IKEA Invades America Case Solution And Analysis, HBR Case Study Solution & Analysis of Harvard Case Studies

IKEA Invades America

SOLUTION NO.1

Introduction and Key Success Factors

IKEA was established in 1943 by a poor farmer, Ingvar Kamprad with an aim to offer high-quality furniture products at affordable rates for customers. IKEA achieved an enormous amount of success in Sweden with the implementation of an effective strategy planning. It had also benefited the company at global level; however, it benefitted US to a great extent. Due to high competitive pressure, IKEA designed its own furniture for customers so as to gain competitive advantage. They effectively implemented the marketing strategy to gain competitive advantage in the market. They utilized the core concept of 4P’s of marketing efficiently while promoting and advertising the products in the market. Successful marketing and promotion activities participated a lot to strengthen their customer base and market share. IKEA successfully implemented product development strategy globally including America in to their business and increased their product portfolio in an efficient way as per their customers’ demands. Other factors that also contributed to the organizations success was an effective pricing strategy. IKEA targeted the customers geographically via market segmentation at global level. They increased their stores rapidly in the market at different locations.

The company’s focus on global expansion was tremendous; as a result they had launched 154 stores in 22 different countries and had 286 million customers annually. IKEA’s sales also increased rapidly and reached a figure of $12 billion. The IKEA participation of employees in the success of the business was quite noticeable; they had 70,000 employees, who belonged to multi-cultural environment. Multi-cultural working environment brought unique ideas from the employees, which brought immense benefits to the company. Research and Development activities in IKEA had identified that American people have a unique taste and buying behavior in the furniture industry, and that was missing in the products of IKEA furniture products. Afterwards, they understood the needs and demands of American customers and practiced all these shortcomings that customers were facing in order to achieve success in the furniture industry and establish itself as the world’s top furniture retailer.

SOLUTION NO.2

LONG TERM STRATEGY OF IKEA

IKEA’s long-term strategy was to expand at global level including United States. The main objective of IKEA was to open 50 stores in America by 2013. They adopted niche marketing style, but it did not relate with customers tastes and buying preferences. IKEA does not want to become a general furniture supplier as their objective is to achieve long-term success in the furniture industry. This was the reason why they were always eager to implemented a strategy that supported to keep them competitive in the furniture industry in the long run.

Long-term strategy of IKEA was to further strengthen their customer base and market share that should be based on these factors:

Identification of Need
Product Development
Market Development
Market Segmentation
Customer Oriented Approach

Identification of need

While designing the long term strategy, identification of need is one of the vital features that contributes in the success of the business. IKEA should identify the need for customers in home furnishing purpose. The better they identify the needs; the more customers will be added in their business.

Product Development

As IKEA has already done a tremendous job in their product development function therefore, they should remain focused on that strategy in the long run to gain competitive advantage in the industry. They should focus on quality standards in home furnishing and they should also consider latest trends in the business because customers usually prefer to use the latest products that are common in the market.

Market Development and Market Segmentation

IKEA should consider global expansion in their business and they should identify key markets in the furniture industry. In order to remain world’s top furniture retailer, IKEA should also segment their market in an efficient manner. For instance, IKEA should design their products as per the customer’s buying power and ......................

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In 2002, the IKEA Group is the top retailer of furniture in the world, with 154 stores worldwide. In the United States, IKEA operates 14 stores that were extremely popular, despite the self-service requirements. The company's goal is to have 50 stores in operation in the United States in 2013. Various options control this growth strategy. "Hide
on Youngme Moon Source: HBS Premier Case Collection 13 pages. Publication Date: April 27, 2004. Prod. #: 504094-PDF-ENG