IKEA: Managing Global Expansion (Page 2)

Abstract

In 2002, IKEA was one of the leading furniture retailers in the world. IKEA offered a range of items - furniture, cookware, tableware, kitchen utensils, gadgets, textiles, bedding, cushions, shower curtains and paint. IKEA had emerged as a global player in one of the most highly fragmented industries in the world. In 2002, Interbrand ranked IKEA 44th on its list of the top 100 global brands, ahead of Pepsi and Harley Davidson. IKEA''s business formula had been built around high-quality, Scandinavian design, global sourcing of components and knock-down furniture kits that customers transported and assembled themselves. IKEA's cost leadership strategy had enabled it to pass on to customers lower prices, anywhere from 25% to 50% below those of its competitors. The case explains how a new business model can change the rules of the game even in a traditional industry.

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BACKGROUND NOTE contd..

In 1965, Kamprad opened a second outlet in Stockholm. His new store, built on the outskirts of the city, was the largest in Europe at the time. Kamprad gave priority to creating ample parking space in downtown locations.

Rather than cater to the older, more affluent consumers Kamprad focused on younger buyers, who were typically furnishing their first apartments. In the early 1970s, when the Swedish furniture market was stagnating Kamprad looked seriously at international expansion. By the 1990s, IKEA had come to be known as the world's largest designer and retailer of well-designed, inexpensive, and functional home furniture. The retailer's product range had expanded to include lighting, rugs, textiles, utensils, tools, kitchen and bathroom fixtures, glassware, decorative items, wallpaper, paint, and a range of other items that were found in a typical home. Worldwide, IKEA's stores carried over 20,000 products, of which 12,000 formed a core product set that was sold in all stores.

In 1994, IKEA began to offer its Kubist storage units, built with board-on-frame construction. IKEA improvised its manufacturing technique to create inexpensive, sturdy and lightweight storage units. The retailer redesigned old plants in Poland to make parts for Kubist.

In 1997, IKEA introduced children's IKEA. The retailer worked with child psychologists and professors to develop products good for kids' motor skills, social development and creativity....
 

        Case Code   BSTA068
   Case Length    15 Pages
              Period    2003
 Organization     IKEA
        Pub Date     2003
Teaching Note    Not Available
     Countries    Scandinavia
      Industry    Consumer Durables

Issues

Case study of IKEA; Furniture retailer; Low cost leadership; Furniture at IKEA; Cookware at IKEA; Kitchen utensils at IKEA; Textiles at IKEA; Case study of leadership; Management; Furniture hall; Ingvar Kamprad; Furniture information; Fragmented industry