IKEA: Managing Global Expansion

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The IKEA business idea is to offer a wide range of home furnishings with good design and function at prices so low that as many people as possible will be able to afford them. And still have money left! Most of the time, beautifully designed home furnishings are created for a small part of the population - the few who can afford them. From the beginning, IKEA has taken a different path. We have decided to side with the many.

- IKEA Website¹.

Introduction

In 2002, IKEA was one of the leading furniture retailers in the world. IKEA offered a range of items - furniture, cookware, tableware, kitchen utensils, gadgets, textiles, bedding, cushions, shower curtains and paint. It had more than 160 stores spread over 30 countries. IKEA had emerged as a global player in one of the most highly fragmented industries in the world. In 2002, Interbrand ranked Ikea 44 on its list of the top 100 global brands, ahead of Pepsi and Harley Davidson. IKEA's success, to a great extent, had been shaped by founder Ingvar Kamprad. His strong belief that people would buy more furniture if the price was low enough, quality good and there were no delays in delivery, had gradually revolutionized the conservative national furniture markets first in Europe and then in other parts of the world.

IKEA's business formula had been built around high-quality, Scandinavian design, global sourcing of components and knock-down furniture kits that customers transported and assembled themselves. IKEA's cost leadership strategy had enabled it to pass on to customers lower prices, anywhere from 25% to 50% below those of its competitors...

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1] www.ikea.com

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