IKEA'S GLOBAL STRATEGY:

06级国贸２班第一小组：陈江，陈照佳，蔡纯，蔡欢然，张振辉

FURNISHING THE WORLD

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06级国贸 1班第一小组：陈江，陈照佳，蔡纯，蔡欢然，张振辉

Our questions:

1） What are IKEA's firm‑specific advantages? Country‑specific advantages?

2）.What are the cultural factors which make expansion abroad in retailing difficult? What has made it possible in IKEA's case?

3） Describe how IKEA'S expansion has re-energized mature markets around the world and changed the competitive situation.

4） How does the TV advertising campaign initiated by IKEA overcome the entry barrier of high advertising expenditures?

5）Should IKEA expand further in the United States or focus on other countries?

ⅰ. firm-specific advantages and Country - specific advantages

1.IKEA sells the same furniture all over the world, so IKEA rips huge economies of scale from the size of its stores and the big production runs necessary to stock them.

2.IKEA also offers a low competitive price because of the economies of scale (30% lower than competitors)

3.Exclusive relationship between IKEA and its suppliers, offering modern and exclusive designs for IKEA. Designers also work closely with suppliers, keeping the costs low.

4.Ready-to-assemble kits help to stack products in shelves in order to maintain larger inventories.

ⅰ. firm-specific advantages and Country - specific advantages

4.The cash and carry shopping formula; you can go to the rack directly to collect the product and go home to build it by yourself.

5.Successful use of the word of mouth and the use of catalogues in order to reduce the advertising costs.

6.IKEA has simple and plain staff levels, lowering the fixed costs and giving more freedom to its employees. This management structure also helps making decisions in a faster way.

ⅱ the cultural factors which make expansion abroad in retailing difficult

Retailing expansions can be difficult, because of cultural differences in the global market.. There are many factors to consider when expanding into a new area or culture, because culture can have a great impact on merchandising, promotion of products,and cross-over

of store brands and brand images.To make it possible to take part of th

e market share, IKEA take some measures in management.

1, Product Positioning IKEA aimed to build up a polular-oriented company that any common civilian could afford the products.They combine practicality with beauty, reducing the cost of the products. What’s more, the fascinating different styles ,particularly that mixed with the local cuture, are one of the most significant reason that led to success.

2 Cuting The CostLow prices on the idea of product design has always been. The procedure of the design will always stick to the idea of low price.And the innovation and closely cooperation with OEM manufacturer are always contributing to cutting the cost

ⅲhow IKEA'S expansion has re-energized mature markets around the world and changed the competitive situation.

Why IKEA can maintain their advantage at the global stage ? there are 5 key reasons in it. Firstly, IKEA perform the strategy in the globalization of the production and the market, which made it get more raw materials and customers to enhance their market competitiveness. Secondly, IKEA not only sells the furnishings, but also the life style. Due to the comfortable environment, IKEA attracts more and more people. Thirdly, IKEA designs the beautiful products which the ordinary customers can afford to. Also, IKEA puts design philosophy on ‘whose design lower cost at the same price of the products. Fourthly, IKEA is welcomed to many people by its popular Nordic design style. Fifthly, IKEA adjust its products depending on the local place so that it could adapt to the local customers, in this way, it has a strong adaptive. Through these strategies, IKEA has become more and more powerful in the global stage.

ⅳ How does the TV advertising campaign initiated by IKEA overcome the entry barrier of high advertising expenditures?

TV ads are still affecting the furniture industry. However, with the market environment changes, the amount of information explosion, consumer demand for personalized, a single ad has been running no longer be able to bring about the desired results, We also need other through different

media (such as newspapers, magazines, web, DM) and consumer multi-level communication with the ground, as well as the marketing activities of the match. More importantly, enterprises should be able to find their own channels of communication with consumers. Ikea ads do not occasionally appear in the media, but more like in order to strengthen the relation

ship between the media and public relations media. Ikea brand communication has been going its own way, including its personality full of fine print catalog. IKEA in communication with the consumer, more reliance on the "Guide to good home" .Catalog has been the main means of marketing. IKEA every year in various parts of the distribution of a large number of customers free of charge to the fine print catalog, in China a year to distribute as many as 2,000,000, this figure is alarming, it's even more than the number issued a number of brand-name busin

ess magazines.

How does the TV advertising campaign initiated by IKEA overcome the entry barrier of high advertising expenditures?

The DM as a high-end advertising, Effective market reach, it can ensure 100 percent, no one will be the exquisite "album art" turn a blind eye. Many of the family decoration is almost an IKEA catalog of staff, Although the cost of a one-time expenditure of a great, but compared to television and other traditional media advertising, in the long run, they save more. Due to the effective reach and frequency of exposure to uncertainty, advertisers began to look increasingly to television advertising on other media, this time of the DM started out the ads. Refined version of the DM100% to reach an effective rate of 100% of the effective exposure frequency, so that advertisers no reason not to treat each other as the other eye, as the goal of IKEA's customers is limited, of course, it is willing to pay high advertising DM spread the cost.

Thinking

Should IKEA expand further in the United States or focus on other countries?

IKEA should not qiut the market of United States, however, it should pay the more attenion to other countries, especially China. There are some points that I don’t think IKEA should focus their strengh on America.First, now America is serious affected by the Subprime Mortgage Crisis. Its market may shrink in the later years. What’s more, its market is nearly saturate.Second, Amercia is one of the coutries which its labor cost is most expensive in the world. It will increase IKEA’s cost.Third, if IKEA want to develop itself, it should find another taget market where he can stretch its body.

ThinkingShould IKEA expand further in the United States or focus on other countries?

Contrary to the circustance in America, there are some advantages to IKEA if it expands its market in China.

Firstly, China is slightly influented by the Subprime Mortgage Crisis. With the nearly vacuum market, there is a large space for IKEA to step in.Secondly, with the low-price labor, IKEA can lower its cost.Thirdly, Chinese policitis and lows are now being perfected day by day, and its market or the nation is more and more opened. All of this give IKEA a good circumstance to expand its market in China.

According the points that mentioned above, I have a firm belif that if IKEA concentrate a little more efforts on occupying Chinese market, it will receive the considerable reward.

06 级国贸２班第一小组：

陈江：第二题 3106004359

陈照佳：第五题 3106004360

蔡纯：第一题， ppt 制作 3206004380

蔡欢然：第四题 3206004381

张振辉：第三题 3106004378

Thank you for watching!!