International marketing strategy: Ikea

This Swedish chain began as the vision of one enterprising young man. As a boy, Ingvar Kamprad used to purchase matches in Stockholm, and sell them to people in his native rural town of Agunnaryd at a discount price. Eventually, he applied this concept from matches to mattresses and home furnishings, all at discount prices but without sacrificing quality.

IKEA was founded in 1943 when Kamprad was only 17 years old. The first IKEA store opened in Sweden in 1958. IKEA is an acronym: the first two letters reflect the founder’s name: Ingvar Kamprad and e the last two letters stand for the name of the family farm, and the town the founder grew up in: Elmtaryd and Agunnaryd.

Initially, the furniture at IKEA was more or less the same as that offered by other manufacturers in the area. The breakthrough that led to the ‘do it yourself’ style of flat packed furnishings came when Ingvar and a designer were trying to pack a table but were struggling with the amount of space it was taking up. In frustration, the designer exclaimed ‘Let’s pull off the legs and put them underneath’. Once this was done, it fit neatly into the car and the rest is history.

The IKEA concept is one of the most studied business cases of the century. It was born in 1965, when the largest IKEA store was opened in Stockholm. Nobody was expecting hundreds of people to be waiting to get into the store, so the managers decided to allow people to enter the warehouse and help themselves. That was the origin of IKEA's low prices: purchasing as inexpensively as possible and flat-packing furniture for customers to put together themselves. Then, this concept was subsequently exported to other countries.

Tags: Marketing strategy, International business strategy, International business management, Internationalization,

[...] But IKEA's biggest worries may be the many international and Chinese chains and companies that counterfeit IKEA products. More products are copied now (for example, BIKEA which sells exactly the same furniture as IKEA copying the catalogue) because more IKEA products are made in China and some of their suppliers also supply other furniture and home design companies. Conclusion In conclusion, the world's largest home-furnishing retailer, Sweden's IKEA has been expanding sales all over the world by availing of the national competitive advantage, especially in the increasingly wealthy China. [...]

[...] International marketing STRATEGY IKEA's Global Expansion Strategy was originally established in Sweden by Ingvar Kamprad. IKEA has grown rapidly in recent years to become one of the world's largest retailers of home furnishing. In its initial push to expand globally, IKEA largely ignored the retailing rule that international success involves tailoring product lines closely to national tastes and preferences. Instead, IKEA stuck with the vision, articulated by the founder Kamprad that the company should sell a basic product range that is "typically Swedish" wherever it ventures in the world. [...]

[...] - IKEA increased its turnover by 13% in 2004 to 12.8 billion. - The market for household furniture is forecasted to grow by from 2004 to 2009, to reach a value of 14.9 billion 26.8 billion). - Upholstered furniture is expected to be the largest sector, accounting for 37% of the market in 2009, reaching sales of 5.5 billion. Strategy Ikea’s commitment to low cost stems from its cultural origins has directed the concept and use of large sized stores. [...]