Global Marketing

Management Report - IKEA Global Marketing
12 January 2015
To: Senior Vice President Marketing, IKEA
Re: Global Strategic Marketing Plan
1. Brief Profile of IKEA
IKEA came into being in 1943 as a vendor for pens, wallets and watches. It’s owner Ingvar Kamprad went door to door to sell this tiny products. Eventually it began to sell furniture. The hallmark from the very beginning was low price coupled with innovation in its design and business supply line operations. According to IKEA’s Annual Report 2013, currently it has ___ stores worldwide, and the following bar graph visually shows the growth trend of IKEA between 2001 and 2013.
Figure 1: Growth trend of IKEA between 2001 and 2013

Source: Statistica 2014.
Other features of IKEA’s business current up to 2013, are given below:

Terms
Overview of IKEA’s business (Till 2013)
Total sales
EUR 28.5 billion
Stores
298 in 26 countries
Products
About 9,500 in the range
Co-workers
More than 139,000
Production
Approximately 2/3 of production within Europe
Web visits
Over 1 billion
Catalogues
187 million printed in 22 languages
Store visits
690 million
Web visits more than 1 billion
Suppliers
1,084 home furnishing suppliers in 53 countries
IKEA began its operations in China in 1998. It maintained the low price in China and at the same time its innovation was effective through adaptation of the furniture that it began to sell. China has high population. Per household number of people was more than in the West and at the same time the space available at home of the Chinese was less than the West. So, IKEA modified the size and design of its furniture. Thus it proved to a people-oriented in its approach to business in China.
The aim of this management report is to analyse IKEA’s current business in China and to suggest modifications in it’s strategic marketing plan.
2. Macro Environment in China
In analyzing the macro environment, this report uses the PESTEL framework and the Porter’s Five Forces framework. Of the

References: Bhasin, K. (2012), “Why IKEA Took China By Storm, While Home Depot Failed Miserably” BI Intelligence, http://www.businessinsider.com/ikea-home-depot-china-failed-2012-9?IR=T, accessed 20 November 2014 Burt, S., Johansson, U Capdevielle, L., Li, M. and Nogal, P. (2007), “A creation of competitive advantage by using differentiation of company´ s strategy actions: The case study of IKEA Sweden with experiences on Chinese and French markets. Daniel (2013) “8 subcultures in China” CNTVna () accessed 21 November 2014. Edvardsson, B., Enquist, B Enquist, B., Edvardsson, B. and Sebhatu, S. P. (2007). Values-based service quality for sustainable business. Managing Service Quality, 17(4), 385-403. Fang, T. (2012). Yin Yang: A new perspective on culture. Management and organization Review, 8(1), 25-50. Fangfang, L. (2013) “IKEA builds on success in Jiangsu” China Daily. (http://usa.chinadaily.com.cn/business/2013-08/29/content_16929111.htm) Index Omundi www.indexmundi.com/, Last Accessed On: January 10, 2015. Ivarsson, I. and Alvstam, C. G. (2010). Upgrading in global value-chains: a case study of technology-learning among IKEA-suppliers in China and Southeast Asia. Journal of Economic Geography, lbq009. Jianfeng, Z. (2013) “IKEA 's China manufacturers face tough times”, CCTV.com, 20 February 2013 (http://english.cntv.cn/program/bizasia/20130220/102020.shtml). Last Accessed On: January 10, 2015. Johansson, U. and Thelander, Å. (2009). A standardised approach to the world? IKEA in China. International Journal of Quality and Service Sciences, 1(2), 199-219. Jonsson, A. (2007). Knowledge Sharing Across Borders-A Study in the IKEA World (Doctoral dissertation, Lund University). Jonsson, A. (2008). A transnational perspective on knowledge sharing: lessons learned from IKEA 's entry into Russia, China and Japan. The International Review of Retail, Distribution and Consumer Research, 18(1), 17-44. Kharel, G. C. (2014), “China Overtakes US as World 's Largest Economy in Purchasing Power”, International Business Times, http://www.ibtimes.co.in/china-overtakes-us-worlds-largest-economy-purchasing-power-610951, Last Accessed On: January 10, 2015. Lang, J. (2015). WEB. http://urlm.co.uk/www.johnlang.co.uk. Last Accessed On: January 10, 2015. Leelapanyalert, K. and Ghauri, P. (2006). Managing international market entry strategy: the case of retailing firms. Advances in international marketing, 17, 193-215. Osterwalder, A. Pigneur, Y.: Business Model Generation. NJ: John Wiley. (2010) Pan, Y Statistica 2015, http://www.statista.com/statistics/264433/annual-sales-of-ikea-worldwide/, Last Accessed On: January 10, 2015. Statistica, 2015, “The Statistics Portal”, (http://www.statista.com/statistics/226900/trade-revenue-of-furniture-in-china-by-month/) Last Accessed On: January 10, 2015. Thomsen, S. N. (2013) “IKEA opened manufacturing facility in China” ScandAsia.com (http://scandasia.com/ikea-opened-manufacturing-facility-in-china/) Last Accessed On: January 10, 2015. University of Edinburgh,(2015).Performance Vision. WEB. http://uebs-cases.blogspot.co.uk/2012_03_24_archive.html. Last Accessed On: January 10, 2015. Wang, C. L. and Lin, X. (2009). Migration of Chinese consumption values: traditions, modernization, and cultural renaissance. Journal of business ethics,88(3), 399-409.