IKEA: CASE ANALYSIS

IKEA: Case Analysis

Introduction

IKEA emphasizes on responding to the home furnishing needs of people throughout the world, it even changes some of its designs to suit the different cultures (yet maintaining the typical Swedish functional style). IKEA mainly designs furniture to suit people who want to improve their home and create a better everyday life. This is epitomised in their mission statement that claims, 'Offer a wide range of home furnishing items of good design and function, excellent quality and durability, at prices so low that the majority can afford to buy them'(Bartol, 2008, 212).

IKEA believes in working closely with manufacturers, suppliers, designers and other specialists. Expertise of these various stakeholders is pooled in to come up with innovative techniques to reduce costs so that these can be passed on to the customers. Its customer base consists of people who are actively seeking better value for money in their products. Hence, we can deduce from this that IKEA sells furniture and home accessories 'for the wise but not for the rich' (Bartol, 2008, 213). The company looks for solutions at every stage to help minimise costs and provide extra value - design, production, transportation, etc. Today, IKEA is one the largest volume furniture chains with total sales in excess of $4 billion. IKEA has more than 131 stores spread over 29 countries worldwide.

IKEA has a very conservative policy towards internationalization. As a rule, they never enter a new market with its own retail outlet. Instead a supplier link with the host nation is established thereby IKEA presence being there either by a fully owned subsidiary or then through franchising. IKEA's partnership with other American business groups can be viewed as a strategic and legal risk reducing approach in which the competitors can give IKEA valuable input on the political, legal, cultural, and financial and other issues that pose as opportunities or threats for IKEA (Bartol, 2008, 214).

IKEA in United States

Understanding the market and more so the competitive forces that exist within the market is very important and any market oriented firm would be sure to analyse this to try and turn it to their advantage. In the home furnishing market in the U.S., the majority of the market has been captured by smaller local brands that manufacture or sell furniture produced here or then from the East (Bartol, 2008, 215).

The remainder market shares lie in the hands of bigger establishments such as Marlin Furniture, home Centre, The One, ID Design, ChenOne and IKEA. However, not all of them would be considered as direct competitors as they differ in size, product range and pricing. The One, ID Design and ChenOne, for example, are more luxury furniture catering to the up-market society crowd. IKEA management does acknowledge Home Center and American firms as their direct competitors simply because they work around the same themes as IKEA but seem to be relatively less expensive. As part of its competitor audit, IKEA identifies critical factors required for success in this industry and then ...