IKEA's Global Strategy
Swedish company IKEA was the world's largest furniture retailer since the early 1990s. It sold inexpensive furniture of Scandinavian design. The company operated in 55 countries with a workforce of 76,000 (the company referred to its workforce as its 'co-workers').
IKEA offered nearly 12,000 items to the home furnishings market worldwide. It sold a wide range of products including furniture, accessories, bathrooms and kitchens at 186 retail stores in 30 countries across Europe, North America, Southeast Asia, Middle East and Australia. IKEA enjoyed high brand equity.
| In 2003, Manhattan US-based Interbrand, a marketing research and consultancy firm, valued the 'IKEA' brand at $6.92 billion and ranked IKEA 43rd on its list of the top 100 most valuable global brands, ahead of Nestle, Harley-Davidson, and Apple.3
| Analysts attributed IKEA's success to its skill in combining good product design and superior quality with an affordable price. IKEA's low-pricing strategy was aimed at young people.
For several decades, IKEA had looked for international markets, which were culturally as close as possible to the Scandinavian market. The basic assumption behind IKEA's global strategy was 'one-design-suits-all.' Anders Dahlvig, the CEO of IKEA, had once said, "Whether we are in China, Russia, Manhattan, or London, people buy the same things. We don't adapt to local markets."
| IKEA had, in fact, been quite successful with its 'one-design-suits-all' global expansion strategy in many markets. However, industry experts were doubtful as to whether this strategy would translate well into new, culturally diverse and riskier markets. They felt that a higher degree of localization was essential for companies like IKEA to be successful in diverse markets.
The Asian markets, together with the Middle East and Australia, accounted for only 4% of IKEA's total revenues in 2004. The company was...
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