CASE STUDY

(IKEA THE GLOBAL RETAILER)

Established by Ingvar Kamprad in Sweden in 1943, when he was 17 years old. The home furnishing superstore has expanded to 230 stores in 33 countries, generating $23 billion in sales. Target market is global middle class, looking for low-priced but attractively designed furniture and household items. Stores offer 8000 to 10,000 items from kitchen cabinets to candlesticks.

Company aims at reducing the price of its offerings by 2 to 3 % per year. Company had been able to reduce the price of its best selling Klippan loveseat by 40% between 1999 to 2006. For global success, IKEA adapt its offerings to the tastes and preference of consumers in different nations.

Q1 How is IKEA profiting from global expansion ? What is the essence of its strategy for creating value by expanding internationally ? A1 IKEA originally manufactured its product in Sweden, but due to global expansion, it transferred its production to low-cost supplier in Poland. This increased the profitability by reducing the transport cost. The ability to adapt its offerings to the tastes and preferences of consumers is the essence of its strategy.

Q2 How would you characterize IKEAs original strategic posture in foreign markets ? What were the strength of this posture ? What were the weakness ? A2 Originally IKEA offered European style posture in foreign markets. Strength of this posture are Less cost and build a trademark. Weakness are Doesnt match with the taste and preference of consumers.

Q3 How has the strategic posture of IKEA changed as a result of its experience in the United States ? Why did it change its strategy ? A3 The strategic posture of IKEA changed from European- style to American-style. The reason for change was that European-style offerings were not always able to resonate with the American consumers, who had different taste and preferences.

Q4 How would you characterize the strategy of IKEA today ? A4 Current strategy of IKEA is to adapt there offerings as per the taste and preferences of consumers in that nation. For example to enter the markets of China, IKEA included balcony section in their stores, to reflect the popular layout of Chinese apartments.