Analysis of Ikea’s Process of Internationalisation & Succuss in the Retail Industry

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Executive Summary
The purpose of this report is to provide an analysis of IKEA’s process of internationalisation and success as a global brand. The analysis is based on the overview of IKEA’s business structure and company operations. Research for this report was conducted via newspaper articles, IKEA annual reports, online journals and related websites. The major findings of the report identified how IKEA’s profit levels and performance is constantly improving each year, their brand positioning of the company and consumer demand on its services and products. Market entry approaches and strategy have also been discussed including how the company has been able to sustain its competitive advantage. Future plans and strategies in place for the company have also been researched and discussed. This is shown through company statistics and graphs from past and recent annual figures.

TABLE OF CONTENTS Page
Executive Summary3
Introduction 4
Background6
Position of the firm8
Real demand8
Rare or Unique8
Difficult to Copy9
Capturing the Value9
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IKEA’s Retail Strategy & Target Market10
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How IKEA Creates Sustainable Competitive Advantage11
Market Entry Approaches13
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The Internationalization Of Ikea14
Expanding By Fully Owned Subsidiaries14
Expanding By Franchise14
Ikea Entering Japan15
Supporting Organizational Structure16
Performance Levels17
Future Developments19
Conclusion21
References22
Appendices 24
Introduction
IKEA is one of the biggest furniture retailers in the world, recognized for its Scandinavian style. IKEA is a home furnishing company with a fully integrated supply chain, including its own industrial groups – Swedwood and Swedspan and retail centre – Ikea stores. The company works in four basic areas: range strategy & product development, production, supply and retail.

IKEA was founded in 1943 by Ingvar Kamprad, a young entrepreneur from Elmtaryd, Sweden. Initially Kamprad sold a wide range of products such as pencils, nylon stockings, wallets and watches via mail order. In 1948 Ikea started offering furniture for sale, and three years later the first edition of the Ikea catalogue was released. IKEA has expanded to 37 countries and 301 stores. The IKEA Group itself owns 267 stores in 25 countries; the other 34 stores are owned and run by franchisees outside the IKEA Group in 16 countries. (IKEA 2011) IKEA is actually a privately held company owned by Stichting INGKA Foundation, a non-profit registered in Leiden in the Netherlands which is controlled by the Kamprad family. Stichting INGKA Foundation is the owner of INGKA Holding B.V.

INGKA Holding B.V. is the parent company for all of the IKEA Group companies. The IKEA Group companies are comprised of IKEA Services B.V. and IKEA Services AB which have 9 divisions in Sweden and the Netherlands which support the work in all the IKEA Group companies. The IKEA Group Companies are primarily concerned with carrying out the necessary functions to bring IKEA products to market. (George, 2011) IKEA is famous for its high-quality, low priced furniture. Its main products are home-furnishing products, including furniture and accessories for kitchens, bedrooms, living rooms, bathrooms and children’s rooms.

Background
IKEA is a global brand established upon a reputation of quality products and services with almost 10,000 products available in their range and 301 stores in 37 countries. (George, 2011) The company founder Ingvar Kamprad was born in 1926 and at 17 years old registered the IKEA name on the 28th of July 1943. (IKEA,2011) The name IKEA is an acronym and stands for his full name Ingvar Kamprad, the farm where he grew up Elmtaryd and his home town Agunnaryd. A couple of years later...
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