Free Managing Global Competitive Dynamics: IKEA Essay Example

IKEA a Swedish company started its business in the year 1963 by opening its first store in Norway. Company started business expansion in global market by opening its retail stores in Denmark, Switzerland, America, Australia, Canada, Netherland, Austria, China and various other countries across the world. The company expended in different international markets by adopting dodger strategy and different entry models such as franchising, joint venture, acquisition depending upon the local laws of the target markets.
IKEA is well known for its stylish, innovative, and cost effective home furnishing products. The barriers for entering into new markets are low, but the markets have high intensity of local rivalry and presence of large retailers. Local rivals copy the concepts of IKEA and sell it to the consumers. In America, Ikea faces tuff competition from Wal-Mart, Minialista & Pottery Barn. In UK Tesco and Next are the major competitors of Ikea. IKEA differentiates its offering by providing quality trendy products at lower prices.
Standardization of products and close dealing with manufactures enables company to effectively serve to the customers. The Company in twelve countries has ninety percent similar product lines. Company does not sub-contract its designing job. All designers at IKEA work closely with the customers in order to understand their needs. IKEA tries to differentiate its offering by understanding local cultural, economic, political and geographical factors, and modifying products according to the local requirements. For example American prefers deeper wardrobes, and Italian prefers Long hangers. Company modifies it marketing strategy according to the local language, values and preference.
Major factors behind success of IKEA are economy of scale, standardization of products wherever possible, cost-leadership by close working with manufacturers & suppliers, and stylish quality products that are suitable for requirements local customers in global markets.