Ikea Case Study
1) Ikea largely follows a standardization approach. Every IKEA market all over the world is similar. A typical IKEA market has a grocery store, a Swedish cuisine restaurant and a supervised play area for kids. This I’ve seen myself in Dubai too. The store is a self-service store. The product is taken home and assembled by the customer himself. IKEA produces its furniture or parts of the furniture in a particular few places and send them worldwide for sale. This approach leads to economies of scale which lowers the price of the end product. Economies of scale is achieved when the company takes advantage of the economies of different location to produce goods. For example- Indian labor is used by a lot of companies. To an extent IKEA does follow adaptation approach. For example IKEA has opened many emerging stores in Eastern Europe. The people of Eastern Europe have low purchasing power and accordingly IKEA has offered a smaller selection of furniture to fit the cramped living style typical in former Soviet bloc countries. IKEA follows a standardized approach with a touch of adaptation approach. 2) Wal-mart would be IKEA’s biggest competitor. Wal-mart also looks at selling furniture at low cost. Both IKEA and Wal-mart are multinationals. Both compete on prices. For IKEA to have an upper hand, they should offer larger varieties of furniture. 3) When IKEA expanded to China initially, it didn’t do quite well. Reason being, high prices. Export taxes were high causing the goods to be sold at a higher price than the people of china could afford. So people in china, instead of buying this furniture, went into the IKEA store and started taking pictures or drawing out the piece of furniture they wanted. The store employees thought they did that to see how the furniture would look in their homes and later discovered that they took pictures to get the same furniture made at a cheaper price. IKEA then decided to reduce the prices by 46% and then became...
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