the internationalisation of ikea
TRANSCRIPT
The Internationalisation of IKEA
Introduction to Ikea Founded in 1943
The Ikea logo is blue and yellow due to its heritage
The Swedish lifestyle is reflected in the Ikea product range
The Ikea Concept is: “Its to create a better everyday life
for many people.We shall achieve this through the business idea, which is to offer a wide range of well-designed, functional home furnishing products at prices so low, that as many people as possible will be able to afford them”
... Ikea asks customers to work as a
partner
So that together Ikea can create a better life for everyone.
... The Ikea group has 154 stores in
22 countries
Last year a total of 268million people visited the Ikea groups stores worldwide.
Operating Strategy: Ikea does not have its own
manufacturing facilities uses sub-contracted manufacturers all
over the world Ikea shoppers are ‘pro-sumers’ Customers have to assemble products
themselves Ikea provides catalogues, tape
measures, shopping lists, pencils.
How the Ikea Group Works Work at Ikea is organized to match
the needs of the customers to the potential of the suppliers in the best possible way.
Ikea co-workers all over the world contribute
Group Support Functions: Finance and
Treasury PR &
Communications Social &
Environmental Affairs
Property
Risk Management Legal Affairs Human Resources Retail
Development Logistics
Ikea’s Culture: Ingvar Kamprad believes:
“Most things still remain to be done - a glorious future! Time is your most important asset!”
Ikea is built upon this philosophy all the way from the design teams to suppliers and the customer
Ikea’s Culture Continued The aim of Ikea is to eliminate excessive
levels of management with a very flat organization.
Bureaucracy is fought at all levels Kamprad believes that “Simplicity and
common sense should characterize planning and strategic direction”
Culture emphasizes efficiency and low cost
Why Leave the Domestic Market? Reactive or Proactive approach to
internationalization? Ikea demonstrates a proactive approach “The importance of their own opportunities
available to them in other markets to exploit those opportunities rather than the negative factors which existed in their own markets” (Alexander, 1997)
Ikea’s first store opened in Sweden in 1953 Ikea’s second store opened in Oslo, Norway in
1963
Where is IKEA? Australia –5 Austria – 5 Belgium – 4 Canada – 11 China – 2 Czech Republic – 3 Denmark – 4 Italy – 8 Netherlands – 10 Norway – 5 Poland – 7 Russia 2
Slovakia – 1 Spain –5 Finland – 2 France –13 Germany – 31 Hungary – 2 Sweden – 13 Switzerland – 6 UK – 11 USA - 16
IKEA’S Policy Conservative Policy
Establish supplier links before opening
Strategic risk reducing approach
Format The organisation allowed rapid
growth Expansion group Construction group Initially – had a very flat
management style Open management characterises
Ikea
How? Fully Owned Subsidiaries
Stable markets which are deemed identical to the home market
Set up by expansion teamThis is used in Europe and N America
Franchising Unknown, high risk markets Expansion group is involved Carries basic items They are compared to overall corporate
performance Fees are paid to IKEA Able to maintain centralised control
Time Line 1958 – Almhult 1963 – Norway 1965 – Stockholm 1969 – Denmark 1973 – Zurich –
Switzerland 1974 – Munich – Germany 1975 – Australia 1976 – Canada 1977 – Austria 1979 – Netherlands 1981 - France
1984 – Belgium 1985 – USA 1987 – UK 1989 – Italy 1990 – Hungary + Poland 1991 – Czech Republic +
United Arab Emirates 1996 – Spain 1998 – China 2000 - Russia
Switzerland This was their first store outside
Sweden Ignored the fact that furniture here
was of traditional design Attracted 650,000 visitors in first
year
Germany Oct ’74 - 2003 Constituted the largest market for
furniture Large store in Zurich 1974 opened near Munich IKEA differentiated themselves by
offering immediate delivery 37,000 visitors in first 3 days Legal proceedings against IKEA
... Began to be acknowledged
10 new stores in the next 5 years
50% share in the cash and carry segment
Canada March ’76 - 2003 In 1979 bought a problem
franchise in Canada He turned it into a lucrative
business within three years Continued to grow within Canada
America June ’85 - 2003 Had enormous potential Imitators appeared e.g. Stor Management decided to accelerate
its expansion plans 1990 – began to struggle Now going from success to
success
Management Change In 1986 appointed Andres Moberg
as president Before this the company had been
managed informally Impacted on management style Formal budget and planning
process
Corporate Plan Was developed for three years Aims: -
Finding low priced materials Matching products to capabilities Developing long term relationships
with suppliers
Continued… Combination of low cost
standardisation, technology and quality
IKEA Rail 2001
The catalogue is now produced in 34 languages
Further Expansion 1987 – entered the UK 1989 – entered Italy Plans to build a presence in Russia
and East Europe 1st East Europe outlet was in
Budapest- Joint Venture
Further Expansion continued 1988 – Ikea Poland built a $25M
warehouse and retail centre Established a joint venture with a
woodworking factory Office in Vienna coordinated the
activities in Eastern Europe
Facts and Figures The turnover for the year
1/09/2001 – 31/08/2002 was 12bn Euro
Turnover per region – Middle East, Australia, Asia – 4% North America – 19% Europe – 77%
Top Five Sales Countries
0
5
10
15
20
25
Country
Perc
enta
ge o
f sal
es
Germany UK USA France Sweden
Future Japan has been announced as the next
venture Want to open two stores in Tokyo Focus on the US is on existing markets New stores and relocations New distribution centres Somerville No plans for Ireland at the moment
Conclusion Ikea at first did not recognise the need to
adapt to culture Needed to decide how far they could push
their common concept in other countries Ikea does not manufacture its own
products but works with a complex network of suppliers
Success is based on the idea of keeping the cost between manufacturers and consumers down