Ikea - Case Study

Case Study: IKEA’s Global Strategy: Furnishing the World

By

John Rubas

Embry Riddle University Worldwide

MBAA 514

November 15, 2012

IKEA’s Global Strategy: Furnishing the World

IKEA is a Swedish furniture store chain known for its low priced home products and sells ready to assemble furniture. With IKEA’s successful choice of inexpensive products and its unique marketing strategy, the company has been able to expand internationally with ease.

In 1943, IKEA was founded by Ingvar Kamprad in Almhult, Smaland, Sweden. Originally, the mail order business sold pencils, postcards, wallets, picture frames, and jewelry. Then in 1948, furniture was added to the company’s inventory. IKEA’s unique concept of selling disassembled furniture reduced the company’s operating costs and the use of flat box packaging created an advantage for the company (IKEA, 2012).

IKEA uses the same store design and layout as it has in the past, modeled around a simple warehouse strategy. This strategy consisted of “knockdown” inventory kits stacked on large racks throughout the store (Peter & Donnelly, 2011). With their products packaged and stored this way it allowed their customers to take their purchases with them therefore eliminating delivery costs. Because IKEA offers inexpensive household products and furnishings worldwide interest and demand has created an opportunity for the business to expand its footprint globally. IKEA operates 338 stores in 40 countries, with most located in Europe, the United States, Asia, Canada, and Australia (Facts and Figures, 2012).

Although IKEA is a successful global business, it has encountered its fair share of challenges and issues. After expansions in Sweden and Switzerland markets, IKEA entered Germany in 1974, where they encountered several issues. First, the company faced several regulatory obstacles, and the opening birthday celebration of its first store was criticized because it contradicted German tradition where...