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IKEA IN THE USA I. Summary IKEA is the world’s largest furniture retailer, which specialized, standardized but in stylish, inexpensive Swedish design. Its fully owned store has 150 in 28 countries worldwide with sales of $7 billion (Michael and Ronkainen, 2001). The company-pioneered move toward globalization in the furniture industry and perhaps one of the most successful multinational furniture retailing firms operating based its unique concept that furniture sold in kits that assembled by the customers at home. Furthermore, IKEA also gain advantages from its supplier worldwide through high-secured contract with high volume production that allowed selling its product in lower price (Groland Schoch, 1997). The founder of IKEA Ingvar Kamprad, established system that its costumers as ‘prosumers’ and its supplier as the customers (Michael and Ronkainen, 2001). The system has created value that allowed its product available in lower price but still in a good quality. Moreover, IKEA also has advantages from its unique advertisement that using catalogue throughout the world. However, in the first of their move toward expansion to North America in 1985 was not successful as in Europe. The problem was in 1990 where the company needs to change its approach for such a different in tastes and preferences. As the results, IKEA North America sales had tripled to $480 million in 1994 and it doubled in 1997 to $900 million (Hill, 2001). II. Introduction IKEA is one of good example of the International company which compete in global marketing and expand their business in furniture specialized. The ‘Swedish design’ company success is based on the relatively simple idea of keeping the cost between manufactures and customers down. Therefore, this case study will examine of IKEA international company and its element through answering the three questions provided. III. Question 1: What has allowed IKEA to be successful with a relatively standardized product and product line in a business with strong cultural influence? Did adaptation to this strategy in the North American market constitute a defeat to their approach? Answers: According to IKEA founder, Ingvar Kamprad it has concept to offer a variety of home furnishing of good design and function at price so low in order to attract people to buy them (Michael and Ronkainen, 2001). IKEA has successful in international business market with emphasis through three long-term strategies, which an organization can build its core competencies (Olsson, 1996). 1. Achieve overall low-cost leadership in the industry 2. Market production that are differentiated 3. Focus on market segments for growth in cost and differentiation IKEA perform its competitive positioning by performing key internal in value chain at lower cost and better than its competitors perform. IKEA introduce value system between its consumers and suppliers as “prosumers” by means half producers and half consumers (Michael and Ronkainen, 2001). In this system, the customers are suppliers of a time, labor, information knowledge and transportation. On the other hand, the suppliers are customers, receiving technical assistance. Customers are informed in the catalogue of what IKEA provide and what they are expected to add to the final process.
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