Ikea Case

Topics: Globalization, Cost, Price Pages: 2 (573 words) Published: March 2, 2013
1.How has Globalization of markets benefited IKEA?

Globalization of Markets is one of the facets of the 21st century’s major trend called ‘’Globalization’’. Globalization of Markets is a growing concept defined as companies expanding their businesses all over the world to serve different customers’ needs and desires internationally. Apart from customers tastes and preferences becoming more universal and diminishing trade and investment barriers by different governments, the major driving force of this rising facet is technology. The IT revolution – from advancements in transportation to telecommunications – has enabled global corporations to offer globally standardized products which are not only innovative, reliable and functional, but also low priced (Levitt). In simple words, globalization of markets is an intensifying modern trend where companies try to create one single global market and sell standardized consumer products to that entire global market.

As a home product company, IKEA has proven itself to be very successful with its ‘one-design-suits-all’ (Research) global expansion strategy. According to the case (Hill, 2012, p. 37, Line 14-24), IKEA applies the concept of globalization of markets when it opens a new store in a new market by using a simple yet bright method. It has 5 universal practices:

1)Open a large warehouse store designed in the blue and yellow colors of the Swedish flag and sell 8000 to 10, 000 items, from beds, wardrobes, hall furniture, and kitchen cabinets to candlesticks. 2)Use wacky promotions to drive traffic into the stores.

3)Configure the interior of the stores so that customers have to pass through each department to get to the checkout. 4)Add the restaurants and child care facilities so that shoppers stay as long as possible. 5)Price the items as low as possible. Make sure that product design reflects the simple mark.

As a world renowned furniture retailer, IKEA has benefitted a lot from its...
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