IKEA is a multinational furniture retailer headquartered in the Netherlands. It was founded in 1943 in Sweden and has grown significantly over the years. IKEA focuses on affordable furniture and home accessories for middle-class customers around the world. It utilizes various strategies like cost leadership, differentiation, and transnational strategies to maintain growth and competitiveness across its global markets. IKEA sources products from over 1,300 suppliers in 53 countries to keep costs low and meet demand across Europe, North America, and other regions.

1. By
Rahul Karangutkar (0951826)
Parag Jain ()
Atoosa Zand (0)
Trung
Seun Fayemiwo (0)
Amanda (0)

2. Outline
 Introduction
 Vision And Mission
 Growth
 Geographical Scope
 Strategy
 Attractiveness Of Market
 Strategic Competencies
 Strategy

3. Introduction
 Ingvar Kamprad Elmtaryd Agunnaryd
 Founded: 1943 in Almhult, Smaland, Sweden
 Founder: Ingvar Kamprad
 Headquarters: The Netherlands
 Parent Company: INGKA Holding
 Industry: Retail
 Product: Self Assembly Furniture
 Chain of Product: Restaurant, Manufacturing, Housing,
 Revenue: €23.1billion (2009)
 Employees: 127,000 (2009)
 Area Served: Multinational
 316 stores (2010)
 699million visitors (2010)

4. IKEA
 Vision:
 Mission Statement: Ikea's mission is to offer a wide range of home furnishing items of
good design and function, excellent quality and durability, at prices so low that the
majority of people can afford to buy them
 Growth
0
5
10
15
20
25
TURNOVER € BILLION
TURNOVER €
BILLION
Source: Ikea, 2010

5. Growth Pattern
 Started 1943 as a one man
mail order company
 The Ikea concept started
in 1950
 The company started
sourcing supplies from
other European countries
 In 1960, the warehouse
principle was introduced
 In 1963, Ikea went
abroad, opening in
Norway
0
50
100
150
200
250
300
350
1954
20…
20…
2007
208
20…
2010
No of IKEA retail
outlet
No of
IKEA
retail
outlet

6. Geographical Scope
SALES BY REGION
Europe – 81%, North America -16% and Asia & Australia -3%
TOP SUPPLIER COUNTRIES
China -18%, Poland- 12%, Sweden -9%, Italy -7% and Germany -6%

7. Supply Chain (IKEA)
Source: Thetimes100.co.uk, 2010

8. Business Strategy
 Segmentation
 Middle-class population, All age group.
 Advanced Economies – Europe, USA, Australia
 Emerging Markets – China
 Positioning
 Cost Leadership
 Differentiation

9. Business Strategy
Competitive
Advantage
Economies of
Scale:
Standardisation
Economies of
scope:
Furniture and
Restaurant
Share facilities
Economic
Design
Logistics
Network of
Supply: 1300
suppliers in 53
Countries
Large
Warehouse
Showroom in
Sub-Urban
centres
Customers
included in the
value
chain, minimu
m staff
Strength of
brand name
Distinctiveness
in Design
Diversity in
Assortment

10. Value chain of IKEA
Purchasing
Range
Stores
DISTRIBUTION
SUPPLIERS CUSTOMERS

11. Resource Based View (IKEA )
PHYSICALASSETS OWN 313 STORES WOLDWIDE AND ARE USUALLY LOCATED
OUTSIDE THE TOWN
37 STORES THAT ARE FRANCHISED
38 COUNTRIES
WORLD LARGEST FURNITURE RETAILER
FINANCIALASSETS PROMOTION AND ADVERTISING
SOURCE FROM FRANCHISE
EXPERIENCED A 15% SALES INCREASE BETWEEN 1990-2005
2005 THEY MADE 14.8 BILLION EURO
2010 THEY EXTIMATED $23 BILLION
INTELLECTUAL
RESOURCE
GOOD RELATIONSHIP WITH GOVERNMENT
SKILLED STAFFS
UNIQUE FURNITURE STYLING
OPERATE 24 HOURS DAILY
GOOD RELATIONSHIP WITH SUPPLIERS
BUILDING STRUCTUER

12. Resource Based View
REPUTION RESOURCE BRAND NAME
FRANCHISING
$128 MILLION FOR UNICEF IN 2015
WELL KNOWN IN EUROPE ASIAAND AMERICA
HUMAN RESOURCE 127,000 STAFFS
SKILLED EMPLOYEE’S IN STORE’S AND WOOD’S
GOOD TRANSPORT SYSTEM
EXPERT DESIGNERS
GOOD CUSTOMER SERVICE
OVER 12,000 ITEMS PRESENT IN THE WEB
MOTIVATION OF EMPLOYEES (REWARD SYSTEM)
RELATIONAL
RESOURCE
28 DISTRIBUTION CENTER
GOOD INTERNET ACCESS
NETWORKING SYSYTEM
550 MILLION PEOPLE USING THEIR WEBSITE EVERY
YEAR
GOOD TRANSPORT SYSTEM

13. INTERNATIONAL BUSINESS STRATEGY (SMM 206) PRESENTATION
PORTER’S DIAMOND MODEL: IKEA
DEMAND
CONDITIONS
FACTOR
CONDITIONS
FIRM
STRATEGY, STRU
CTURE &
RIVALRY
SUPPORTING
INDUSTRIES
(Porter, 1990)
• Low cost  low price strategy
• Low bureaucracy
• Rivalries:
 British “B&Q”
Germany
• Population: 1.3 billion
•The raising of Middle class
• Cheap furniture demand
•Labour force: low cost
•Infrastructure:
poor => good
•Government policy
• Suppliers
• Technology

14. Transnational Strategy
 Pressure for global Integration
 Standardising whenever possible
 90% of product line is similar across in more than
12 countries
 IKEA’s marketing is centrally developed at
headquarters
 Pressure for local responsiveness
 Adapting when necessary
 Modification of its furniture to suit individual
countries e.g longer hangers in Italy and deeper
wardrobes in USA
 Implementation of local adjustments in
marketing to suit language and catalogue.

15. Comparative Advantage
 Supply from China
 Low cost labour
 Labour skill
 Raw material accessibility
 Sales in EU, North America
 Very Large middle class group

16. Conclusion
 Since IKEA’s target consumers are the middle-
class, they should extend their retail services to
Emerging Market Economies where Middle class
population is rapidly increasing.
 IKEA should increase sourcing its supply from
emerging markets, which are characterised by low
cost labour to sustain its competitive advantage.

17. REFERENCES
 Baraldi, E.(2008) “Strategy in Industrial Networks:
Experiences from Ikea” Carlifonia Management
Review, 50(4), 99 – 126.
 Beard, B. (2006) “IKEA facing competition on
furniture row” Arizona Business Gazettes, available
online at:
http://www.azcentral.com/abgnews/articles/0824abg
-tr-emerald0824.html , accessed 01/12/2010
 Boscor, D., and Bratucu, G. (2009). “Transnational
strategies adopted by furniture manufactures- case
study:IKEA” ProLigno, 5(3): 55 – 61.
 Datamonitor (2008). “Ikea Group”

18. Thank You !