ikea global strategy case study

IKEA Globalization Strategy Benefits and Limits Case Study

Ikea globalization strategy: essay introduction, ikea globalization strategy: discussion, ikea globalization strategy: conclusion, works cited.

IKEA is a furniture company operating on a global scale. With stores all around the world, it had to adapt its strategy to the countries where the European approach proved unsuccessful. Nevertheless, IKEA is an example of a highly profitable global company. This paper will cover the benefits of globalization that IKEA experienced, the importance of cross-cultural understanding, and the limits of the global market.

IKEA is a tremendously successful company. In part, it owes its success to perceiving the whole world as its market. With 230 stores in 33 countries, it has shown that global strategies can lead to success. Its strategy focused on providing a finely designed product at the lowest possible cost. IKEA stores share their style all over the world, making the brand recognizable and reliable. By expanding its market without lowering the quality of the product, it was able to establish one of the most recognizable and profitable furniture brands in history (Steenkamp 51). IKEA prides itself on its cost-cutting policy, and with a global strategy, it requires globalization of production. By creating production sites in the countries it operates in, IKEA cuts the costs of delivery and manufacturing that would otherwise become unfeasible when working on a global scale (Olhager et al. 146; Burt et al. 16).

However, IKEA was not able to keep its stores and catalog identical in all countries. Without understanding the specific needs of the country, a global company is at risk of losing a lot of customers. Before expanding into the United States, IKEA did not consider the differences between the US and European markets (Mellahi and Frynas 4). As the case study points out “Sofas weren’t big enough, wardrobe drawers were not deep enough, glasses were too small, curtains too short, and U.S. size appliances didn’t fit in the kitchens.” This expansion could have been disastrous had the company not addressed this problem by redesigning its products to be more appropriate for the market. Now it is a popular brand in the United States, and the early mistakes are long forgotten.

To not repeat the same error twice, IKEA made an effort to customize its stores in China to the needs of Chinese customers. For example, a balcony section of the store was introduced. Chinese apartments often have balconies, so it was a smart decision to capitalize on this regional difference (Prange 81). This change in strategy shows some of the limits of the global approach. One strategy cannot apply to all countries due to their regional differences. A global company has to consider the needs of its customers on a more local level. This move will make the business more profitable in return. However, it does not prevent the global approach from being viable. These limits only suggest that the strategy should include more thorough research of the market before expanding. After the research is done, the company can choose how to appropriately segment the market (Schlegelmilch 70).

Globalization can be used to create a successful business. IKEA utilized this to cut costs on production, expand into 33 countries, and become a brand known worldwide. The story of its rise was not without obstacles. Its difficulties in expanding beyond Europe have shown that there are limits to utilizing the same strategy everywhere. However, with a few adjustments based on regional preferences, the company became a success outside of Europe.

Burt, Steve et al. “International Retailing as Embedded Business Models.” Journal of Economic Geography , vol. 16, no. 3, 2015, pp. 715-747, Web.

Mellahi, Kamel, and Jedrzej George Frynas. Global Strategic Management . Oxford University Press, 2015.

Olhager, Jan et al. “Design of Global Production and Distribution Networks.” International Journal of Physical Distribution & Logistics Management , vol. 45, no. 1/2, 2015, pp. 138-158, Web.

Prange, Christiane. Market Entry in China . Springer International Publishing, 2016.

Schlegelmilch, Bodo B. Global Marketing Strategy . Springer, 2016.

Steenkamp, Jan-Benedict. Global Brand Strategy . Palgrave Macmillan UK, 2017.

• Chicago (A-D)
• Chicago (N-B)

IvyPanda. (2023, October 30). IKEA Globalization Strategy Benefits and Limits Case Study. https://ivypanda.com/essays/ikea-companys-globalization-benefits-and-limits/

"IKEA Globalization Strategy Benefits and Limits Case Study." IvyPanda , 30 Oct. 2023, ivypanda.com/essays/ikea-companys-globalization-benefits-and-limits/.

IvyPanda . (2023) 'IKEA Globalization Strategy Benefits and Limits Case Study'. 30 October.

IvyPanda . 2023. "IKEA Globalization Strategy Benefits and Limits Case Study." October 30, 2023. https://ivypanda.com/essays/ikea-companys-globalization-benefits-and-limits/.

1. IvyPanda . "IKEA Globalization Strategy Benefits and Limits Case Study." October 30, 2023. https://ivypanda.com/essays/ikea-companys-globalization-benefits-and-limits/.

Bibliography

IvyPanda . "IKEA Globalization Strategy Benefits and Limits Case Study." October 30, 2023. https://ivypanda.com/essays/ikea-companys-globalization-benefits-and-limits/.

• Marketing Excellence: IKEA
• Will We Still Love IKEA?
• IKEA Company and Its Intrapreneurial Organisation
• IKEA: Its’ Success in the Internationalisation Process
• The Effects of Diverse Culture of IKEA in UAE to Impact of Cultural Diversity on IKEA
• IKEA’s Strategy Success Analysis
• IKEA Human Resources
• IKEA Analysis
• IKEA: Business Responsibility and Sustainability
• Manufacturing Plant's Quality, Process, Location
• Satyam Scandal and Corporate Governance Failure
• Tesco Corporation's Internationalization Strategy
• Zara Company's Strategic Management and Competitive Edge
• Dubai Electricity and Water Authority's Tech Innovations

Academia.edu no longer supports Internet Explorer.

To browse Academia.edu and the wider internet faster and more securely, please take a few seconds to  upgrade your browser .

Enter the email address you signed up with and we'll email you a reset link.

• We're Hiring!
• Help Center

IKEA Case Study

by Sharleen Suwaris

Free Related PDFs

Hanaa Elsayad

The paper is a case study for the different types of risks faced by IKEA as the company started its operations in China. How the risks were mitigated, avoided or accepted has been discussed.

RELATED TOPICS

•   We're Hiring!
•   Help Center
• Find new research papers in:
• Health Sciences
• Earth Sciences
• Cognitive Science
• Mathematics
• Computer Science
• Academia ©2023

Find Study Materials for

• Business Studies

Combined Science

Computer science, english literature, environmental science, human geography, macroeconomics, microeconomics.

• Social Studies
• Browse all subjects
• Exam Revision
• Career Advice for Students
• Student Life
• Study Guide
• University Advice
• Read our Magazine

Create Study Materials

Select your language

IKEA is the largest  furniture retailer in the world.  In 2017 IKEA had 2.3 billion visits to their website and 936 million visits to their stores.  All those visits resulted in 36.3 billion euros in sales.  In 2017 IKEA opened 14 new stores, bringing their total to 403 stores globally.   

Explore our app and discover over 50 million learning materials for free.

• Ikea Transnational Strategy
• Explanations
• StudySmarter AI
• Textbook Solutions
• Amazon Global Business Strategy
• Apple Change Management
• Apple Ethical Issues
• Apple Global Strategy
• Apple Marketing Strategy
• Ben and Jerrys CSR
• Bill Gates Leadership Style
• Bill and Melinda Gates Foundation
• Coca-Cola Business Strategy
• Disney Pixar Merger Case Study
• Enron Scandal
• Franchise Model McDonalds
• Google Organisational Culture
• Ikea Foundation
• Jeff Bezos Leadership Style
• Kraft Cadbury Takeover
• Mary Barra Leadership Style
• McDonalds Organisational Structure
• Netflix Innovation Strategy
• Nike Marketing Strategy
• Nike Sweatshop Scandal
• Nivea Market Segmentation
• Nokia Change Management
• Organisation Design Case Study
• Oyo Franchise Model
• Porters Five Forces Apple
• Porters Five Forces Starbucks
• Porters Five Forces Walmart
• Pricing Strategy of Nestle Company
• Ryanair Strategic Position
• SWOT analysis of Cadbury
• Starbucks Ethical Issues
• Starbucks International Strategy
• Starbucks Marketing Strategy
• Susan Wojcicki Leadership Style
• Swot Analysis of Apple
• Tesco Organisational Structure
• Tesco SWOT Analysis
• Unilever Outsourcing
• Virgin Media O2 Merger
• Walt Disney CSR Programs
• Warren Buffett Leadership Style
• Zara Franchise Model
• Assessing Innovation
• Business growth
• Digital Technology
• Internationalisation
• Market Entry
• Customer Expectations
• Customer Service and ICT
• Flow Production
• Good Customer Service
• Job Production
• Just-In-Case Inventory Management
• Just-In-Time Inventory Management
• Lean Production
• Methods of Good Customer Service
• Poor Customer Service
• Procurement
• Production Process
• Quality Assurance
• Sales Process
• Stages of Sales Process
• Action Research
• Divorce between Ownership and Control
• Innovation Culture
• Kotter's Change Model
• Learning Organization
• Lewin's Change Model
• Managing Organisational Culture
• National Culture
• Organisation Structures
• Organizational Climate
• Organizational Culture Definition
• Organizational Development
• Resisting Change
• Strategic Implementation
• Abandonment Option
• Accounting Rate of Return
• Adjusted Present Value
• Adjustments in WACC
• Agency Problems
• Agency problem
• Amortization
• Arbitrage Pricing Theory
• Asset Backed Securities
• Benefits of M&A
• Beta in Finance
• Binomial Model
• Black Scholes Formula
• Black-Scholes Model
• Bond Coupon
• Bond Duration
• Bond Returns
• Bond Terminology
• Bond Volatility
• Business Life Cycle
• Business Risk Analysis
• Business Valuation
• CAPM Assumptions
• Calculate Compound Return
• Calculating IRR
• Call Options
• Capital Asset Pricing Model
• Capital Budget
• Capital Budgeting
• Capital Investments
• Capital Rationing
• Cash Budgeting
• Cash Collection
• Cash Conversion Cycle
• Certainty Equivalent
• Common Stock
• Company Cost of Capital
• Comparables Valuation
• Compensation
• Competitive Advantage
• Components of Working Capital
• Conglomerate Merger
• Continuous Compounding
• Convertible Bonds
• Convertibles
• Corporate Bonds Default Risk
• Corporate Control
• Corporate Debt
• Corporate Debt Yield
• Corporate Financial Goals
• Corporate Income Tax
• Corporate Tax
• Corporation
• Cost of Bankruptcy
• Cost of Capital
• Cost of Equity
• Cost of Equity Capital
• Cost of Financial Distress
• Credit Decisions
• Cross Currency Swap
• Currency Risk
• DCF Terminal Value
• DCF Valuation
• Debt Policy
• Debt Restructuring
• Debt vs Equity
• Decision Trees
• Declining Industries
• Default Risk
• Direct and Indirect Costs of Bankruptcy
• Discounted Cash Flow
• Discounted Payback Period
• Dividend Payout
• Dividend Policy
• DuPont Analysis
• Dual Class Equity
• Earnings Per Share
• Economic Exposure
• Economic Rent
• Economic Value Added
• Efficiency Calculations
• Exchange Rate Theories
• External Financing
• Fama French 3 Factor Model
• Financial Bubbles
• Financial Decisions
• Financial Distress
• Financial Leverage
• Financial Managers
• Financial Planning
• Financing Decision
• Flexible Production
• Flow to Equity
• Follow On Investments
• Forward Contract
• Fundamentals of Corporate Finance
• Future Value
• Future Value of Annuity
• Futures Contract
• General Cash Offer
• Global Ownership Structures
• Going Public
• Growing Annuity Formula
• Growing Perpetuity Formula
• Growth Industries
• Growth Stocks
• Hedge Ratio
• Horizontal Integration
• How to Build a Merger Model
• IRR Pitfalls
• Identifying Options
• Incentive Compensation
• Income Stocks
• Incremental Cash Flow
• Inflation Indexed Bonds
• Interest Rate Hedge
• Interest Rate Swaps
• Internal Rate of Return
• International Cash Management
• International Cost of Capital
• International Risk
• Investment Criteria
• Investment Decisions
• Investment Opportunities
• Issuance of securities
• Law of Conservation of Value
• Law of One Price
• Lease Accounting
• Leverage Ratios
• Leveraged Buyout
• Leveraged Leases
• Leveraged Restructuring
• Levered Beta
• Liquidity Ratios
• Loan Covenants
• Long Term Financial Plans
• Managing Credit
• Managing Debt
• Market Capitalization
• Market Values
• Marketable Securities
• Maximizing shareholder value
• Medium Term Notes
• Merger Waves
• Merger and Acquisition Considerations
• Merger and Acquisition Costs
• Mergers and Acquisitions
• Modern Portfolio Theory
• Modigliani-Miller Formula
• Monitoring and Evaluation
• Monte Carlo Simulation
• NPV Investment Decision Rule
• Net Present Value
• Nominal Interest Rate
• Operating Leases
• Optimistic Forecast
• Option Valuation
• Option to Expand
• Options Fundamentals
• Options Risk Management
• Organizational Change
• Ownership Structure
• Payback Period
• Pecking Order Theory
• Performance Management
• Perpetuities
• Political Risk
• Portfolio Risk
• Portfolio Theory
• Positive NPV
• Predicting Default
• Preferred Stock
• Present Value of Annuity
• Present Value of Perpetuity
• Pricing Models
• Private Equity Partnerships
• Private Placement
• Privatization
• Problems with NPV
• Project Analysis
• Project Valuation
• Put Call Parity
• Put Options
• Pyramid Systems
• Rate of Return
• Real Interest Rate
• Real Options
• Reasons For a Merger
• Residual Income
• Restructuring
• Return on Equity
• Rewarding Performance
• Risk Adjusted Discount Rate
• Risk Management
• Risk Neutral Valuation
• Risk of Hedging
• Scenario Analysis
• Security Risk Assessment
• Selling Securities
• Semi-Strong Market Efficiency
• Sensitivity Analysis
• Share Repurchase
• Sharpe Ratio
• Short Termism
• Sovereign Bonds
• Speculation
• Spot Exchange Rate
• Statistical Models
• Stock Dividend
• Stock Issues
• Stock Prices
• Stock Valuation
• Stockholder Voting Rights
• Strong Form Efficiency
• Structural Models
• Tax on Dividends
• Term Structure
• Terminal Value
• Time Value of Money
• Timing Option
• Transactions
• Transparency
• Types of Agency Problems
• Types of Bonds
• Types of Debt
• Types of Depreciation
• Types of Interest Rates
• Types of Investment Funds
• Unlevered Beta
• Value Additivity Principle
• Valuing Common Stock
• Variance and Standard Deviation
• Venture Capital Market
• Weighted Average Cost of Capital
• Working capital
• Yield Spread
• Zero Coupon Bond
• Analysing Financial Performance
• Average Rate of Return
• Balance Sheet
• Break Even Analysis Chart
• Break-Even Analysis
• Cash Flow Budget
• Cash Flow Forecast
• Cash Flow Improvement
• Cashflow Problems
• External Sources of Finance
• Financial Objectives
• Financial Performance and Stakeholders
• Financial Statements
• Financial Terms and Calculations
• Income Statements
• Internal Sources of Finance
• Investments
• Profitability Ratio
• Sources of Finance
• Boundary Spanning
• Contract of Employment
• Departmentalization
• Employee Benefits
• Employee Costs
• Employee Engagement
• Employee Rewards
• Employee Training and Development
• Employment Policy
• Expectancy Theory
• Flexible Work Arrangements
• HR Policies
• Hackman and Oldham Model
• Herzberg Two Factor Theory
• Human Resource Flow
• Human Resource Management
• Human Resource Objectives
• Improving Employer - Employee Relations
• Incentives for Employees
• Internal and External Communication
• Intrinsic Motivation
• Job Characteristics Model
• Job Satisfaction
• Labour Productivity
• Labour Turnover
• Maslow Theory
• Matrix Organizational Structure
• Methods of Recruitment
• Motivating & Engaging Employees
• Motivation in the Workplace
• Organisation Design
• Organizational Justice
• Organizational Strategy
• Organizational Structure Types
• Pay Structure
• Performance Evaluation
• Performance Feedback
• Recruitment And Selection
• Reinforcement Theory
• Retention Rate
• Self-Efficacy Theory
• Taylor Motivation Theory
• Team Structure
• Termination
• Training Methods
• Work-Life Balance
• Business Ethics
• Business Risks
• Business Uncertainty
• Consumer Law
• Economic Climate
• Effects of Interest Rates on Businesses
• Employment Law
• Environment and Business
• External Factors Affecting Business
• Government Policies on Business
• Health and Safety
• Inflation and Business
• Information and Communication Technology in Business
• Multinational Company
• Sustainability in Business
• Tax on Business
• Account Management Responsibilities
• Account Receivable
• Accounting Assumptions
• Accounting Basics
• Accounting Changes
• Accounting Changes and Error Corrections
• Accounting Cycle
• Accounting Equations
• Accounting Errors
• Accounting Policies
• Accounting for Income Taxes
• Accounting for Investments
• Accounts Payable
• Accrued Liabilities
• Accumulated Other Comprehensive Income
• Acquisition Valuation
• Activity Ratio
• Adjusting Entries
• Allocation Base
• Allocation Method
• Amortization of Intangible Assets
• Antidilutive
• Assets Held for Sale
• Average Cost Method
• Balance Sheet Accounts
• Bond Indenture
• Bond Valuation
• Bonds and Long-term notes
• Capitalized Cost
• Cash Dividends
• Cash Inflow
• Cash and Cash Equivalents
• Cash and Receivables
• Cash vs Accrual Accounting
• Change in Accounting Principle
• Change in Inventory Method
• Change in Reporting Entity
• Claims and Litigations
• Components of Pension Expense
• Composite Depreciation Method
• Comprehensive Income
• Conceptual Framework
• Contingencies
• Convertible Bonds Accounting
• Corporation Definition
• Correcting Entries
• Cost Allocation
• Cost Flow Methods
• Cost of Debt
• Current Liabilities
• Debt Investment
• Deferred Payment
• Deferred Tax Asset
• Deferred Tax Liability
• Defined Benefit Pension Plan
• Defined Contribution Plan
• Depreciation
• Depreciation Methods
• Diluted Earnings Per Share
• Direct Method Cash Flow
• Discontinued Operations
• Dispositions
• Dollar Value LIFO
• Donated Assets
• Ease of Raising Capital
• Effective Interest Method
• Elements of Cash Flow Statement
• Elements of Financial Statements
• Employee Ownership
• Enhancing Qualitative Characteristics
• Equity Investments
• Equity Issuance
• Equity Method
• Ethics in Accounting
• Exchange Traded Notes
• Executive Compensation
• Extinguishment of Debt
• FIFO Method
• Fair value through net income
• Finance Lease
• Financial Accounting
• Financial Disclosure
• Financial Functions in Excel
• Financial Instruments
• Financial Reporting
• Further Adjustments
• Future Value of an Annuity
• Gain Contingency
• Graded Vesting
• Gross Profit Method
• History of Accounting
• How to Prepare Cash Flow Statement
• Hybrid Organization
• Impairments
• Importance of Cash Flow
• Income Statement Accounts
• Income Tax Accounting
• Income from Continuing Operations
• Indirect Method Cash Flow
• Induced Conversion
• Installment Note
• Intangible Assets
• Interest Capitalization
• Interest Revenue
• Internal Control
• International Financial Reporting Standards
• Intraperiod Tax Allocation
• Inventory Accounting
• Inventory Cost Flow Assumptions
• Inventory Errors
• Inventory Systems
• Inventory Valuation Methods
• LIFO Method
• Lease Disclosure
• Lease Discount Rate
• Lease Expense
• Lease Purchase Option
• Lease Requirements
• Long Term Contract Accounting
• Long Term Notes
• Loss Contingency
• Lower of Cost or Market
• Lower of Cost or Net Realizable Value
• Lump Sum Purchase
• Model Business Corporation Act
• NOL Carryback
• NOL Carryforward
• Net Operating Loss
• Non Cash Acquisition
• Non Current Liabilities
• Notes Payable
• Notes Receivable
• Notes to Financial Statements
• Objectives of Financial Reporting
• Open Account
• Operating Lease
• Overhead Allocation
• Paid in Capital
• Partial Year Depreciation
• Pension Expense
• Pension Obligation
• Pension Plan
• Pension Plan Assets
• Permanent Differences
• Post Retirement Benefit
• Premium Bonds
• Preparation of Financial Statements
• Present Value of Lease Payments
• Present Value of an Annuity
• Prior Period Adjustments
• Profitability Analysis
• Property Dividend
• Prospective Approach
• Qualitative Characteristics of Financial Reports
• Quality of Earnings
• Reacquired Stock
• Receivables Financing
• Remeasurement of Lease Liability
• Research and Development Costs
• Residual Value
• Resource Depletion
• Restricted Cash
• Restricted Stock
• Retail Inventory Method
• Retained Earnings
• Retired Shares
• Retrospective Approach
• Revenue Recognition
• Revenue Recognition Issues
• Role of Auditor
• Self Constructed Assets
• Service Life
• Share Based Compensation
• Share Class
• Shareholder Rights
• Shareholders Equity
• Short Term Lease
• Simple Interest vs Compound Interest
• Software Development Costs
• Solvency Ratio
• Specific Identification Method
• Start Up Costs
• Statement of Cash Flows
• Stock Issuance
• Stock Option Plan
• Straight Line Method
• Structure of Cash Flow Statement
• Tangible vs Intangible Assets
• Tax Accounting
• Tax Rate Changes
• Temporary Differences
• Treasury Bonds
• Treasury Stock
• Types of Assets
• Types of Cash Flow
• Types of Corporations
• Types of Inventory
• Types of Lease
• Valuation Allowance
• Warranty vs Guarantee
• What is included in Inventory
• Basic Financial Terms
• Business Enterprise
• Business Location
• Business Ownership
• Business Planning
• Classification of Businesses
• Evaluating Business Success Based on Objectives
• Measuring Success in Business
• Motivation in Entrepreneurship
• Reasons for Business Failure
• Risks and Rewards of Running a Business
• Arc Elasticity
• Bertrand Oligopoly
• Block Pricing
• Cardinal Vs Ordinal Utility
• Commodity Bundling
• Conglomerate Mergers
• Constraints
• Consumer Equilibrium
• Consumer Expectations
• Consumer Search
• Contribution Analysis
• Cost Complementarity
• Cost Function
• Cournot Oligopoly
• Data-driven Decisions
• Decision Tree Method
• Demand Forecasting
• Demand Function
• Econometric Methods
• Economic Trade Off
• Economics Of Effective Management
• Employee Monitoring
• Equi-marginal Principle
• Finitely Repeated Games
• Fixed And Sunk Costs
• Functions In A Business Firm
• Government Regulations
• Incremental Decision Making
• Individual demand vs Market demand
• Industry Classification
• Infinitely Repeated Games
• Information Economics
• Input Prices
• Isoprofit Curves
• Isoquant Curve
• Lagrangian Multiplier Method
• Least-cost Combination Of Inputs
• Manager Performance
• Marginal Rate Of Technical Substitution
• Marginal Returns
• Market Concentration
• Market Uncertainty
• Measuring productivity
• Nash Bargaining
• Net Present Value Method
• Ordinary Least Square Method
• Own Price Elasticity Of Demand
• Pay-back Period Method
• Point Elasticity
• Pricing Decisions
• Pricing Strategies For Market Leaders
• Properties Of Indifference Curve
• Properties Of Isoquants
• Quantitative Demand Analysis
• Research And Development
• Revealed Preference Theory
• Sequential Bargaining
• Signaling & Screening
• Sources Of Monopoly Power
• Specialized Investments
• Stackelberg Oligopoly
• Strategic Thinking
• Supply Function
• Survey Methods
• Sweezy Oligopoly
• Technology Supply and Demand
• The Five Forces Framework
• The Theory Of Individual Behavior
• The Time Value Of Money
• Total Product, Average Product, And Marginal Product
• Total Utility Vs Marginal Utility
• Types Of Monopolies
• Vertical Integration
• Vertical Vs Horizontal Integration
• What Is Dumping
• Behavioral Theory in Organizational Management
• Charismatic Leaders
• Conflict Management
• Conflict Process
• Contingency Theory
• Decision Making
• Decision Making Model
• Ethical Decision
• Ethical Leadership
• Fiedler Contingency Model
• Impression Management
• Individual Differences
• Leader Member Exchange Theory
• Leadership Challenges
• Leadership Theories
• Negotiation
• Office Politics
• Organizational Leadership
• Organizational Politics
• Positive Leadership
• Social Network Analysis
• Stakeholder
• Trait Theory of Leadership
• Transactional Leaders
• Transformational Leadership
• Types of Conflict
• Business Aims and Objectives
• External Environment
• Forms of Business
• Franchising
• Key Business Terms
• Limited Liability
• Shareholder
• Sole Trader
• Evaluating Total Quality Management
• Importance of Quality
• Improving the Supply Chain
• Measuring Quality
• Operational Data
• Operational Objectives
• Operational Performance Analysis
• Outsourcing
• Productivity and Efficiency
• Quality Management
• Total Quality Management
• Affective Events Theory
• Attitude in the Workplace
• Behavioral Science
• Big Five Personality Traits
• Biographical Characteristics
• Bureaucratic Structure
• Causes of Stress at Work
• Challenges and Opportunities for OB
• Challenges of Management
• Choosing the Right Communication Channel
• Classification of Groups
• Conflict Results
• Contingent Selection
• Creative Behavior
• Cultural Values
• Decision Making Biases
• Direction of Communication
• Discrimination in the Workplace
• Diversity Management
• Diversity in the Workplace
• Effective Management
• Effective Negotiation
• Effective Teamwork
• Effects of Work Stress
• Emotional Intelligence
• Emotional Labor
• Emotional Regulation
• Employee Involvement
• Employee Selection Methods
• Evidence Based Management
• Factors Influencing Perception
• Functions of Emotions
• Functions of Organizational Culture
• GLOBE Framework
• Group Cohesiveness
• Group Decision Making
• Group Development Stages
• Group Norms
• Group Roles
• Group Status
• Group vs Team
• History of Motivation Theory
• Hofstede's Cultural Dimensions
• How to Measure Job Satisfaction
• Impact of Power
• Importance of Leadership in Human Resource Management
• Influences on Organizational Culture
• Initial Selection Process
• Innovative Organizational Culture
• Integrating Theories of Motivation
• Interpersonal Skills
• Job Attitude
• Job Dissatisfaction
• Job Satisfaction Causes
• Job Satisfaction Outcomes
• Leadership Trust
• Maintaining Organizational Culture
• Mechanistic vs Organic Structure
• Models of Organizational Behavior
• Modern Motivational Theory
• Myers-Briggs
• Negotiation Process
• Organizational Behavior Management
• Organizational Constraints
• Organizational Culture Problems
• Organizational Decision Making
• Organizational Structure Management
• Organizational Values
• Paradox Theory
• Perception in Decision Making
• Personal Stress Management
• Personality Models
• Personality and Values
• Personality at Work
• Planned Change in an Organization
• Positive Company Culture
• Power Tactics
• Power in Work
• Responsible Leaders
• Self-Evaluation
• Simple Structure
• Situation Strength Theory
• Social Loafing
• Stereotype Threat
• Stress Management in Organization
• Stress in the Workplace
• Substantive Selection
• Team Challenge
• Team Composition
• Team Player
• Team Process
• The Study of Organizational Behavior
• Third Party Negotiation
• Training Effectiveness
• Trait Activation Theory
• Types of Diversity
• Types of Emotions
• Types of Moods
• Types of Power in the Workplace
• Types of Teams
• Understanding and Developing Organizational Culture
• Unequal Power
• Virtual Organizational Structure
• Work Emotions
• Working as a Team
• Workplace Behavior
• Workplace Spirituality
• Communication Barriers
• Communication Channels
• Communication Process
• Cultural Barriers
• Oral Communication
• Persuasive Strategies
• Types of Communication
• Written Communication
• Assessing Business Performance
• Business Considerations from Globalisation
• Competitive Environment
• Core Competencies
• Corporate Mission and Objectives
• Corporate Social Responsibility
• Economic Change
• Economic Environment
• Financial Ratios
• Interest Rates in the UK
• Investment Appraisal
• Lifestyle and Technological Environment
• Non-Financial Data
• Porters Five Forces
• SWOT Analysis
• Social and Technological Environment
• Areas of Competition
• Bowmans Strategic Clock
• Diversification
• Strategic Positioning

Lerne mit deinen Freunden und bleibe auf dem richtigen Kurs mit deinen persönlichen Lernstatistiken

Nie wieder prokastinieren mit unseren Lernerinnerungen.

IKEA is the largest furniture retailer in the world. In 2017 IKEA had 2.3 billion visits to their website and 936 million visits to their stores. All those visits resulted in 36.3 billion euros in sales. In 2017 IKEA opened 14 new stores, bringing their total to 403 stores globally.

This case study of IKEA's transnational strategy provides insight into the company's strategy and operations. It highlights the company's aim to produce high-quality products at low prices to achieve a competitive advantage , drawing buyers' attention and increasing profitability. The success of the company can be attributed in part to the loyalty of its customers. This is evidenced by the number of young and price-conscious consumers who have bought into the IKEA concept. We will analyse Ikea's transnational strategy and the various challenges that IKEA has faced in its international expansion. This will reveal the company's solutions to specific problems and how their global strategy helped the company become one of the most successful furniture retailers in the world .

Before we get into the main discussion of IKEA's transnational strategy , let's find out about its history.

An introduction to IKEA

IKEA is a furniture and home décor company founded in 1943, in Sweden, by Ingvar Kamprad. After years working with furniture makers and suppliers, the young entrepreneur was able to establish a method that involved supplying furniture to be assembled directly by the customer in their home. The company started by developing innovative modular designs and sourcing components from Eastern Europe. The company then expanded throughout Scandinavia.

Stores were located in areas that could accommodate a large number of vehicles. The design and layout of the IKEA store remained the same throughout the years. The store's inventory is always large and customers can pick out their own furniture. In most cases, they do so without waiting for the store to deliver their order. F urniture can be assembled in various configurations, and the buyer can decide on the size and style of the pieces. Additionally, IKEA is a company that makes the purchasing journey an experience in itself.

INGKA Holding BV is the parent company of the IKEA Group companies. This includes the Swedish furniture retailer IKEA of Sweden, the industrial group Swedwood, which makes the furniture for IKEA, sales companies and the purchasing and supply functions relating to IKEA.

IKEA Transnational Strategy

There are four types of international business strategy: Global Standardisation Strategy, T ransnational Strategy, I nternational Strategy, and L ocalisation strategy (See Figure 1). The matrix emphasises two types of pressure faced by a multinational company when expanding abroad: local responsiveness and cost reductions.

Due to its poor performance in the 1990s, the company was forced to move to a transnational strategy that emphasises cooperation and interdependence of the home country's headquarters and its international subsidiaries and stores. To keep design and furniture at an affordable price, Ikea also adopts a global standardisation strategy so that its products, services, branding, and marketing strategies retain a level of 'sameness' everywhere. Some adaptations, however, are made to advertising and products offered in local markets.

The organisation of IKEA follows a matrix structure where each country has a Service Office (SO) and a national headquarter with support units. The SOs are responsible for the development and expansion of the stores in their local markets. Depending on the complexity of the project and the market conditions, Ikea may even choose to establish a country manager and a retail director for a country.

For IKEA, the importance of transferring corporate values, culture and concepts throughout their global divisions emphasises the need for knowledge sharing.

Knowledge sharing is the act of distributing existing knowledge from the headquarter to subsidiaries by a multinational firm.

The advantages of knowledge-sharing include:

Capitalising on market advantages of foreign operations (such as labour costs, proximity to natural resources, or shipping lanes)

Competitive edge in local markets

Organic, locally-driven decisions and organisational structure

Wide r market penetration and brand awareness

IKEA's knowledge sharing is primarily supported by a matrix organisational structure where each country's service office is linked to the Global Service Office at its core. Through this network, knowledge and information are shared throughout the organisation. Training also plays an important role in information sharing. Through onboarding programmes, each new employee is familiarised with the company's history, culture, and working methods. This is best reflected in IKEA's HR policy:

As an IKEA employee, you are willing to share your knowledge and experience with all IKEA employees.

Being an open company is another key factor, allowing IKEA to promote knowledge sharing among its employees. All the company's projects, important news, financial data, etc. can be viewed on bulletins and corporate newsletters.

IKEA's hybrid strategy

The IKEA hybrid strategy combines cost leadership and differentiation strategies. This allows companies to create differentiated products at low cost while still satisfying the expectations of their customers (see Figure 2 below).

The hybrid strategy is one where the company tries to gain two competitive advantages at the same time: low prices and high-quality products.

IKEA's strategy aims to achieve a competitive advantage by producing at the lowest cost. It allows the company to charge lower prices and increase profitability. To achieve its goals, IKEA cuts costs and is always looking for the least costly suppliers. It also tries to offer lower prices to its wider audience.

Differentiation strategy

To gain a competitive advantage, IKEA aims to offer products that are perceived as being different and better than their competitors.

The goal of the differentiation strategy is to create a compelling brand image by focusing on the quality of their designs.

Focus Strategy

The cost focus and differentiation focus are the two aspects of the company's main strategy.

IKEA uses a combination of these strategies to achieve its vision. One of the strategies it uses is its cost leadership strategy . This part of the strategy involves trying to produce at the lowest possible cost to maintain a competitive advantage.

To support its hybrid strategy, IKEA has a clear policy that applies to all of its activities, which incorporates elements of cost leadership and differentiation focus strategies. This policy is designed to ensure that the company's activities are carried out in line with its strategy, and is constantly improved.

Analysis of IKEA's transnational strategy

This section will analyse IKEA's transnational strategy and the various challenges that IKEA has faced in its international expansion. It will also reveal the company's solutions to specific problems.

An example of this is China, where IKEA opened its first store in Beijing in 1998. It took IKEA five years to understand the Chinese market, as the culture of Asia and Europe are very different. Below are the challenges that IKEA faced.

Challenges:

How to provide low prices and compete with local markets in China? High import taxes made it almost impossible for the company to offer low prices.

IKEA considered how to compete in China's cluttered market, where many local firms and products copied each other.

The low-income levels in China made it difficult to reach many people.

IKEA had to source local products and materials to compete with prices in China. This resolved the problem of high import taxes in China.

IKEA started performing local quality inspections, closer to the manufacturing stage, to save on repair costs and offer low price products in huge volumes. IKEA hoped to win over some of the competitors in the Chinese market.

IKEA targeted the young middle-class population as this category has a higher income and is more aware of Western styles. Targeting this segment helped IKEA project itself as an aspirational western brand.

Instead of using the IKEA catalogue to promote its products, they used Chinese social media and micro-blog website Weibo to target the urban youth instead.

One of the main challenges for IKEA in China was how to provide low prices.

This was a massive change in IKEA's strategy as it was targeting the mass market in other parts of the world.

Every year, IKEA conducts an annual survey to measure how consumers perceive the company's products and store layout. The goal of the survey is to find out if local adaptation is necessary to create the IKEA business concept, which is to create a better everyday life for many people by offering a variety of well-designed, functional products at prices that are as low as possible. In new markets, it is important to find a price level that is appropriate for the company and its customers. To attract people, the products offered must be perceived as good quality at low prices.

The challenges of IKEA's transnational strategy

IKEA is a very strong brand. Its strong brand identity, and its ability to attract customers, makes it stand out from its competitors. This is the reason IKEA is successful at achieving a hybrid strategy. However, challenges include reacting to changes in the environment, including the ability to deal with price wars. The external environment is IKEA's main threat. It can be measured using various factors, such as political, economic, social, technological and environmental factors.

Political refers to the various laws and regulations that affect a business.

Economic factors that affect businesses include interest rates, inflation, and exchange rates.

Social trends refer to the various changes that are happening in society. This includes the rise of the millennial generation and the decline of the baby boomer generation, for instance.

The level of automation and the technological advancement that businesses must adapt to are some of the factors that affect the profitability of businesses.

The impact of various environmental factors on businesses, like global climate change or health and safety laws.

To learn more about PESTLE, check out our explanation on external environments!

IKEA has faced many challenges along the way. One of them is uncontrolled child labour in countries that supply them with woven products. Due to the prevalence of child labour in countries such as India and Pakistan, the company has limited control of its suppliers. This issue usually affects the families and communities in these areas. So far, they have been unsuccessful in their attempts to control this issue.

IKEA's transnational strategy is inspired by the concept of combining high quality with low prices which adapts to a countries' needs. The company aims to produce furniture that is both functional and affordable. As a highly integrated company, IKEA, through its internalisation strategy, has been able to reduce costs and improve its overall product offering globally. This strategy and the many advantages it provided, were developed to compete against other furniture retailers and to grow globally. IKEA's strategy is to replicate its successful model in different markets. This can be achieved through the use of a transnational strategy.

IKEA's Transnational Strategy - Key takeaways

IKEA's transnational strategy is inspired by the idea of combining high quality with low prices. This way the company aims to produce furniture that is both functional and affordable.

IKEA is the largest furniture retailer in the world.

The company started by developing innovative modular designs and sourcing components from Eastern Europe.

IKEA uses a transnational and global standardisation strategy.

• IKEA follows a matrix structure where each country has a Service Office (SO) and a national headquarter with support units.
• The IKEA hybrid strategy combines cost leadership and differentiation strategies. This allows companies to create differentiated products at low cost while still satisfying the expectations of their customers

3. Riddhima Chopra, Ikea Case Study, Aeunike Lecture , 2009.

4. Warren Shoulberg, 'Why Ikea Succeeds Around The World While Other Retailers Falter', Forbes , 2018.

6. Eray Aydin, Ikea Knowledge Sharing, Slideshare , 2015.

Frequently Asked Questions about Ikea Transnational Strategy

--> what is ikea's international strategy.

To keep design and furniture at an affordable price, Ikea also adopts a  global standardisation strategy so that its products, services, branding, and marketing strategies retain a level of 'sameness' everywhere. 

--> Is IKEA a transnational company?

Yes, Ikea is one of the companies that follow transnational strategies.

--> Does IKEA use standardization or adaptation?

IKEA uses a global standardisation strategy.

--> What type of global business is IKEA?

Final ikea transnational strategy quiz, ikea transnational strategy quiz - teste dein wissen.

What is IKEA's international strategy?

Show answer

Its concept is to combine high-quality design and functionality with low prices. Ikea's goal is to keep the prices low enough to allow the customer to buy the product directly. 

Show question

Is IKEA a transnational company? 

Does IKEA use standardization or adaptation? 

standardization

What type of global business is IKEA? 

IKEA is a global home furnishing brand that was started in 1943 by Ingvar Kamprad. It started as a mail order catalog business. 

Who is the founder of IKEA?

Ingvar Kamprad

In what year was IKEA founded?

What does IKEA mainly sell?

 it is mainly focused on selling ready-to-assemble furniture

True or False?

The company started by developing innovative modular designs and sourcing components from eastern Europe.

Ikea strategy allowed it to offer quality furniture at very low prices. 

What is Ikea hybrid strategy?

Ikea hybrid strategy is aimed to achieve competitive advantage by producing at the lowest cost.  It allows the company to charge lower prices and increase the profitability. 

To achieve its goals, IKEA constantly bring costs up and is always looking for the most costly suppliers. 

What is Differentiation Strategy?

To gain the competitive advantage, IKEA aims to offer products that are perceived as being different and better than their competitors. 

What is Focus Strategy?

Focus strategy is essentially a core marketing strategy that allows organizations to identify the specific needs of a niche market and develop products aligned with these needs. The focus remains solely on providing value to customers within this niche market. 

One of the strategies that IKEA uses is its cost leadership strategy.  This part of the strategy involves trying to produce at the lowest possible cost to maintain the competitive advantage that they have. 

What is the goal of the Ikea differentiation strategy?

The goal of the differentiation strategy is to create a compelling brand image by focusing on quality designs. This strategy works even though they do not charge a premium for these products.

IKEA faced many challenges along the way to success, Pick once correct answer?

child labor in countries that supply them with woven products.

Was Ikea successful when they first. entered the Japanese market?

What is the external environment of IKEA's main threat?

The external environment is IKEA's main threat. It can be measured using various factors such as political, economic, social, and environmental. 

What are the four types of international business strategies?

Global Standardisation Strategy, Transnational Strategy, International Strategy, and Localisation strategy 

What are two pressures faced by a multinational company when expanding abroad?

local responsiveness and cost reductions 

By adopting a global standardisation strategy, Ikea's products, services, branding, and marketing strategies...

retain a level of 'sameness' everywhere 

What is the matrix structure of the IKEA organisation?

The organisation of IKEA follows  a matrix structure  where each country has a Service Office (SO) and a national headquarter with support units. 

Define knowledge sharing

Knowledge sharing is the act of distributing existing knowledge from the headquarter to subsidiaries by a multinational firm. 

What are the advantages of knowledge-sharing?

Capitalising on market advantages of foreign operations 

IKEA's knowledge sharing is primarily supported by a ... where each country's service office is linked to the Global Service Office at its core.

matrix organisational structure 

Give an example of a challenge faced by IKEA when expanding abroad.

uncontrolled child labour in countries that supply them with woven products 

The hybrid strategies help the company to gain two competitive advantages which are...

low prices and high-quality products 

Why does IKEA adopt the cost leadership strategy?

To produce at the lowest possible cost to maintain a competitive advantage.

Test your knowledge with multiple choice flashcards

Your score:

Join the StudySmarter App and learn efficiently with millions of flashcards and more!

Learn with 29 ikea transnational strategy flashcards in the free studysmarter app.

Already have an account? Log in

Flashcards in Ikea Transnational Strategy 29

• Human Resources
• Managerial Economics
• Organizational Communication
• Introduction to Business

of the users don't pass the Ikea Transnational Strategy quiz! Will you pass the quiz?

How would you like to learn this content?

Free business-studies cheat sheet!

Everything you need to know on . A perfect summary so you can easily remember everything.

Join over 22 million students in learning with our StudySmarter App

The first learning app that truly has everything you need to ace your exams in one place

• Flashcards & Quizzes
• AI Study Assistant
• Study Planner
• Smart Note-Taking

More explanations about Business Case Studies

Discover the right content for your subjects, engineering.

Sign up to highlight and take notes. It’s 100% free.

This is still free to read, it's not a paywall.

You need to register to keep reading, start learning with studysmarter, the only learning app you need..

Create a free account to save this explanation.

Save explanations to your personalised space and access them anytime, anywhere!

By signing up, you agree to the Terms and Conditions and the Privacy Policy of StudySmarter.

StudySmarter bietet alles, was du für deinen Lernerfolg brauchst - in einer App!

Privacy overview.

IKEA global Strategy

Ikea strategy case study analysis.

There are few companies which manage to enter a foreign market, establish themselves and take over the market from the competitors. The major challenges which face such companies are learning the market trends and developing goodwill which will make consumers use its products as opposed to competitors' products. There are also unique challenges which face individual markets, such as the macroeconomic environment, which only local firms have the ability to adapt to in a relatively short time. In spite of these challenges, IKEA a company with origins in Sweden has managed to establish a global presence.

It uses a global sourcing approach where it takes advantage of the different strengths of different markets when undertaking its operations. According to Rosenhauer (2008: 2-3), IKEA was established in 1943 and is the largest furniture retailer in the world. It operates in more than twenty five countries and has over one million customers who visit it each year. It is one of the most successful multinationals in the world. This paper aims at analyzing the factors which have led to the success of this firm using the global sourcing strategy, and the characteristics that other multinationals can borrow from it in order to succeed.

Order custom essay IKEA global Strategy with free plagiarism report

Global sourcing. This is a ikea global strategy which exploits the global efficiencies when producing and selling products. There are several characteristics that multinationals can learn from IKEA in relation to the global marketing strategy. These are briefly explained below; Subcontracting strategy. Subcontracting is a ikea international strategy that involves delegation of core activities to independent contractors who perform duties on behalf of a firm. It involves giving professionals an opportunity to perform duties efficiently and at lower costs, since they are professionals at what they do.

IKEA subcontracts manufacturing services to manufacturers across the world, and this enables the manufacturers take advantage of their expertise and technology, which eventually reduces costs. Standardized product strategy. This is a international strategy which is incorporated in IKEA's global strategy. It involves the manufacture of high quality standardized products which meet the global demand patterns. This is done as a strategy to boost scales, through targeting the global market, and producing products which are standard and readily recognized by consumers in any part of the world. Read also Challenges Facing By Ikea

Cite this Page

IKEA global Strategy. (2018, Jan 05). Retrieved from https://phdessay.com/ikeas-global-strategy/

Run a free check or have your essay done for you

More related essays

Case Study Analysis - IKEA IKEA possesses numerous strengths that will help the company gain high value proposition around the globe in general and in the United States in particular..

Kamprad’s careful stewardship of resources exemplifies his abilities as a manager. By practicing frugalness and economy, he was able to maximize profits by keeping costs low while also being able.

What factors account for the success of IKEA? Three factors account for IKEA’s success in the furniture retailing industry: First, their Scandinavian designs are simple but unique. In the past, IKEA’s.

How has the globalization of markets and production benefitted IKEA? Globalization as we know it is the phenomenon of the world economies becoming reliant and integrated with one another. This.

IKEA has a distinct market segment in the home furnishing arena. It has created a niche market with innovative designs, quality, and low price structure. IKEA has employed the cost.

Given the SWOT analysis presented in the case, what are IKEA’s key competitive advantages? What strategic focus should the company take as it looks to further expand into the U. S..

What has allowed IKEA to be successful with a relatively standardized product and product line in a business with strong cultural influence? Did adaptations to this strategy in the North.

IKEA has definitely made great strides since coming to America in 1985. The case study points at many areas where idea has made huge impacts on the American furniture retail.

We use cookies to give you the best experience possible. By continuing we’ll assume you’re on board with our cookie policy

Save time and let our verified experts help you.