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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"Maintaining a strong IKEA culture is one of the most crucial factors behind the continued success of the IKEA concept."¹

- Ingvar Kamprad, Founder of IKEA.

"We expect IKEA - China will be among the top five before 2020, taking into account the rapid economic development of the nation, its surging gross domestic product (GDP) and people's increasing living standards."²

- Ian Duffy, President of IKEA, China in 2004.

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."⁴

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1] www.ikea-group.ikea.com.

2] "IKEA Outlines Mainland Expansion Plan," China Daily, www.china.org.cn, April 06, 2004.

3] "The 100 Top Brands," BusinessWeek, August 04, 2003.

4] Nicholas George, "One Furniture Store Fits All," Financial Times, February 08, 2001.