International business of IKEA

Topics: IKEA, Marketing, Furniture Pages: 6 (2738 words) Published: November 14, 2014
Overview of IKEA
Introduction
IKEA is the most successful mass-market retailer in the world, selling Scandinavian-style home furnishings and other house goods. IKEA was founded by Ingvar Kamprad in Sweden in 1943 and its objectives is “to offer a wide range of home furnishing items of good design and function, excellent quality and durability, at prices so low that the majority of people can afford to buy them. ” In order to offer lower prices, its typical feature is the flat packed product that customers fit at home by themselves, which reduces transportation costs and cost of assembly. Furthermore, sustainability development is also of great importance to IKEA, through an internal slogan of ‘low price but not at any price’ is a leading example of sustainable innovation and business growth. The company’s own furniture is designed by itself but made by about 1,500 suppliers in more than 50 countries. It also sells online and by mail order with the print run for the 2006 catalogue hitting 160 million. The IKEA experience has become unique rather than just sell furniture. Consumers can enter an IKEA show room and will be greeted with some combination of the 10,960 items in the IKEA range worldwide. IKEA is more than just a furnishing experience; the company makes a concentrated effort to be environmentally aware, also. The age-old IKEA adage to “create a better life for the many people” has been translated to encompass the environment, as well (Responsibility beyond home furnishing, 2011). As of September 2014, IKEA owns and operates 351 stores in 43 countries as Austria, Australia, France, Hungary, Israel, Malaysia, Russia, Saudi Arabia, Germany and USA. In fiscal year 2010, goods sold worth US$23.1 billion, which represented a 7.7 percent increase over 2009. The IKEA website contains about 12,000 products and there were over 470 million visitors to IKEA's websites in the year from September 2007 to September 2008.

IKEA’s objectives related to international business
To keep growing and expanding, IKEA is accelerating store rollouts in both large outlet and new high-street formats. In FY14, IKEA plan to invest €2.5 billion in stores, factories, renewable energy and shopping centres. The firm plans to boost their development in three of its fastest-growing markets: In Russia, where it is already a huge success in Moscow, in China, where is has a strong footprint, and in the US, where the goal of having 50 outlets has already been achieved for the year 2013. IKEA demonstrates that, when supported by main partnerships with manufacturers and suppliers, providing access to furniture of lower pricing, in an exciting, yet simple format can be a winning formula.

the Internationalisation Process of IKEA
Theories of International Business
Strategy is a method or plan chosen by an organization to achieve a desired future, such as achievement of a goal or solution to a problem or differentia itself from competitors. Companies should rely on efficiency, flexibility and learning to grow global market and internationalise their business. Efficiency refers to organizing efficient supply chains in order to reduce the cost of the firm's operations and activities on a global level. Flexibility means ability of managing diverse specific risks and opportunities of each country. Learning is related to the firm's ability to use international experience and to transfer knowledge from one market to the other. Global integration refers to the coordination of the firm's activities to achieve efficiency because of the advantage of similarities between countries. Local responsiveness refers to meeting the specific needs of buyers in individual countries. Standardization is suitable for products with global acceptance and for products with similar quality, features and costs on a global level. The factors that determine global companies to adapt locally are: diversity of local customer needs, differences in distribution channels,...
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