The Global Strategy of IKEA - Essay Example

IKEA has become one of the most successful furniture retailer’s in the world. IKEA low-cost-approach to doing business and innovative marketing and brand identity has allowed IKEA to mold and convert their brand image and company to become a lifestyle oriented company. IKEA was one of the pioneers towards globalization by offering furniture that was sold unassembled to its clientele therefore it could be shipped more securely and economically and consequently sold at the lowest possible costs to their customers.

The company carefully adapted their corporate structure, business model, and culture to maintain and build their brand image, while carefully adapting their product offerings and marketing to match the preferences, customs, and needs of their local clientele. IKEA has become much more than a furniture merchant, it embraces customers with lifestyle that embraces good taste and recognizes value. The company has thrived in the global market where others competitors have not succeeded in penetrating.

The key strategy to IKEA’s global success has been in keeping in line with their original philosophy of success which has been to provide unique, functional, simplistic but beautiful furniture designs and products at a low cost. This unrelenting pursuit of efficiency and frugality has permeated throughout the corporate culture and structure (Quickmba, 2011). IKEA has always embraced the strategy of standardization by designing furniture and products that have a broad market appeal while adapting their stores, marketing, and product line-up to better suit local tastes and preferences.

In reality IKEA utilized a strategy that involves standardization of their most of their product line-up in order to maximize efficiency and lower costs, while providing certain customized product solutions that are adapted to the requirements and needs of their local clientele The product line offered by IKEA in their stores is relevant and suitable for their local markets since customers will only purchase products that fit their homes and lifestyles (Yunker). 2) In the U.S., IKEA has not had as much success in gaining as much of a market share as in the global market.

The company had trouble penetrating the U.S. market for several reasons such as different tastes in furniture and a demand for more customized furniture, difficulties transferring IKEA’s frugal culture to the U.S., and an increased level of competition compared with Europe .There many big and small companies competing with IKEA for a piece of the market share for U.S. of the furniture market. Major global retailers such as Wal-Mart sell lots of furniture and offer consumers some of the lowest prices in the marketplace.

Although Wal-Mart does not offer the overall lifestyle experience and unique product selection of an IKEA store their level of buying power, supply chain management, global corporate structure and their position as the U.S. biggest retailer undercuts a lot of the IKEA’s competitive advantages. Target is another major U.S. retailer that has a major market share in the home furnishing industry. Target and Wal-Mart are major retailers have the market share, experience, brand recognition, and corporate and financial prowess to create a loyal customer base and make it harder for IKEA to gain market share.

Since both companies offer rock bottom prices the customer decision price is no longer decided by price alone, but other factors such as product offerings, quality, and brand identity. References Quickmba.com (2011). Global Strategic Management. Retrieved April 28, 2011 from http://www.quickmba.com/strategy/global/ Yunker, J. IKEA: Behind the Best Global Retail Website. Retrieved April 28, 2011 from http://www.bytelevel.com/news/IKEA_article.pdf