SWEDEN’S IKEA

INTERNATIONAL MANAGEMENT STRATEGY

Brief History
 Established in the 1940s in Sweden

 Become one of the world’s largest retailers of

home furnishing

 Push to expand globally

Strategy: production oriented

 Decided what it was going to sell and then

presented it to the worldwide public

 Swedish roots in its international advertising

Strategy: global network of suppliers

 2,700 firms in 67 countries

 Exclusive contract and low prices

 Work closely with suppliers to build savings

 Huge economies of scale

The Result
 1974: 10 stores, only 1, located outside
Scandinavia, and annual revenues of $210
million

 1994: A group with 125 stores in 26

countries and sales of close to $5 billion
New challenge in North America
 1985-1990: Six stores in North America

 Not quickly become profitable and by 1990

operations were in trouble
◦ Exchange rate
◦ Product’s taste and physique problem
Solution
• Customize its product offering to North American
taste

• Boosted the amount of products being sourced locally

form 15% in 1990 to 45% in 1994
Result
• Sales immediately increased by 30 to 40%

• By 1994 expanded the number of American stores to

15 and now 37
Conclusion
 What strategy was IKEA pursuing as it
expanded throughout Europe during the
1970’s and early 1980s—a multidomestic
strategy, global strategy, or international
strategy?

 Why do you think this strategy did not work

as well in North America as it did in Europe?
Answer
 Global strategy for Europe and International
strategy for North America

 Don’t work well because:

◦ Big different tastes and physique
◦ Exchange rate
Thank you for your attention!