Ikea

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Agathe Estour
Student number: 2925500

World count: 2,135

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Case study:
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IKEA
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QUESTION 2

Introduction

IKEA is a Swedish retailer of furniture and objects of decoration in kit.This company offers a large range of well-designed and functional home furnishing products at low prices with no delays in delivrery. The funder is Ingvar Kamprad.
The acronym IKEA (Ingvar Kamprad Elmtaryd Agunnaryd) consists from the first letters of his name, the name of his farm Elmtaryd and the name of his country Agunnaryd in South Sweden.
Ingvar Kamprad began his career by selling fish,Christmas magazines, but quickly he realized that his best opportunity lay in furniture. Furthermore, furniture price rose 41% between 1935 and 1946. The first store was opened in Älmhult in 1958.

1- Key dates of IKEA’s internationalization

http://www.scribd.com/doc/6204196/Cas-IKea-Strategie-Internationalisation-Du-Groupe

IKEA began its internationalization in 1970s and entering newmarkets in Western Europe (in Germany, Norway, Denmark, Canada, and Switzerland). IKEA has been a striking success in Germany. Western Europe became the IKEA’s major market centre. They even achieved to enter in Switzerland, which is a very difficult market.
The IKEA’s internationalization went on in 1980s. IKEA established new stores in Italy, United Kingdom, France, Belgium... with the same successas in 1970s.
But IKEA didn’t stop its expansion on the contrary; the company had conquered from 1990s to 2000s the United States, China, Japan, Spain, Russia, and Portugal...
The establishment in USA, in the end of 1980s was the best success of IKEA and led to a lot of change in the IKEA’s internationalization strategy.
Nowadays, IKEA Group has 298 stores in 25 countries and employs 128 000co-workers.

2- Model of internationalization

To become established in a country, there are two steps.
At first, IKEA integrates the Swedish spirit and IKEA’s concept into the country where the store becomes established. They never buy another company, they always buy land and built a store on it. They choose this method in order to obtain exactly what they “need” that is to say: a verybig size store places in an adapted location, on the outskirts of cities, with ample parking for customers. Furthermore, IKEA always built its store with the same design, it’s its “signature”. Indeed, customers have to follow a way in the shop which makes them want to buy a lot of things.
Another particularity of IKEA’s store concept is the fact that there are Swedish products in stores. Thus,customers can eat Swedish specialities in IKEA’s restaurants, which are in the store.
In this way, IKEA Group really introduces its own culture and standardizes its concept in each country where they are established, the company uses a global strategy of internationalization.
- Complex legal structure
- Ingvar Kamprad’s shares have been transferred to a Dutch Group Stitching Ingka Foundation
-Foundations are tax exempt not for profit organizations registered under Dutch law.

- Complex legal structure
- Ingvar Kamprad’s shares have been transferred to a Dutch Group Stitching Ingka Foundation
- Foundations are tax exempt not for profit organizations registered under Dutch law.

- Scale economies
- To sell furniture in « kit » to reduce transportation costs
(-80%)
- Durablepartnerships with furniture producer
- Scale economies
- To sell furniture in « kit » to reduce transportation costs
(-80%)
- Durable partnerships with furniture producer

No international competitors, only locals

No international competitors, only locals
- Well-designed, inexpensive, functional home furnitures
- To furnish first flat (young couple)
- Well-designed, inexpensive,...
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