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Published date
02/16/2011
Language
documents in English
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Type
case study
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70 pages
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Internationalization with a concrete example of the IKEA group

  1. Corporate Overview
    1. Background
    2. Sectors of activity
    3. The key figures
    4. The organization of the group
  2. The operations of the IKEA Group
    1. The leader's personality and the "IKEA spirit"
    2. The IKEA concept
    3. Analysis of the group's strategy
    4. The competition
  3. The internationalization strategy of the IKEA Group
    1. Why internationalize?
    2. The phases of internationalization of the IKEA Group

In specialty marketing and strategy management, in order to acquire the basic knowledge necessary for any manager, we studied the strategic concepts and phases of internationalization of a large group of Sweden: IKEA. Thus, by using personal research and theoretical concepts seen in class, we have implemented our assets to a real case: the study of the internationalization of IKEA.

The furniture market is characterized by increased competition, however, IKEA has managed to impose itself with a differentiated offering by entering a niche segment. Its basic concept is based on sales of flat-pack furniture and the constant search for lowest prices. IKEA is marked by a strong entrepreneurial culture established by its founder and leader: Ingvar Kamprad. The latter was able to spread the company’s concept internationally with success.

The company has established itself both in developed countries and in developing countries despite cultural differences and often restrictive regulations. However, this method of internationalization has limitations that may hinder the development of the brand. To remain competitive and to persist in a market where globalization is inevitable, IKEA needs to take account of the emergence of new parameters to sustain its success.

What is the general strategy of IKEA? Does this strategy have advantages for internationalization?
Compared to the theoretical approach to the implementation of an internationalization strategy, how has IKEA applied it? What are the differences that emerge? Does this benefit IKEA or not?
In the first part, we will briefly introduce the company, its industry and its organization.

In the second part, we will analyze the functioning of the group in its market by studying its infrastructure, its strategy and corporate culture. In the last part, we will make the comparison between the theoretical analysis and practices of IKEA to bring out the positive and negative aspects. Finally, after analyzing these different steps, we'll make some strategic recommendations for its future settlements.

IKEA is a Swedish company whose main activity is selling furniture. But what sets it apart from its competitors is that its furniture is sold in kit forms. And this, in constant discount prices. Its uniqueness is that it has established around the world. The range of IKEA products is characterized by a rather sleek and contemporary style using wood as primary material, a clear trend, and colored plastic and metals.

IKEA has a special significance:
-I and K are the initials of Ingvar Kamprad, the founder of this company
-E is for Elmtaryd which is the name of his parents' farm
-A is for Agunnaryd which is the name of the village where he grew up

This brand name is of its Swedish roots and so is the owner of the company. This Swedish origin is also rooted in the firm's logo and corporate culture. Indeed, the colors are blue and yellow which match those of the Swedish flag. The company was founded in 1943 and the industry then offered utilitarian objects at reduced prices: pens, small leather goods, picture frames, tablecloths, jewelry and nylon stockings.

Tags: IKEA, strategic concepts, internationalization, furniture market, increased competition, Ingvar Kamprad, Swedish company, contemporary style, Swedish roots, corporate culture

[...] This strategic tool synthesizes the factors affecting the performance of a company with five forces. These forces describe the five factors affecting a particular market, and more specifically, the intensity of competition The industrial study Porter’s forces for the furniture market in developed countries Risk of new entrants Low impact Presence of barriers to entry Bargaining power of Suppliers Low Competitive intensity Oligopolistic structure Bargaining power of customers Low Substitutes - None Competitive intensity: In developed countries, the furniture market is mature, and the demand is more expansive. [...]


[...] They incur significant risks, which may increase their propensity to fail - The phases of internationalization of the IKEA group A The pre entry or preparation phase To internationalize, a company must master one or more concepts that confer competitive advantages in the local market. In addition to its international success, it needs to provide competitive advantage at the international level. Thus, during the pre-entry phase, the company will have to consider: - What concept to export? - Which country to export to? [...]


[...] The Ikea group will establish a network of providers and distributors in every country where it operates. This allows it to maintain direct contact with its suppliers, and therefore maintain an ongoing negotiation with them to receive better prices. Thus it may maintain better control over its suppliers. To achieve coordination among different partners, the company introduced the IKEA IT system, enabling the use of extranet, intranet, and EDI (electronic data interchange) information system. This system favors the proximity and responsiveness between the different actors involved in the process. [...]

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