final presentation IKEA
- 1. International strategy, is a plan for a company when they see a high demand for their product in a different country, the business make an investment to sell their products in that country. although there may not be a high demand for the product, companies like ikea have realised that there are many furniture stores world wide that aren’t fulfilling their customers needs. People aren’t asking for ikea, however customers would prefer to shop at ikea as they meet all of the customers needs.
- 2. For the Financial Year of 2015 (FY15), IKEA’s total number of sales was €31.9 billion which was 11.2% higher than last year when they sales were €28.7 billion. IKEA also get a yearly turnover from IKEA restaurants, bistro, Swedish food market and co-worker restaurant. There are 9,500 products available to purchase from IKEA. IKEA had 771 millions store visits in Financial Year 2015 which was a 7.7% increase comparing to 2014. IKEA.COM had a 1.9 billion visits which is a huge increase of 21% comparing to 2014. IKEA employees a total number of 155,000 people who are called ‘co-workers’. The largest number of 107,400 employees work in Europe, 20,000 in America. Asia and Australia employs 15,200 co-workers and 12,400 works in IKEA in Russia.
- 3. Culture is a critical environment variable that international companies need to consider in entering and managing their foreign operations. Culture is the knowledge, beliefs, art, law, morals, customs and other capabilities of one group distinguishing it from other groups. International companies need to recognize the importance of culture in order to avoid major mistakes involving money and resources.
- 4. When trading in different countries, IKEA has too look at the cultural differences in order to meet customers’ tastes and preferences to be successful in the market. According to IKEA’s website in UK, it sells modern and simple furniture that are usually designed to look good and not necessarily store a lot things. In India, people have different taste they like furniture that look rich and they are more family orientated and they will need furniture of large capacity. In India people will be looking for furniture of light colours usually white as it reflects the sun and doesn’t make it feel even hotter. Whereas in UK, many houses have carpets on the floor as we don’t get such a hot temperature as it is in India. In the UK most of the furniture is flat packed in the box and customers can take it home and set it up themselves. However, in India people like to have things ready to use. There are many different people in the UK of different religion therefore, IKEA sells fabric materials as well as leather. However, in India cows are respected and treated as a symbol of earth therefore, people living there would not buy leather furniture.
- 5. Many Chinese view a trip to Ikea as a fun excursion to a furniture-filled park where they can sample exotic foods, such as Swedish meatballs, take selfies in mock-up apartments or take a nap in a cosy bed. At noon, the store's 700-seat cafeteria is full of customers eating Swedish meatballs, and Chinese cold spicy chicken. After that, many find a quiet part of the store to relax Ikea's first stores in China couldn't accommodate all-day shoppers. But realised if they build huge stores, , the crowds will come. Forty-five million visitors passed through Ikea's China locations last yeaAt the root of Ikea’s popularity is the retailer’s relaxed attitude towards allowing customers to fully test its products, in contrast to most Chinese furniture stores. Because most Chinese apartments have a balcony ikea in china has even created a house display with a balcony to adapt to the houses in china. Most furniture bought by Chinese people is very colour full, when visiting the ikea in china you will realise a difference in the way they have formatted their store, the demand in china is colourful furniture and that is what you will se from the moment you walk in, however in the UK that is not the case, which is why in the UK you enter into a simple showroom of living rooms with simple grey and black colours that wouldn’t put of the customers. Qatar There is one ikea store in Qatar, IT IS BASED in doha its doors where open march in 2013 Between august 2015 to july 2016 the store had 1.6 million vistors store is located in Doha Festival City Mall.
- 6. 12/08/16 Another name for this strategy is Localization. A multi domestic strategy is a strategy by which companies try to achieve maximum local responsiveness by customizing both their product offering and marketing strategy to match different national conditions. While sacrificing global effectiveness, this strategy is effective when there are clear differences among national and regional markets and low pressures for cost reduction. The pressure for local adaptation is high and the pressure to lower cost is low.
- 7. • By adapting localization customers are more likely to retain back in the business helping ikea to maintain a steady position in the national market. • By increasing operations in more than one country gives an output of high profits leading to business increasing in value and maintaining efficiency. • By opening stores in many location is a result of increasing the size of the business in terms sales, employees and value of business. • By trading in new markets the customer base for ikea increases rapidly over the time giving a positive image for the business.
- 8. • Expensive manufacturing costs and tariffs involved in the country. Overhead costs will be high.
- 9. 12/08/16 The firm as a Value Chain (Porter, 1985) This is the value chain created by Porter which is based on the process view of organsisation. In this case is IKEA, the purpose of this value chain is to look at the organisation as a system and made up as a subsystem in each inputs. Value creation activities can be categorized as primary activities and support activities. As seen in the slide, support activities provides the inputs that allow the primary activities of production and marketing to occur. Primary activities involves from creating the products or services, marketing and delivering the products to buyers. Also, Provide values to the product by supporting and after sale services to the buyers of the product.
- 10. 12/08/16 Information systems: Information system is a system that collect information about a new product or services which includes filter, process, create and distribute the design in order to move to the next stage of manufacture. Research and Development: The design of home furnishing products at IKEA starts with an understanding of people’s everyday needs at home (IKEA, 2016). IKEA focus on products that is sellable and right for IKEA identity. IKEA products are develop by IKEA of Sweden in Almhult. IKEA co-workers in product and development focus on price, quality, design and functions, environment and health. Also, most of IKEA operations of the stores, design and manufacturing of furniture is run by a trust called INGK holding, head-quartered in Delft, Holland. •Logistics: Logistics involves all types of activities required to collect, store and distribute the output (IFM, 2016).
- 11. 12/08/16 Production: IKEA have a large range of products that they have 12,000 different products and each stores carried a selection of these 12,000 depending on the store size (IKEA, 2016). They have the core range of products worldwide. IKEA purchases its products around the world according the products design. IKEA has more than 1,350 suppliers in 50 countries. All the products have the label ‘design & quality. IKEA of Sweden. The majority of products are from Europe (64%), Followed by Asia (33%) and North America (3%). Also, 22% of IKEA product range are made in China because it costs less and China have more trading areas. In order to produce safe quality products in China they carry out a product risk assessment test in the process of a product so it meets IKEA quality (IKEA, 2016).
- 12. 12/08/16 Marketing and sales: IKEA is a successful retailer because they focus more on price, they investigate their consumers income and understand the people with limited income. Therefore, they provide affordable price so everyone can buy from IKEA (IKEA, 2016). IKEA cut costs in shipping and labor because they have a culture of “pick it up in the store and put it together at home” means that they put the products on shelve straight from delivery. By doing this they are using space efficiently and using whatever metrics they have to make sure their goods are probably distributed to optimize sales. IKEA promotion includes TV adverts, sponsorship and magazine advertising. IKEA had a recent campaign the IKEA kitchen part advert “Be happy inside” to promote their new products. •HR: Human resources involves activities of hiring, trains, rewards and motivates. HR is based people as a source of value so that business can create a good HR practices. Customer services: IKEA customer services is straightforward that the consumers can buy the product from anywhere including online through their webistes and apps. IKEA have 3 types of delivery so its convenient for consumers. They have the store delivery, customers can buy the products physically, online delivery that they can order online and it will be delivered to their home. Picking with delivery consumers make a list of what they want to buy in the store and the staff will collect it for them (IKEA, 2016).They provide product guarantee for each products so that consumers can return with the valid reason. IKEA provide fixing and adjusting service that they go to consumers house to place it anywhere they like.consumers can track their orders so they can feel relaxed and confident with IKEA.