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  • IKEA

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    Sourav Shihoron
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    IKEA benefited from globalization by being able to more easily sell internationally and open stores in other countries due to falling barriers to cross-border trade, allowing it to grow into a global brand. IKEA also benefited from globalization of production by sourcing goods from locations around the world to take advantage of lower costs, such as concentrating cotton slipcover production in China for cheaper labor. However, the IKEA story shows that treating the entire world as a single market has its limits, as tastes and preferences vary between cultures, demonstrating the need to sometimes adapt offerings to local markets like redesigning products for American consumers versus Europeans.

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    IKEA benefited from globalization by being able to more easily sell internationally and open stores in other countries due to falling barriers to cross-border trade, allowing it to grow into a global brand. IKEA also benefited from globalization of production by sourcing goods from locations around the world to take advantage of lower costs, such as concentrating cotton slipcover production in China for cheaper labor. However, the IKEA story shows that treating the entire world as a single market has its limits, as tastes and preferences vary between cultures, demonstrating the need to sometimes adapt offerings to local markets like redesigning products for American consumers versus Europeans.

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    4K views1 page

    IKEA

    Uploaded by

    Sourav Shihoron
    IKEA benefited from globalization by being able to more easily sell internationally and open stores in other countries due to falling barriers to cross-border trade, allowing it to grow into a global brand. IKEA also benefited from globalization of production by sourcing goods from locations around the world to take advantage of lower costs, such as concentrating cotton slipcover production in China for cheaper labor. However, the IKEA story shows that treating the entire world as a single market has its limits, as tastes and preferences vary between cultures, demonstrating the need to sometimes adapt offerings to local markets like redesigning products for American consumers versus Europeans.

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    Summary The case discusses in length about Sweden based IKEA's globalization strategies and its foray in the

    Chinese furniture market. The basic assumption behind IKEA's global strategy was 'onedesign-suits-all,' which meant that the company did not adapt to the local markets. The case presents how IKEA was forced to change some of the elements of its global strategy in the culturally diverse Chinese market. It highlights the importance of striking a balance between the implementation of global polices and the need for higher degree of localization for IKEA to be successful in markets like China. The interrelationship between IKEA's culture, structure and strategy and its responsiveness to the needs of local markets are also highlighted. 1 The first question: how has the globalization of market benefited IKEA? The globalization of market refers to the merging of historically distinct and separate national markets into one huge global marketplace. Falling barriers to cross-border trade have more easier to sell internationally, so it is easier for IKEA to grow into a global cult brand with 230 stores in 33 countries and have 5 suppliers of the frames in Europe, plus 3 in the United States and two in China. Because a fewer barriers to cross-border trade. IKEA can easily to open a store in other countries. 2 the second question: how has the globalization of production benefited IKEA? The globalization of production refers to sourcing of goods and services from locations around the globe to take advantage of national differences in the cost and quality of factors of productions, IKEA did a good job, in order to reduce the cost of cotton slipcovers, IKEA has concentrated production in four core suppliers in China. The resulting efficiencies from these global sourcing decisions enabled IKEA to reduce the price of the Klippen by some 40 present between 1995 and 2005, because in China we have cheaper labour and lower price of source, it will reduce the cost of production in IKEA, thereby allow IKEA to compete more effectively. 3. What does the IKEA story teach you about the limits of treating the entire world as single integrated global marketplace? In my opinion, every country is unique and has different cultures. If the strategies to provide low price of product offer a company must identify what and which factor that can bring the lowest cost in term of labor, transportation, materials and so on. IKEA first discovered in the early 1990s. The company found that its European-style offerings. However, it didnt always resonate with American consumers. Because of this reason, IKEA has redesigned its US offerings appeal to American consumers, which has resulted in stronger sales. It is obvious that tastes and preference play an important role in the globalization market. Also, since not everyone had a car, IKEA ensured that their stores were located near public transport. Every culture in every single country varies when it comes to taste. Need to adapt local product in these markets for these consumers.

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