IKEAs Marketing and Expansion Strategy Analysis

IKEAs Marketing and Expansion Strategy compendThis report is a fol impression on from the in programme IKEA video display based on the IKEA case study IKEA-Managing global expansion. Being a multinational successful organisation there would be various corners to formula at in order to analyse IKEA however this report result focus on the analysis of IKEAs globalisation and internationalization models, as intimately as key opportunities and threats faced by IKEA and their heathenish web and how it supports their up-to-the-minute strategies.Over survey of the piece of furniture securities industryBased on Mintel research database, the gross gross sales of furnishings and housew are in the top 25 global economies generate annual revenues of more than $270 billion. that the sales of furniture were hit hard in 2008 and 2009 by a combination of fewer housing transactions and the recession. With the exception of IKEA, US companies (Furniture Village, Homebase, DFS etc) surmo unt the global home furnishings landscape, yet the worlds most(prenominal) lucrative regional market is still Europe.Buying furniture nowadays is non as plainly organised as in the past where you just had to take what was acquirable from the few sellers and wait weeks before it was delivered. Today competition is all in all well-nigh religious offering the right product, for the right money, in the right way. Just pull d receivestairs half of adults (25 million) look for lasting reference when buy furniture. Retailers necessity to resurrect their quality with customer reviews and demonstrating how items can stand up to heavy rule especially in households with kids. Service is important and four in ex adults are influenced by the presence of knowledgeable and assistanceful staff when choosing in the midst of neckcloths. The role of staff has shifted from one of a sales person to be one of consultant. Further visiting showrooms is a key part of the buying process for furniture as it gives the customer an idea active their cherished surround however focus remains on price.Overview of the companyIKEA conclave is a global and privately-held retailer of Scandinavian (Swedish) designed home furniture and accessories and now retailer of its own nutrient label. Their products range focuses on expert design, good quality and function at a low price. In the mid-2000s the company was leader in the flat-pack furniture business generating annual sales of 21.5 billion euros. The company has the biggest market share in the UK. It operates about 301 hive aways boilersuit in 36 countries most of them in Europe, North America, Asia and Australia. The company was founded by Mr. Ingvar Kamprad in 1943 and although partly tone downled by the Kamprad family, it is under the ownership of the Stichting INKGA group, a charitable foundation registered in the Netherlands. IKEAs main UK antagonists include Asda, Argos, Debenhams, Next, Tesco, John Lewis etc.The diversion between Internationalisation and globalizationGlobalisation entails all the operations undertaken by an organisation that envisions itself present in many countries worldwide. IKEAs past globalisation strategy was based on one design fits all which meant that initially they did non lodge to the local markets. merely as they expanded in lacquer and the US they soon realised that they had to tailor describe their products to fit the realms specifications and requirements if they wanted to succeed. For instance, the US customer preferred big and ample furniture and houseware objet dart in Japan they looked for small and mere(a) items to fit their small reinforcement environments.In opposition internationalization is at the some other end of the globalization as it takes into consideration what each particular market has to offer and not what the company has to offer to the market. IKEAs strategy has adapted over the years in a way that they think globally and act locally.IKEAS INTERNATIONALIZATION dodgingKey OpportunitiesIKEAs main strength is its international reproach recognition construct up on low product prices and design. Its product portfolio caters for most lifestyles and budgets. The exe have intercourseing of approach leadership strategy in order to penetrate untried markets is a definite strength and opportunity IKEAs costs were/are round 30%-50% below competition prices. The costs of transportation were cut by 80% by providing furniture in flat packs. By offering simple and modern designs and by introducing cash and carry and self helping concepts, IKEAs stores were guaranteed a success. After investigating the German market IKEA took advantage of the pitiful organisational strategy of the living furniture dealers in the country and changed its operations by providing customers immediate delivery of quality goods at low prices when they opened their Munich store.Their westbound German market has expanded through aggr essive advertising contempt the challenges encountered by the law suits initiated by its competitors and trade associations. In the UK, IKEA provided unique products, low prices and cashcarry answer. In this way the firm achieved competitive advantage over its existing competitors that were taking as long as 3 months to deliver the goods. remote to their competition, IKEA demonstrated efficiency and skill.As mentioned previously, in their US placement IKEA had to adapt their product range to suit the requirements of the American market. They redesigned the store layout to provide more directions and shortcuts for customers who opposed to the idea of wandering through the store. They also increased the surface of their beds, bed linens, sofas, armchairs etc., as the European sizes were too small for the American customer. In addition they also offered a customization of their products. Further their US expansion IKEA made a bold move by opening a mega store in Chicago with a new layout (double the size of a radiation diagram IKEA store). It had 3 levels that included a self work warehouse, customer service and cafe on the first floor as well as a showroom and a market place on the other floors. From there on the stored were designed to advance the direction and flow of customers. IKEA also offered home delivery and assembly for an extra charge. The US expansion was a success due to these notices and strategy adaptation despite their competition incessantly replicating IKEAs products.ThreatsThe organisations main weakness is that they are very much reliant on the European market where 82% of its stores are located. The threat here is delineated by the competition as IKEAs methods cause been copied by other retailers that have introduced similar product ranges at low prices. Market saturation is some other threat as with the development of e-commerce in each European country customers can compare prices, reviews and switch to alternative suppliers if necessary.Further threats are represented by the recession in Europe as well as the adverse effect of a weak dollar on sales in the US. Political and economical instability of the Chinese and Russian markets are also a potential threat since IKEA is innovationning on expanding in these two markets. However IKEA is successfully counteracting its main weakness (over reliance in Europe) with its key opportunity expansion in the emerging markets in Asia and easterly Europe.The cultural Web and the Organisational CultureThe organizational culture describes the psychology, attitudes, experiences, beliefs and values (personal and cultural values) of an organization which define its environment or it can apparently describehow things are done around hereTo analyse IKEAs cultural web we need to use the Cultural Web model. The Cultural Web identifies six elements that help to make up the paradigm the pattern or model of the employment environment.By analyzing the occurrenceors in ea ch, we can see what is working, what isnt working, and what needs to be changed.StoriesThe gunman in the company is Ingvar Kamprad seen by the employees as a visionary who worked hard, lived simply and gave an example to all. In fact IKEA is all about the Swedishness a simple culture with simple values such as humbleness, simpli city, teamwork etc. The vane image varies in different countries depending on the countrys culture. eg in Sweden (low priced, low quality brand), UK (poor service) etc.Rituals and RoutinesThe Company strongly believes in staying close to its customers. In fact every store is a parent- friendly environment people come first. However IKEA is also focused on its people and their working way. Employees dress conversationally and work in a relaxed office environment with open plan floors. On their website IKEA remarks that A career in IKEA is not a ladder, is what and where you make it. They expect teamwork and mistakes as long as the employee learns from them . However IKEA is also about making the impossible in cost bare-assed. In fact, staff traveled economy and took buses or stayed in hostels. thither are wall stickers to issue off lights, taps and com displaceers after each use. Stores that cut costs the most receive a reward from the prudence.SymbolsIt is normal to find the same features in every IKEA store. For instance, all shop floor staff dress in uniform (yellow blue) for the Swedish flag colours. There is a restaurant, a food hall a childrens corner as well as precise shopping helps such as pencil, paper, shopping bag, and tape measure. As mentioned previously, IKEA is all about Swedishness and focus on a minimalistic and simple design delivered in their custom flat packs. Their main symbol is the brand name and the brand colours all significative of Sweden and their Swedish founder Kamprad.Organisational Structure characteristic of IKEAs organisation is their informal circumspection which is presented in a non-hierarc hical and caring manner. There is typically only 3 hierarchical levels of responsibility between the store manager and the employee. Every month there is the so called Anti-bureaucrat week where management spend a whole week in the warehouses and stockrooms. Appropriate preparedness programmes are given to all company management. However as unceasingly on IKEA s organisational grammatical construction is their focus on cost cutting and as such they incite all designers and material buyers on cost reductions.Control SystemsAt the centre of the IKEAs control systems is quality control. Emphasis is put on delivering good quality, sturdy furniture that passes their standards. Further way to control their operations is by making sure that the management works close with the staff making also sure that their warehouses are correctly labelled in their products. Rewards are given to the stores that generate more profit and that cut more costs considering that one of the principles of IK EAs strategy is cost cutting.Power Structures superior management was predominantly Scandinavian and only in the last 5 years the strategy of only forwarding employees who were Scandinavian or Swedish speaking into management has changed. However all employees are involved the mortal store operations and encouraged in their work thanks to their friendly management strategy. Employees are in fact egged on to take responsibilities in order to assess their performance their ideal is that every employee is important to IKEAs success.The ikonIKEAs cultural web supports its current strategy. In the past IKEA favoured the Sweds for managerial programmes plainly in the last 5 years international career management is now seen essential to sustaining international growth but more step and measures need to be taken to ensure that other backgrounds are fitted into the managerial programmes. The organizational career culture supports the corporate strategy with suitable structure and rewards . IKEAs cultural values are things like informality, cost consciousness and a very humble and down to earth approach as passed down by Kamprad along with responsibility and teamwork and ensuring that their employees are highly motivated and committed.Cultural and Corporate Strategy ChangesPut more emphasis and work on employees of other nationalities/backgrounds in order to create a multicultural environment by having a diverse management and strengthen IKEAs corporate view being a multinational group.Since all IKEAs stores are out of the city centres many customers in the big metropolis do now own a car or have suitable transportation in order to be able to shop in IKEA and then a possible strategy change could entail IKEA to have smaller retail outlets near city centres perhaps selling furniture on assort but definitely having stock in-store for houseware and smaller items.Many IKEA competitors offer stop delivery on orders above a certain amount as we have previously shown com petition is fierce in Europe therefore this measure could ensure that the profit is taken by putting a minimum spending limit in order to qualify for stark delivery (e.g. free delivery on orders above 150 GBP or more) and would therefore open IKEA to more budget oriented customers.Another lead to attract more customers would be to have quick assembly tips/class in store for the non-diy oriented customers. IKEA is all about self service but not many customers are skilled to deal with DIY and assembly. This measure would make sure that their products are opened to every type of customer. self-importance service warehouse and furniture pick up places all delay some long numbers in regards to the desired item. Perhaps IKEA could employ a new system where warehouses havelabels, not numbers making it easier on customers. (e.g. Section Chairs. Aisle-3, Type Victa)ConclusionsIKEAs main strategies remain the same success is ensured by adopting aggressive price strategies and aggressive a dvertising as well as a wide product range unlike any competitor at the moment. Service however needs to come to focus to improve customer purchasing and still maintain their market position as other cheaper players are entering the market such as the supermarkets.Is getting any bigger better?