IKEA

One of the reasons IKEA won its competitive advantage was that on 1964 a Swedish magazine published a comparison between IKEA’s furniture and its competitors, and said that IKEA’s quality was not only as good as if not better than furniture from other Swedish furniture manufacturers, and the prices were much more lower. This article said that a living room with furniture from IKEA was 65% cheaper.

Another reason was its self-service system on their store in Stockholm, where costumers were able to pack their furniture and take them to the checkout. It was so successful that the used it in every store they had.

One of the reasons of IKEA’s expansion to Europe went so well was that IKEA’s elegant functional designs with their clean lines, low prices, and immediate availability were much better than the European stores that where expensive and not always had availability.

IKEA then wanted to apply the term of “globalization of markets”, which means that they wanted to expand their company to a new international market, so they found a new huge market: The United States. The reason why they entered North America so quickly was their rapid success in Western Europe, however United States and Canada had different markets than Europe. In America furniture retailing was a very fragmented business. The company found that its European-style offerings didn’t always resonate with American consumers. The measures of IKEA’s furniture were not the same as American people wanted. This made the company to redesign many of their products.

In response, IKEA found new locations for their stores, started to product some of their products in the US to reduce transportation costs. They also started to advertise themselves aiming to the younger people.

From this experience IKEA learned how to compete in foreign countries outside of continental Western Europe, and used this lesson to enter to many different countries and cultures, adopting the way of living of their citizens. By 2008, IKEA was already in 17 countries.

Before, IKEA’s strategy was the same as their strategy in Sweden. They had furniture at low cost and good designs. They didn’t care much about the people they were selling to, and they only cared about their production.

After they saw their strategy didn’t work in the US, they started to worry also for their clients and their needs and they started to make the products that these people wanted. This is a strategy they are still using today and it’s working very well for them, because they make different products to the country they are working in.

IKEA then had some great ideas about their suppliers. They try to find the right producer for each of the items they sell. At first, they got all of their products from Sweden suppliers, but latter they started to manufacture their products in Poland because it cost less. Then, they started to work with suppliers in every part of the world they have stores in, to avoid costs of transportation. Today, they have 5 suppliers in Europe, 3 in the US, and 2 in China. This strategy that IKEA did is called “globalization of production”, ass we so it in our course. This term means that IKEA searched for where in the world its cheaper to produce their products, and they went into those countries.

I think this strategy is vital to IKEA’s success because found the suppliers who’s right to produce each item, so their products are perfect. Also, they can sell at low costs because they don’t have costs of transportation on their products because they produce them in the country where the product it’s going to be sold.

I think that one of the reasons of IKEA’s success is that the company keeps the philosophy of its creator. I think that it is very important that a company ass big as IKEA is keep with the ideas of when

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