IKEA’s Global Strategy Essay

Swedish association IKEA was the worlds largest furniture retailer since the early 1990s. It sold inexpensive furniture of Scandinavian purpose. The company operated in 55 countries with a workforce of 76,000 (the company referred to its workforce as its co-workers).IKEA offered nearly 12,000 items to the spot furnishings market worldwide. It sold a wide range of products including furniture, accessories, bathrooms and kitchens at 186 retail stores in 30 countries across Europe, North America, Southeast Asia, substance tocopherol and Australia. IKEA enjoyed high brand equity. In 2003, Manhattan US-based Interbrand, a marketing research and consultancy firm, value the IKEA brand at $6.92 billion and ranked IKEA 43rd on its call of the top 100 most valuable global brands, ahead of Nestle, Harley-Davidson, and Apple.3 Analysts attributed IKEAs success to its skill in combining good product design and superior quality with an affordable price. IKEAs low-pricing scheme was aime d at vernal people.For several decades, IKEA had looked for international markets, which were culturally as close as affirmable to the Scandinavian market. The basic assumption behind IKEAs global strategy was one-design-suits-all. Anders Dahlvig, the CEO of IKEA, had once said, Whether we are in mainland mainland China, Russia, Manhattan, or London, people taint the same things. We dont vary to local markets. IKEA had, in fact, been instead successful with its one-design-suits-all global expansion strategy in legion(predicate) markets. However, assiduity experts were doubtful as to whether this strategy would translate well into new, culturally assorted and riskier markets. They felt that a higher degree of localization was essential for companies similar IKEA to be successful in diverse markets.The Asian markets, to extendher with the Middle East and Australia, accounted for only 4% of IKEAs total revenues in 2004. The company was keen to increase this share in the future . Upon entry into the far easterly markets, IKEA faced a number of challenges in terms of varied cultural, demographic and market specific needs. IKEA opened its first store in China in 1998.Although the companys global strategy had worked well in the past in most of the markets it had entered, it quickly learnt that success in the Chinese market required a different strategy in the areas of merchandising and HR. IKEA also had to alter two of the most important aspects of its clip-tested and proven global strategy when it came to China while elsewhere in the world, IKEA had invariably located its stores in less expensive areas and sold its furniture on the do-it-yourself (DIY) principle, these elements had to be traded in China. IKEA claimed that it had decentralized most of its functions including HR and stores focussing in China, but despite this, there was criticism that IKEA was far excessively bureaucratic with many of its operations being globally controlled and systema tized.Commenting on this, Ian Duffy, IKEAs China retail manager commented, We need time to learn and change in the (Chinese) market to become a success. IKEA should have many innovations to adapt to the China market. At IKEA our vision is to create a better mundane life for the many people. Our business idea supports this vision by oblation a wide range of well-designed, functional home furnishing products at prices so low that as many people as possible go out be able to afford them.(Our vision and business idea, http//www.ikea.com/ms/en_US/about_ikea/the_ikea_way/our_business_idea/index.html)It seems non achieved in China market yet. Firstly, IKEA should have greater cooperation with local suppliers to get to a greater extent competitive advantage of cost leadership. Secondly, according to the specialty of China market, IKEA should have some more adjustment to satisfy so many China picky customers. Thirdly, IKEA should intensify propaganda work to let more customers envision a nd accommodate the IKEA model. As an outcomer, there is a long way to be the winner in this huge and potential market.After a long time to research the China market, IKEA already understand the China market more than before. With accelerating the speed of expand, the success of IKEA in China market is only the conundrum of time.