Ikea Invades America

IKEA INVADES AMERICA

1. What factors account for the success of IKEA?

IKEA successful growth in the home furnishing retail market can be attributed to many different philosophies. The are several success factors that helped IKEA to succeed in the furniture market. The most important are cost efficiency, product strategy, and Scandinavian designs. One of the factors in the IKEA's achievement in cost efficiency plan is its flat packaging. In 1956 IKEA begins testing flat packages for tables and legs. This obvious initiative created more storage space, more items capable to be shipped, reduced labor costs, and less reported damages. For costumers this meant a lower priced product with easy transportation home and also saved the company on shipping . The company estimated that its transport volume was six times less with these innovative flatter packages. IKEA also focuses on seeking to balance cost-effective labor with the company's product quality and standard. In order to save money on labor and production IKEA constantly was looking for opportunities to build supplier relationship in developing countries. Furthermore, consumers with the "Low price with meaning slogan" were only avowed in that they were going to receive trendy furniture at the best likely cost. Another cost cutting advantage IKEA implemented, was the ability for customers for picking up and assemble their own furniture. IKEA wanted to lower the cost for the customers even more so they decided to use higher-quality materials for visible surfaces and lower-quality materials for low-stress, less visible surfaces. This was significant element of IKEA's move toward to customer participation because it kept the price low. Additionally, IKEA invented a unique product strategy. Taking into the account consumers trends, they set product priorities for which they set a price by using a simple matrix that is much lower than the competition. Once product priorities became set up, a...