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IKEA‘s global strategy
Features of Global marketing
Challenges for international marketing
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Recommended: IKEA‘s global strategy
For most ambitious companies in today's complex business environment, gaining competitive advantage and achieving expansion in capacity often requires internationalising operations and entering new markets with the goal of building a broader and more diversified customer base. However, internationalisation typically presents the problem of how to establish the company’s business or brand in a foreign market, considering the cultural and contextual differences in global markets (De Mooij, 1998). Due to the spread of globalisation and the convergence of markets and economies, it has been increasingly acknowledged that a broad range of products and services can potentially have a global appeal and generate considerable revenues across the world. As long as the marketing activities designed to promote products and services are tailored to suit respective markets in line with the prevailing cultural and environmental realities, there is every possibility of achieving commercial success (Kandampully and Duddy, 1999). Accordingly, global marketing requires a flexible framework or structure that enables companies to respond dynamically to observed differences in the respective markets in which they do business (Philip et al., 1994). This makes it possible to organize, plan, and control global marketing activities effectively and efficiently (Keegan, 1989). This report therefore focuses on the marketing activities of the furniture market, specifically on two leading international furniture manufacturing and retailing companies: IKEA and Ashley Furniture Industries, with a view to establishing the kinds of marketing activities they have adopted to establish their presence in specific countries.
IKEA in Russia
As the largest furniture r...
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Tarnovskaya, V., Elg, U. and Burt, S. (2005) The Role of Corporate Branding in a Market Driving Strategy, Working Paper Series, Lund, Sweden: Lund Institute of Economic Research.
Thomas White (2011), "Global Players: Ingvar Kamprad, Founder and Senior Advisor, IKEA", Chicago, Illinois: Thomas White International Ltd.
Usunier, J.C. (2000) Marketing Across Cultures, 3rd edition, New York: Prentice Hall.
Sarkar, A. N., & Singh, J. (2005). New paradigm in evolving brand management strategy. Journal of Management Research, 5(2), 80-90. Retrieved from http://search.proquest.com/docview/237238894?accountid=28644
Globalisation is having a significant impact on marketing. This is because a business, by distributing itself across international borders makes its product more readily available to international customers and creates employment opportunities in the country it has moved to. To understand the impacts, globalisation, marketing (particularly market segmentation), global marketing strategies and general history of Qantas need to be examined.
A brand is utilized by a company to differentiate its products from others in the market. Some techniques for accomplishing this are through the use of distinguishing logos, names, color schemes, and slogans. An effective branding strategy is one of the most important components for gaining a significant advantage in a progressive market. Basically, a company brand is its promise to its customers about what can be expected from its product and how it differentiates from the competitors. The branding strategy is the part of the marketing plan that explains how and to whom the company proposes on conveying its brand messages. It will also explain where the company plans to advertise and what it will publicize both visually and verbally (Williams, 2013). Home Depot’s marketing plan will contain domestic and global branding strategies and will be a collaboration of brand messages from both Home Depot and Reach the Top®.
Each country has its own culture, with subcultures inside the dominant culture (Schaefer, 2009, p.69). “Culture is the totality of learned, socially transmitted custom, knowledge, material objects, and behavior” (Schaefer, 2009, p.57). Values, artifacts, and ideas are also part of culture (p57). With globalization there is the integration of these cultural aspects, as well as language, social movements, and ideas throughout the world (Schaefer, 2009, p.20). Internationalization helps with this integration. Internationalization is the process of planning and implementing products and services so that they can easily be adapted to specific local languages and cultures (Linfo, 2006). Numerous American retail firms have expanded to other countries. Many have been quite successful due to their internationalization. However, failure to study the culture, retail practices, and consumer market of the country they intend to expand to can be quite costly. Although Home Depot is one of the world’s largest home improvement stores, their expansion to Chile cost them enormous financial loss, resulting in their divestment (Bianchi & Ostale, 2006, section 1, para3). This paper will look at successful international expansion of Home Depot stores, analyze what mistakes were made in Chile, and make suggestions of what could have been done differently.
The sources of IKEA’s successful entry into the furniture retail business were IKEA’s low prices and resilience. First, Ingvar Kamprad, the founder of IKEA, began selling furniture in his mail order company. Then he was faced with a social problem and turned it into a business opportunity. Since 1935, furniture prices rose faster than any other retail good at 41%. Kamprad responded by creating a line of furniture priced so that all could afford it. The present furniture cartel attempted to stifle Kamprad’s growth and success. The cartel banned Kamprad from selling directly to the consumer at shows, then managed to persuade the manufacturing cartel to stop supplying Kamprad with furniture. Kamprad responded by supplying elsewhere and now could charge even lower prices. IKEA’s success was due largely to low prices and Kamprad’s ability to capitalize on bad situations.
IKEA has a slightly different organizational structure compared to other large worldwide company. Ingvar Kamprad founded IKEA in Sweden in 1943 when he was 17 years old. The company vision is ‘To create a better everyday life for the many people’ (Inter-IKEA Systems B.V., 2014). Truly, IKEA has provided many home furniture that at acceptable price for the consumers. Besides, The IKEA group of companies has an ownership structure that ensures independence and keep the long- term sustainability for the business. The IKEA group includes the INGKA Holding B.V. is still a privately held company, both parties were owned by the Stichting INGKA Foundation (Inter-IKEA Systems B.V., 2014). The Stichting INGKA Foundation can only use their funding either to donate to charity through the foundation or to reinvest int...
Another example of IKEA’s international strategy in building good relationships with suppliers is in Asia, especially in Vietnam, where IKEA expanded its own supply base. Vietnam manufacturers offers low cost labor force and not expensive raw materials, while IKEA provides the view of creating a long-term, high-volume business relationship, and advice on finding the best according to the price raw materials, setting up and bulding factories, choosing what machines, equipments
IKEA is more than a furniture store they are a company driven by values (IKEA, 2014). The company seeks to make their consumers lives easier by providing them with modern, innovative, inexpensive products which they use to tackle daily home activities. IKEA Group has 298 stores in 26 different countries (IKEA, 2014). The company’s vision is “to create a better everyday life for the many people” (IKEA, 2014, para 1). Using innovative techniques for creating, producing, and marketing their products IKEA can provide consumers with durable products for reason...
...enture into overseas market comes with expectations as well as uncertainties due to unfamiliarity. Charles and Keith, the fashion retailer, has to understand clearly that what appeals in one market might not be accepted in the others and this is almost the same for all industries. Thus, a thorough research on cultural background has to be done before entering an unfamiliar ground.
Daniels, J. D., Radebaugh, L. H., and Sullivan, D. P., (2011). International Business: Environments and Operations. Prentice Hall, Upper Saddle River, New Jersey.
A company’s brand is one of its most valuable assets (Green and Smith 2002). Brands owners invest millions of dollars every year in advertising and promotion to raise awareness and create demand for their brands.
Branding is used to refer to a wide body of literature as to how businesses can use their brands to achieve a competitive advantage, through building brand equity, launching brand extensions, managing global brands, and so forth.
International Marketing, at its simplest level, involves the firm making one or more marketing mix decisions across national boundaries (Jobber, 2010). At its most complex level, it involves the firm establishing manufacturing facilities overseas and coordinating marketing strategies across the globe (Jobber, 2010). There are various reasons for going global, some of which are: to find opportunities beyond saturated domestic markets; to seek expansion beyond small, low growth domestic markets; to meet customers’ expectations; to respond to the competitive forces for example the desire to attack an overseas competitor; to act on cost factor for example to gain economies of scale in order to achieve a balanced growth portfolio. The methods of market entry that could be used are indirect exporting (for example, using domestic –based export agents), direct exporting (for example, foreign –based distributors), licensing, joint venture and direct investment. I found this par...
Branding on consumer purchase decisions. In order to comply with this a questionnaire was prepared and survey has been conducted among 100 respondents and data revealed that brands have strong influence on purchase decision.
Early on in the twentieth century, when mass marketing and production became commonplace, company branding allowed consumers to identify with a company. The consumer made a one sided personal relationship