is a succeeding strategy. Even though many other restaurants have not survived Hard Rock continues to grow. They have done this by catering to local tastes and have expanded to “destination” cities since 70% of its guests are tourists. Another strategy used is having added music venues worldwide since they feel music is universal. Collection memorabilia has also been added and is changed throughout the corporation to provide a fresh experience to its visitors. The music and collection angle is used to target different age demographics and has been successful. (Amer, 2004) Merchandising shops with logos specific to that location is an excellent strategy. Customers can only get a specific shirt from a specific place. Consumers may view the shirts as a collector’s item and this in turn generates revenue for Hard Rock since 48 % of its revenue is made from merchandising alone. (Amer, 2004) Hard Rock is always researching new sites and new markets and takes a lot into......

Words: 432 - Pages: 2

Ikea's Global Sourcing Challenge

...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...

Words: 1231 - Pages: 5

Global Strategy

...1. Briefly describe the content of your poster and how it was organised (400 words) Consider the theme, flow of content, connections with pictures, graphics and illustrations, layout, colour consideration, special features (if any), text, fonts, etc. Basically, you should talk about your group’s poster in words. My group’s poster talked about global strategy of Tata company in motors industry entering to UK market. In the global strategy of Tata motors, the macro-environment and micro-environment factors were presented to indicate the influence of external and internal factors to the succeed of company in UK market. In the poster, the recession was referred to demonstrate that Tata firm overcame challenges and difficulties to succeed. The UK flag theme showed that my group would present the penetrated country from India. To explain my poster, the its content showed clearly the factors influent in the successful strategy of Tata company, the targeted country as well as the international strategy. Based on the content which my group wanted to present, the pictures did not indicate the content of international strategy in Tata motors that made the audients not predict what my group would present. The font in my poster was designed to audients could read and follow my group in presentation. My group did researches together to find out the cause of success in entering UK market of Tata and 2. Which are the skills, in your opinion, that you developed through the......

Words: 296 - Pages: 2