Ikea Case

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IKEA’s Global Strategy: Furnishing the World
Individual Case Study I

Executive Summary

IKEA is a privately held, international home products company that designs and sells ready-to-assemble furniture such as beds and desks, appliances and home accessories, and is the world's largest furniture retailer. The IKEA website contains about 12,000 products and is the closest representation of the entire IKEA range. IKEA’s sales totaled about 12.2 billion USD in 2003, with a net profit margin around 6-7 percent. Of this, Europe accounted for 80% of revenue, with Asia accounting for 3% and North America 15%. INGKA Holding is owned by the nonprofit INGKA Foundation, thus none of this profit is taxed. By conducting TOWS and situation analysis, many internal and external issues have been identified, most importantly the high cost of living and appreciation of Euro, consumers perception, supply and distribution system, import regulations in foreign countries and increasing competition. Other problems include the company’s mediocre marketing techniques, reliance on saturated regions for revenue, brand image and product design influences.

After studying the problems and aligning them with the strengths and opportunities, this report has suggested few strategic alternatives to help IKEA become a truly globalized brand. The alternatives are Improvement in supply chain, market expansion, market penetration, market development and incorporation of global values to strengthen its position and help the company become a dominating global force.

Table of Content

Economic Conditions and Trends5
Cultural and Social Values and Trends6
1. Social value:6
2. Emotional value:6
3. Circumstantial value:6
4. Novelty value:7
Political and Legal Issues7
Analysis of Existing Competitors8
Direct competitors:8
Indirect Competitors:9
Analysis of Potential New Entrants and Substitutes11...
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