Question

CROSSING BORDERS 12.1 Swedish Takeout Fifty years ago in the woods of southern Sweden, a minor revolution took place that has since changed the concept of retailing and created a mass market in a category where none previously existed. The catalyst of the change was and is IKEA, the Swedish furniture retailer and dis- tributor that virtually invented the idea of self-service, takeout furniture. IKEA sells reasonably priced and innova- tively designed furniture and home furnishings for a global marketplace The name was registered in Agunnaryd, Sweden, in 1943 by Ingvar Kamprad -the IK in the company's name. He entered the furniture market in 1950, and the first catalog was published in 1951. The first store didn't open until 1958 in Almhult. It became so incredibly popular that a year later the store had to add a restaurant for people who were traveling long distances to get there. IKEA entered the United States in 1985. Although IKEA is global, most of the action takes place in Europe, with more than 70 percent of the firm's $36 billion in sales. Nearly one-fourth of that comes from stores in Germany. This level compares with only about $5 billion in NAFTA countries. The firm has stores in more than 40 countries around the world. One reason for the relatively slow growth in the United States is that its stores are franchised by Netherlands-based Inter IKEA Systems, which carefully scrutinizes potential franchisees-individuals or companies-for strong financial backing and a proven record in retailing. The IKEA Group, based in Denmark, is a group of private companies owned by a charitable foundation in the Netherlands, it operates more than 350 stores. The Group also develops, purchases, distributes, and sells IKEA products, which are available only in company stores. Low price is built into the company's lines. Even catalog prices are guaranteed not to increase for one year. The drive to produce affordable products inadvertently put IKEA at the forefront of the environmental movement several decades ago. In addition to lowering costs, minimization of materials and packing addressed natural resource issues. Environmentalism remains an integral operational issue at IKEA. Even the company's catalog is completely recyclable. On the day that Russia's first IKEA store opened in 2000, the wait to get in was an hour. Highway traffic backed up for miles. More than 40,000 people crammed into the place, picking clean sections of the warehouse. The store still pulls in more than 100.000 customers per week. IKEA has big plans for Russia. Company officials are placing IKEA's simple shelves, kitchens, bathrooms, and bedrooms in millions of Russian apartments that haven't been remodeled since the Soviet days. One of IKEA's strength is its strategic learning and adjustment in its international expansion. Its approach has been called "Flexible replication," wherein a strategic tem- plate is fitted to each international context. And now IKEA has opened 16 new stores in China's biggest cities. Sources: Colin McMahon. "Russians Flock to IKEA as Store Battles Moscow.Chicago Tribune, May 17, 2000;"IKEA to March into China's Second-tier Cities [Next]" SinoCast China Business Daily News, August 6. 2007, p. 1; "IKEA Struggles to Source Sustainable Timber," Environmental Data Services, July 2009, p. 22. Anne VanderMey. "IKEA Takes on China." Fortune, December 12, 2011; Anna Jonsson and Nicolai J. Foss, "International Expansion through Flexible Replication: Learning from the Internationalization Experience of IKEA." Journal of International Business Studies 42. no. 9 (2011). pp. 1079-102.

IKEA, a global furniture company based in Sweden, is credited with changing the strategy of furniture retailing.

1. Describe how IKEA changed the traditional model of furniture retailing (and marketing). Do you agree with this departure from the traditional furniture retail sales and marketing strategy? Why or why not?

2. What is IKEA’s strategy to enter the U.S. market? Do you agree with it? What might be a better strategy to bring IKEA to the U.S.?

3. IKEA is now moving into China.   What do you think should be done prior to developing strategy to enter the Chinese market?

Answer 1

Answer1:

IKEA modified the standard model of a piece of furniture merchandising and promoting by finding a strategic way to supply innovative merchandise whereas maintaining low prices for customers. IKEA used a great marketing strategy by building its creditability among one country marketplace and exploiting that same model strategy because it infiltrates alternative countries and builds its international enlargement. The company connects with its customers by establishing restaurants among the shops that make better shopping expertise for patrons World Health Organization resides among the shut geography of the store furthermore as for customers World Health Organization travel long distances to buy. IKEA is proactive in its efforts of being environmentally friendly and creating the globe a cleaner place through its packing and distribution initiatives. The corporate is also terribly disciplined in guaranteeing low costs for each catalog of its merchandise to not increase for one year. This mechanism illustrates that they are dedicated to manufacturing prime quality merchandise with the accessibility and affordability for its customers. I consider this methodology of promoting strategy as a result of it prioritizes moral actions customer desires over profitableness for the corporate

Answer2:

The strategy that IKEA uses in its efforts of expanding into the U.S. marketplace is to own a slow method of franchising that enables the company to manage the World Health Organization it needs to try to business with. The corporate needs to create positive that the franchisee is well versed within the retail business and have the monetary reserve to confirm that it will perform effectively for years to come back. I do consider this methodology as a result of it’s higher to keep the disciplined format of the corporate that has shown a lot of success in alternative countries across the world and follow this same methodology within the U.S. I feel that decreasing the number of qualifications repose IKEA Systems Corporation has established can ruin its complete and lead to stores failing within the U.S.

Answer3:

Since IKEA has already shown an excellent strength in learning and enlargement in international countries, I feel that it ought to follow identical efforts that do within the U.S. I feel that leadership of the repose IKEA Systems Corporation ought to visit China and analyze the market. They ought to conjointly conduct analysis on however competition for stores square measure functioning among the market furthermore as assess any potential franchisees to confirm that they're the proper work. IKEA ought to follow its versatile replication format among an outsized economy like China and specialize in a promoting arrange that it's alone fitted for the marketplace.