International Management Bermet Kanybekova 20113658 Assignment 5: IKEA 1. What has allowed IKEA to be successful with a relatively standardized product and product line in a business with strong cultural influence? Did adaptations to this strategy in the North American market constitute a defeat to their approach? IKEA has become the world’s largest home furnishing retail chain with its international expansion in three major phases. Its mission is to offer a wide variety, good design and value for “young people of all ages”.
IKEA is determined to maintain a standardized product strategy with a universally accepted assortment around the world, now carrying a variety of different home furnishings. It has limited number of manufacturing, however, designs all of its furniture. IKEA’s cost leadership strategy through high volume production and standardized items enabled it to sustain its business. Consumers are expected to become “prosumers”, in the meaning of half producers and half consumers, thus supplying their time for assembling work after their purchases.
Consequently, IKEA’s success is due to its customer focused strategy. The principal market target is composed of “people, who are young, highly educated, liberal in their cultural values, white-collar workers, and not especially concerned with status symbol”. Therefore, consumers with low status concern and low conservatism enabled IKEA’s success in strong cultural influences. Moreover, high income groups have fewer cross-cultural differences and more open to adapt values to new beliefs.
As a result, with their right consumer target, IKEA was able to succeed with their relatively standardized product line. North American market proved that standardization is not a key to success in an American market; therefore adaptions have been made that clearly changed IKEA’s strategy. IKEA with its standardized market changed to a global market strategy and implemented new ideas that fit American taste in their market. Adjustments were made to their furniture that created and targeted more American consumers.
Moreover, some adaptions might have been transferable to other targeted markets around the world. Consequently, the North American experience has caused IKEA to blend in their ideas and start remixing its formula elsewhere. For instance, these changes were implemented to the European market, changing furnishing concepts such as making sofa beds in Europe. 2. Which features of the “young people of all ages” are universal and can be exploited by a global/regional strategy? The “young people of all ages” share similar features internationally that enabled IKEA to maintain its target universally.
However, not all of the targeted features were shared among various cultures. Hence, there were some adaptations according to various cultures and the relative importance of these features varied between countries and their consumers. Nonetheless, the majority of the targeted consumers liked to perceive themselves as practical, modern and non-traditional. In other words, these consumers didn’t stick to the traditional way of furniture, instead saw IKEA’s designs as good, modern and practical that allowed them to afford their products.
In this sense, simplicity and practicality was more important than traditional styles of furniture. With this concept, IKEA was able to specifically target those consumers who vied their products as fitting their taste with different features. Therefore, this concept with being practical and simple instead of traditional is an example of universal feature that can be further developed. IKEA’s targeted market like shopping for good value; therefore, they are ready to contribute their time and energy to get satisfaction out of assembling their work.
Consequently, this willingness to contribute more and achieve better value is another feature that is shared among IKEA’s universal target. These new changes in IKEA’s strategic plan have brought it to a new level of international business with better customer satisfaction and greater value. 3. Is IKEA destined to succeed everywhere it cares to establish itself? Is IKEA destined to succeed depends on how flexible its concept is in various countries. However, I believe that IKEA will not succeed everywhere it establishes itself.
The concept of IKEA can slightly be changed and adapted according to various cultures, but I strongly believe that certain changes cannot be implemented fully. This changing concept will have limitations when it is further taken globally and need to meet the standards universally according to various economies of countries. For instance, value of a certain sofa in a certain country is totally different in another country. If we take a sofa in America for $300, the same product must be sold at a lower price in a developing country due to its value differences in their economy.
Therefore, not all of IKEA’s concepts can be fully changed if they want to maintain its original formula. Moreover, customer expectations are different in various countries, thus, IKEA would have to consider new changes and flexibility in their concept to meet customer expectations and their value for products offered. In conclusion, I would like to point out that there is always a limit in adapting and changing concepts to meet various customer values and their desires to create profitable sustainability.