Case AnalysisJacob Babcock

Jared KohnNick McCarthyMike Russell

IKEA Background

Ingvar Kamprad-1943-Sweden

Top retailer of furniture, home furnishings, & house wares

Standardized product strategy

Cost leadership secured by contract manufacturers

Main Issue

As IKEA grows, how do they continue to expand internationally and spread the IKEA concept to as many consumers as possible with the main focus on success in America?

IKEA SWOT

STRENGTHS WEAKNESSES

Brand Recognition

Marketing Strategy

Stylish products at mass market pricing

Value-added services- installment, daycare,

restaurants, etc.

Privately owned (restricts capital)

Stores require expansive locations

Standardized products

IKEA SWOT

OPPORTUNITIES THREATS

International expansion

Introduce smaller stores

Product adaptation (acculturation-Ch. 3)

Expanded environmental involvement

Competition (direct & indirect)

Global regulatory environments

- Affects product costs, shipping prices, etc.

IKEA Alternative Solutions

Product adaptation- Develop products to meet market/cultural

demands

Introduction of smaller retail outlets- Opportunities for franchising

Continued focus on GreenTech practices

Costs10%

Sustainability40%

Impact on customer

perception30%

Risk20%

Total100%

Product Adaptation 2(.2) 5(2) 5(1.5) 3(.6) 4.3

Smaller Outlets 3(.3) 3(1.2) 4(1.2) 3(.6) 3.3

Green Movement 3(.3) 4(1.6) 4(1.2) 5(1.0) 4.1

Analysis of Alternatives

Scale 1-5

Standardization vs. Adaptation

FACTORS ENCOURAGING STANDARDIZATION

FACTORS ENCOURAGING ADAPTATION

Economies of scale in production

Economies in marketing

Global competition

Differing use conditions

Government & regulatory influences

Differing consumer behavior patterns

Local competition True to marketing

concept

Adapted from exhibit 10.2

Recommended Solution

Product Adaptation- Focus on developing products that

specifically target the market/culture they are sold in

Implementation

Conduct foreign market opportunity analysis