IKEA background info
Company’s Background
IKEA is a Swedish company which sells affordable furniture and is famous for their D.I.Y furniture. They are the largest furniture retailer in the world and currently operates in 38 countries with a total of 332 stores. IKEA’s concept is to make use of unwanted woods and transform them into useful furniture, resulting in an affordable yet stylish product. They are also well known for their delicious food served in their restaurant which is located in their store. Ingka Holding, which belongs to the founder of IKEA, Mr. Kamprad, consists of a 5 person executive committee and holds majority of the stores worldwide. The remaining stores were owned by franchise companies.
Scope and Reasons for international operations
IKEA’s aim is to globalize their company in order to gain popularity and earn more profit. The first store they opened was in Sweden. After which, they decided to expand their stores in neighboring countries like Norway and Denmark to monitor the situation before further expanding their company. With rising success and popularity in their products, they further expand their stores all around the world. Among all the countries, Germany brought them the highest profit. Furthermore, every company will go through the product life cycle process. The last stage of the cycle also known as the declining stage will cause a company’s revenue to decrease. Therefore, it is important for IKEA to introduce their products in other foreign markets in order to start the product life cycle all over again. Building the company’s image is also important for IKEA to earn revenue. By setting up stores all around the world will definitely help build the company’s image. It is not profitable at the initial stage. However, once the image is built, earning revenue will be a piece of cake. Making use of labor from different countries can also benefit the company. Labor varies from country to country and may be cheaper to hire in some countries. By
IKEA is a Swedish company which sells affordable furniture and is famous for their D.I.Y furniture. They are the largest furniture retailer in the world and currently operates in 38 countries with a total of 332 stores. IKEA’s concept is to make use of unwanted woods and transform them into useful furniture, resulting in an affordable yet stylish product. They are also well known for their delicious food served in their restaurant which is located in their store. Ingka Holding, which belongs to the founder of IKEA, Mr. Kamprad, consists of a 5 person executive committee and holds majority of the stores worldwide. The remaining stores were owned by franchise companies.
Scope and Reasons for international operations
IKEA’s aim is to globalize their company in order to gain popularity and earn more profit. The first store they opened was in Sweden. After which, they decided to expand their stores in neighboring countries like Norway and Denmark to monitor the situation before further expanding their company. With rising success and popularity in their products, they further expand their stores all around the world. Among all the countries, Germany brought them the highest profit. Furthermore, every company will go through the product life cycle process. The last stage of the cycle also known as the declining stage will cause a company’s revenue to decrease. Therefore, it is important for IKEA to introduce their products in other foreign markets in order to start the product life cycle all over again. Building the company’s image is also important for IKEA to earn revenue. By setting up stores all around the world will definitely help build the company’s image. It is not profitable at the initial stage. However, once the image is built, earning revenue will be a piece of cake. Making use of labor from different countries can also benefit the company. Labor varies from country to country and may be cheaper to hire in some countries. By