Ikea – the Global Retailer

IKEA – The Global Retailer

1. How has the globalization of markets benefited IKEA?

Globalization of markets relates to the merging of distinct and separated national market entities to one global market. Due to the shortfall of barriers, a business expansion throughout the world becomes possible. Through technology, information processing, transportation and communication, the different cultures of the world have been getting closer.

This globalization of markets has allowed IKEA to rise from a small sole trader business in 1943 to the leading home furnishing brand in the world with more than 300 stores in more than 35 countries/territories and more than 130,000 co-workers. The IKEA concept adds up around the world. By now IKEA generates a yearly turnover of more than 22 Mio € (before taxes), hosts about 660.1 Mio. visitors a year and prints 199 Mio. copies of its catalogue (56 editions in 27 languages) annually.1

Due to the globalization of markets, IKEA was able to grow its market from their home country (1958 one store in Sweden – Älmhult) to more than 35 countries in all main continents. They were able to increase their turnover from 1 Mio € (1954) to 22,713 Mio € (2009) by targeting the global middle class, who is looking for low-priced but well-designed home furnishings. 2

2. How has the globalization of production benefited IKEA?

Globalization of production relates to the dispensation of the production process to different locations around the world to take advantage of national differences in cost and quality of factors of production.

IKEA has benefited significantly from the globalization of production.

Originally IKEA manufactured their products in Sweden only. But as the IKEA concept includes not only keeping the sales prices low, but even lowering it annually, they needed to constantly find ways to cut costs. The decision to make self-assembly products part of their concept and only flat packages instead of pre-assembled...