Ikea case study
MKF5260 International Marketing
Tutorial Exercises Week 8
Identifying International Markets & Entry Mode
1. What was allowed IKEA to be successful with a relatively standardized product and product line in a business with strong cultural influence? Did adaptations to this strategy in the North American market constitute a defeat to its approach?
IKEA has become the world's largest home furnishing retail chain with its international expansion in three major phases. Its mission is to offer a wide variety, good design and value for "young people of all ages". IKEA is determined to maintain a standardized product strategy with a universally accepted assortment around the world, now carrying a variety of different home furnishings. It has limited number of manufacturing, however, designs all of its furniture. IKEA's cost leadership strategy through high volume production and standardized items enabled it to sustain its business. Consumers are expected to become "prosumers", in the meaning of half producers and half consumers, thus supplying their time for assembling work after their purchases. Consequently, IKEA's success is due to its customer focused strategy. The principal market target is composed of "people, who are young, highly educated, liberal in their cultural values, white-collar workers, and not especially concerned with status symbol". Therefore, consumers with low status concern and low conservatism enabled IKEA's success in strong cultural influences. Moreover, high income groups have fewer cross-cultural differences and more open to adapt values to new beliefs. As a result, with their right consumer target, IKEA was able to succeed with their relatively standardized product line.
However, IKEA ran into difficulties in North American market. One of difficulties is different tastes in furniture and a requirement for more customized furniture. For instance, European bed design were not wide enough for American consumers, also IKEA did not sell
Tutorial Exercises Week 8
Identifying International Markets & Entry Mode
1. What was allowed IKEA to be successful with a relatively standardized product and product line in a business with strong cultural influence? Did adaptations to this strategy in the North American market constitute a defeat to its approach?
IKEA has become the world's largest home furnishing retail chain with its international expansion in three major phases. Its mission is to offer a wide variety, good design and value for "young people of all ages". IKEA is determined to maintain a standardized product strategy with a universally accepted assortment around the world, now carrying a variety of different home furnishings. It has limited number of manufacturing, however, designs all of its furniture. IKEA's cost leadership strategy through high volume production and standardized items enabled it to sustain its business. Consumers are expected to become "prosumers", in the meaning of half producers and half consumers, thus supplying their time for assembling work after their purchases. Consequently, IKEA's success is due to its customer focused strategy. The principal market target is composed of "people, who are young, highly educated, liberal in their cultural values, white-collar workers, and not especially concerned with status symbol". Therefore, consumers with low status concern and low conservatism enabled IKEA's success in strong cultural influences. Moreover, high income groups have fewer cross-cultural differences and more open to adapt values to new beliefs. As a result, with their right consumer target, IKEA was able to succeed with their relatively standardized product line.
However, IKEA ran into difficulties in North American market. One of difficulties is different tastes in furniture and a requirement for more customized furniture. For instance, European bed design were not wide enough for American consumers, also IKEA did not sell