IKEA's Globalization Strategies and its Foray in China

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Case Details:

Case Code : BSTR173
Case Length : 16 Pages
Period : 1995-2005
Organization : IKEA
Pub Date : 2005
Teaching Note : Not Available
Countries : China
Industry : Furniture and Home furnishings

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This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.

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Excerpts

IKEA's Corporate Structure

In 2003, the IKEA Group was privately owned by the Stichting INGKA Foundation, registered in the Netherlands through a holding company - INGKA Holding BV. It was not listed on any stock exchange. INGKA Holding BV was the parent company for all IKEA group companies (See Exhibit II for a pictorial representation of IKEA's corporate structure).

Of the group companies, 'Swedwood' manufactured furniture made mainly of wood and wooden components in its 32 industrial units located in nine countries. 'IKEA of Sweden' designed and developed the group's products and it was also responsible for naming their products...

Swedish Identity

Although IKEA had expanded its operations into varied socio-cultural environments across the globe, it had not lost its 'Swedish' identity in its business operations. The company's logo was carefully designed to reflect the colors of blue and yellow that one would find in the Sweden's national flag. All IKEA stores were painted in yellow and blue. The Swedish designers in the global headquarters at Almhult designed products that reflected Swedish values...

IKEA's Globalization Strategy

Global Expansion

IKEA's international expansion occurred in a phased manner. It usually established its presence by opening a single store within the region as a foothold. It then proceeded to spread into the region as a whole in a phased manner. IKEA's entry into a country was accompanied by a forceful public relations exercise and with advertisements in which it highlighted the new retailing ideas it was bringing into the market...

Business Environment in China

By the early 2000s, China had emerged as one of the most competitive markets in the world with several foreign players operating across many industries in the country. The transition of China's economy from a centrally planned to a market driven one in the 1980s, had attracted several MNCs from the US and Europe...

Excerpts Contd...>>