International Business Performance of IKEA - Case Study Example

Running Head: International Business International Business [Institute’s International Business Introduction Presently, business organizations are making untiring efforts to cope up with the competition, in order to survive in this competitive and complex world. In this regard, different aspects have been significantly given importance since the last decade in the global marketplace. In this paper, we will try to discuss some of the most important aspects of a business organization, in order to understand the different processes and strategies that have been employed in this company. In this regard, the case study has been considered as the IKEA, which is one of the best home-furnishing retailers in the market. Modern and utilitarian design furniture’s retailer that allows the consumer to assemble the low-cost home products by themselves is a privately owned and internationally recognized company, the IKEA. Inexpensive Scandinavian designed furniture is one of the specialties of this furniture retailer that assures and gives quality in style. We will try to discuss mission statement, as well as, primary and secondary objectives that have been achieved by the company in the past few years. The study has been done, in order to identify, understand, and analyze different operations of the IKEA, which is one of the world’s largest retailers in the home-furnishing industry. In this paper, different perspectives of the IKEA, such as markets, organizational structure, international marketing strategies, branding, etc. have been discussed, which are some of the key features required for any successful business organization. The case study has been the IKEA, which has a very good reputation among its competitors due to its unique marketing and business techniques, which differentiates it from the other companies in the market. (Rothacher, 2004) Subsequently, the paper has defined and analyzed different strategies that have been the cause of such an impressive position of IKEA in the international retail market. Different criteria have been preferred for the brief analysis of IKEA’s growth and its marketing management in the international arena. History and Concept of IKEA Few decades ago, an innovative idea of Ingvar Kamprad began the IKEA Concept around the world. The Smaland province of southern Sweden was the origin of this keen and ambitious entrepreneur. In the late 1940s, the furniture business was established by the previously mentioned founder of the IKEA. In the last few years, more than a hundred and eight million people have visited the IKEA stores located in different countries annually. (Clutterbuck, 2002) According to the sales turnover of IKEA in the year 2006, approximately 17,658 million United States dollars was the annual sales worldwide. These sales and turnovers have become possible by the determined efforts of more than ten million employees and co-workers of this huge retailer of home furnishing products around the world. One of the significant features of IKEA is its teamwork, and IKEA has valued its human resource that has become one of the major reasons of its success in different regions of the globe. The vast experience of the IKEA in the retail market can be attributed to its success in the retail industry. Its product differentiation and its capability of cost leadership are some of the other key factors that are responsible for its achievement in midst of huge competitors around the world. Perhaps, one of the world’s most successful retailers that are operating multi-nationally around the world has to confront the IKEA that is considered the foremost on the list. The unique concept of this global organization allows the consumers to learn its products in a wide range of its catalogue. (Wada, 2002) Markets A number of retail outlets have been established for the proper distribution of its products around the world. The United States, Europe, Asia, Canada, and Australia are some of the main locations of IKEA’s retail outlets that it controls and owns globally. Interestingly, Israel, as well as, the Middle East nations are managing the IKEA’s stores simultaneously, which makes it one of the world’s few store chains to comprise such type of pluralism and diversity in its distribution and operations. Some of the new stores and retail outlets of IKEA have opened in the Bari city of Italy that was opened in February 2007. Outlets in other cities include Frankfurt, Salt Lake City, Oporto, and Tel Aviv in the month of March, April, July, and October 2007. Moreover, some of the outlets were opened in St. Petersburg city of Russia, which was opened in December 2006, and Kuwait in November 2006. (Interbrand Business Week, 2006) The IKEA is expanding its operations in different parts of the world, while maintaining its quality and dedicated service to its consumers, which has still kept in the ranking of world’s top most home-furnishing retailers. Operational Structure Strategy of personal manufacturing facilities has not been employed by the IKEA. Instead, manufacturers from various regions are subcontracted for supplies of different range of products. However, Sweden is located with the centralized head office of all the research and development facilities, activities, and operations of the company. Therefore, it has been observed that the operational facility has been centralized; however, the production facilities have been distributed in different parts of the world. (Varley, 2006) Pro-summers, half consumers, and half producers are some of main shoppers of the IKEA, in order to maintain low cost of these products. In other words, the wide range of furnishing products of the IKEA requires assembling for proper utilization of its products. In addition, catalogues, shopping lists, pencils, and measuring tapes are provided by the IKEA for different measurements and noting purposes, in order to facilitate shopping and consumers, who visit different retail outlets in the world. For instance, consumers are allowed to purchase roof racks of different cars at cost, and in order to facilitate the customers, pick-up vans, and mini trucks are provided by the IKEA on rental basis. (Wada, 2002) The cost between the customers and manufacturers is kept down, which is the relatively simple strategy of the continuous success and achievement of IKEA in the international retail industry. Merging of consumer tastes is a continuous process around the world, as believed by some of the marketing managers in the IKEA. For instance, United States has been importing contemporary and streamlined Scandinavian style of home-furnishings products from the IKEA since the year 1985. During this period, at least an opportunity has been acquired by the IKEA to attract European customers to import an American style furnishing products from the company. In this way, it is believed that some American furnishing concepts are being employed in the European outlets, which is an effective strategy of merging different tastes of consumers around the world. (Interbrand Business Week, 2006) International Standardization Strategies Until now, the paper has tried to discuss and understand the different concepts and operational structure of the IKEA that have been employed in different part of the world. The paper will now try to analyze the standardization steps that have been taken by the IKEA in promoting their products to its consumers in the international arena. From different studies, it has been found that exclusive own-brand ranges have been created and promoted by the IKEA, in order to promote its stylish furniture, which appeals and attract strongly to especially, first-time buyers. In this regard, different branding campaigns have also been run by the IKEA. For instance, Chuck out the chintz was one of its high-profile campaigns that were used to promote its products on the television in the United States. Customers who interested in the interiors were encouraged to revamp and renovate their interiors, and in this process, IKEA’s modern styles of furniture and household items were promoted by their individual brand names. (Rothacher, 2004) IKEA has created a global image of its name among its consumers. Numerous charities have been supported by the IKEA around the world. In addition, over-harvesting of endangered forests has also been done by the IKEA. In this regard, we can notice that IKEA has been able to create a corporate image of its company, and thus, a corporate brand of its products through efficient and successful marketing of its wide range of products in the international market. Modern, utilitarian design and brand are some of the reasons of the recognition and success of the IKEA’s furnishing products. Additionally, simple word names have been chosen for the IKEA’s products for their individual identification and uniqueness in the market. However, Swedish, Finish, Danish, and Norwegian languages have been used for the creation most of the names. In this regard, IKEA has developed a special naming system for their products, in midst of some exceptions notably. (Varley, 2006) In this way, Swedish place-names have been given to the IKEA’s range of rattan furniture, doorknobs, upholstered furniture, coffee tables, media storage products, etc. However, Norwegian place-names have been set for hall furniture, wardrobes, and beds. Finnish place-names have been selected for chairs and dining tables. All these names have been given uniquely to every single product, which has enhanced the brand of IKEA in the retail market. Lastly, as earlier discussed in the paper, the IKEA values its human resource, and therefore, one of the key objectives of this company is the appreciation of its individual employees and executives. In last few years, millions of dollars have been spent to encourage the employees during their service, which can be seen from its annual sales around the globe. (Clutterbuck, 2002) Conclusion Conclusively, the paper has tried the best in discussing and understanding different perspectives of the IKEA and its working in the international retail market. Various strategies and methodologies have been employed by the IKEA, which has created an impressive reputation in the market. However, there are still some sort of needed improvements in the naming and branding system of the IKEA, as many products that have been named in different languages are not identified by the public easily, and therefore, identification is lack in some of its products. Secondly, secondary sources have been used for the accumulation of the information, which have already been used and formed for a specific purpose. In this regard, it is believed that primary research method might help in the better and detailed analysis and understanding of different issues and perspectives of the IKEA, and different strategies of the company that have been used by a number of companies around the world. Lastly, it is hoped that the paper will beneficial for the students, teachers, as well as, professionals in the better understanding of the organizational operations of international business around the globe. References Albrecht Rothacher. (2004). Corporate Cultures and Global Brands. London: World Scientific. David Clutterbuck. (2002). Talking Business. Salt Lake City: Elsevier. Erika Wada. (2002). the Benefits of Price Convergence. New York City: Peterson Institute. Interbrand Business Week. (2006). Interbrand Business Week Journal. Vol. # 3. Issue 3. Rosemary Varley. (2006). Retail Product Management. UK: Routledge. Word Count: 1720 Checked by Copyscape.com and Turnitin.com for plagiarism Read More