Docstoc

The Internationalisation of IKEA

Document Sample
The Internationalisation of IKEA Powered By Docstoc
					The Internationalisation of IKEA
Kim Houston Catherine Blair Laura Carson Mary McNicholl

Introduction to Ikea


Founded in 1943 The Ikea logo is blue and yellow due to its heritage The Swedish lifestyle is reflected in the Ikea product range





The Ikea Concept is:


“Its to create a better everyday life for many people.We shall achieve this through the business idea, which is to offer a wide range of well-designed, functional home furnishing products at prices so low, that as many people as possible will be able to afford them”

...


Ikea asks customers to work as a partner So that together Ikea can create a better life for everyone.



...


The Ikea group has 154 stores in 22 countries Last year a total of 268million people visited the Ikea groups stores worldwide.



Operating Strategy:




 



Ikea does not have its own manufacturing facilities uses sub-contracted manufacturers all over the world Ikea shoppers are „pro-sumers‟ Customers have to assemble products themselves Ikea provides catalogues, tape measures, shopping lists, pencils.

How the Ikea Group Works




Work at Ikea is organized to match the needs of the customers to the potential of the suppliers in the best possible way. Ikea co-workers all over the world contribute

Group Support Functions:








Finance and Treasury PR & Communications Social & Environmental Affairs Property




 



Risk Management Legal Affairs Human Resources Retail Development Logistics

Ikea‟s Culture:


Ingvar Kamprad believes:


“Most things still remain to be done - a glorious future! Time is your most important asset!”



Ikea is built upon this philosophy all the way from the design teams to suppliers and the customer

Ikea‟s Culture Continued


 



The aim of Ikea is to eliminate excessive levels of management with a very flat organization. Bureaucracy is fought at all levels Kamprad believes that “Simplicity and common sense should characterize planning and strategic direction” Culture emphasizes efficiency and low cost

Why Leave the Domestic Market?


 

 

Reactive or Proactive approach to internationalization? Ikea demonstrates a proactive approach “The importance of their own opportunities available to them in other markets to exploit those opportunities rather than the negative factors which existed in their own markets” (Alexander, 1997) Ikea‟s first store opened in Sweden in 1953 Ikea‟s second store opened in Oslo, Norway in 1963

Where is IKEA?
          



Australia –5 Austria – 5 Belgium – 4 Canada – 11 China – 2 Czech Republic – 3 Denmark – 4 Italy – 8 Netherlands – 10 Norway – 5 Poland – 7 Russia 2

         

Slovakia – 1 Spain –5 Finland – 2 France –13 Germany – 31 Hungary – 2 Sweden – 13 Switzerland – 6 UK – 11 USA - 16

IKEA‟S Policy


Conservative Policy Establish supplier links before opening Strategic risk reducing approach





Format



 



The organisation allowed rapid growth Expansion group Construction group Initially – had a very flat management style Open management characterises Ikea

How?


Fully Owned Subsidiaries Stable markets which are deemed identical to the home market  Set up by expansion team  This is used in Europe and N America


Franchising



 

 

Unknown, high risk markets Expansion group is involved Carries basic items They are compared to overall corporate performance Fees are paid to IKEA Able to maintain centralised control

Time Line
         



1958 – Almhult 1963 – Norway 1965 – Stockholm 1969 – Denmark 1973 – Zurich – Switzerland 1974 – Munich – Germany 1975 – Australia 1976 – Canada 1977 – Austria 1979 – Netherlands 1981 - France

     

  

1984 – Belgium 1985 – USA 1987 – UK 1989 – Italy 1990 – Hungary + Poland 1991 – Czech Republic + United Arab Emirates 1996 – Spain 1998 – China 2000 - Russia

Switzerland






This was their first store outside Sweden Ignored the fact that furniture here was of traditional design Attracted 650,000 visitors in first year

Germany Oct ‟74 - 2003



 

 

Constituted the largest market for furniture Large store in Zurich 1974 opened near Munich IKEA differentiated themselves by offering immediate delivery 37,000 visitors in first 3 days Legal proceedings against IKEA

...


Began to be acknowledged 10 new stores in the next 5 years 50% share in the cash and carry segment





Canada March ‟76 - 2003






In 1979 bought a problem franchise in Canada He turned it into a lucrative business within three years Continued to grow within Canada

America June ‟85 - 2003





 

Had enormous potential Imitators appeared e.g. Stor Management decided to accelerate its expansion plans 1990 – began to struggle Now going from success to success

Management Change







In 1986 appointed Andres Moberg as president Before this the company had been managed informally Impacted on management style Formal budget and planning process

Corporate Plan




Was developed for three years Aims: Finding low priced materials  Matching products to capabilities  Developing long term relationships with suppliers


Continued…


Combination of low cost standardisation, technology and quality IKEA Rail 2001 The catalogue is now produced in 34 languages





Further Expansion







1987 – entered the UK 1989 – entered Italy Plans to build a presence in Russia and East Europe 1st East Europe outlet was in BudapestJoint Venture

Further Expansion continued






1988 – Ikea Poland built a $25M warehouse and retail centre Established a joint venture with a woodworking factory Office in Vienna coordinated the activities in Eastern Europe

Facts and Figures


The turnover for the year 1/09/2001 – 31/08/2002 was 12bn Euro Turnover per region –
  



Middle East, Australia, Asia – 4% North America – 19% Europe – 77%

Top Five Sales Countries
25
Percentage of sales

  

20 15 10 5 0 Country

 

Germany UK USA France Sweden

Future


     

Japan has been announced as the next venture Want to open two stores in Tokyo Focus on the US is on existing markets New stores and relocations New distribution centres Somerville No plans for Ireland at the moment

Conclusion
 





Ikea at first did not recognise the need to adapt to culture Needed to decide how far they could push their common concept in other countries Ikea does not manufacture its own products but works with a complex network of suppliers Success is based on the idea of keeping the cost between manufacturers and consumers down


				
DOCUMENT INFO
Shared By:
Categories:
Tags:
Stats:
views:357
posted:11/9/2009
language:English
pages:31