The case study deals with IKEA, one of the major retailers with most popularity. As a home furnishing supermarket in Sweden, Ingvar Kamprad set up it in 1943. IKEA targets the middle class buyers as it provides furnishings and household products that are low-prices yet attractive. It uses sophisticated blue and yellow stucco colors and the interior to make sure that the customers feel drawn to the goods as they walk through every department. IKEA remains successful in its business activities through this approach. In addition, it also increases the need for the consumers to join and shop in. Globalization of markets is the process where industries, which were once distinct historically and on different national level markets, merges into a large global marketing place where different preferences and tastes of consumers around nations will be converted into one world standard. Globalization plays a critical role in promoting business between companies irrespective of their geographic locations. The concept tends to be standardized, and thus its role in enabling IKEA to benefit immensely from its adoption globally. The basic plan of the firm entails selling Swedish- inspired households and furnishings goods at low prices to middle-class consumers around the globe. Aforementioned will create competition hence attract more customers to purchase from them; this will increase their income and expand its growth.
The company has gained popularity from consumers all over the globe by using the same colors as well as designs too in its warehouses across the continents. Additionally, in most stores, the products from the market-to-market are essentially the same – cheap furniture and household commodities are sold at the same price everywhere. It has been easy to build up company’s image; the globalization of contracts has made IKEA build up their image quickly. They have used same marketing strategy around the globe, or example they have opened large warehouses stores festooned in blue and yellow color; this has enabled their consumers to remember IKEA quickly and enabled IKEA to build its image worldwide. It has increased IKEA’S soundness because it has directly advertised itself.
In some cases, IKEA has had to adapt to the needs of some local markets. For instance, some parts of China, it’s rare to find stores around public transportation, and due to this IKEA provides services such as delivery for customers i.e. Chinese for their purchases to be sent home because car ownership is still not widespread. Another example is the United States, some commodities to reflect the American sizing style as beds were changed, indeed after the redesigning; it resulted in stronger sales than before.
The process where companies source goods and services around the globe from different countries with greater attempts to take advantages of differences in national levels, quality factors, and production cost to allow competition against arrivals more efficiently refers to the globalization of production. It is due to globalization of production that has enabled IKEA to focus on efficiency. IKEA depend on on1, 300 suppliers from 53 countries with hence, it devotes considerable consideration attention in finding the right manufacturer for each item. IKEA looks forward to lowering its prices per year by 2-3% because of the fact of finding an appropriate supplier imposes a problem to the firm for it to be successful. In avoiding high costs of shipping, IKEA has resulted in working with each supplier from its big markets.
For its most popular sofa frame, the company uses ten different vendors because it has no doubt that by relying on various suppliers in Europe China and USA, it will minimize shipping costs rather than having to source the supplies from a single location. Furthermore, IKEA has gained efficiency by concentrating on the production of some products in various markets like China. For example, reducing cotton slipcovers cost during production, IKEA focuses on China and Europe for its production as their four suppliers so that prices of IKEA’s product the Klippan to be reduced by 40% in 1999 and around 2005.
There is globalization benefits accrued, and they include an increase in efficiency, when producing commodities there is a consideration to be put in technology to make it easier for the production of high-quality goods. Furthermore, there is an urge to put efficiency in transportation so as the products can reach the designated consumers faster and in good conditions.
The globalization of production will make the procedures of the products more efficient hence increase in quality and lead to a reduction of cost of production for IKEA to reduce its prices. By doing this IKEA will attract more customers because their products are of higher quality and affordable. IKEA will raise competition from other retailers hence become more successful global retailers in the world.
In my opinion, there are different cultures in every country, and they are unique in their ways. Companies should come up with strategies to provide low prices on products and which will bring lowest costs regarding labor, transportation, and materials. IKEA was discovered in the early 1990s; the company was brought to awareness that its style offering being European could not arouse the American consumers. For example, when IKEA sold beds they varied in twin sizing, the king, and queen rather than sizes of centimeters. Due to this reason, IKEA has redesigned their offerings in the US to appeal to consumers in America; it has brought about more sales in the USA. Since not everyone owns a car, IKEA had its stores located near public transports. Different countries vary in cultures when it comes to taste hence there is need to adapt local products in these markets for the consumers.
IKEA also need to maintain an excellent communication more so with their customers and other stakeholders concerning the environmental activities. Printing publications and use of online will help the business to communicate with different targets.
In conclusion, IKEA owning hundreds of stores across the globe its popularity is substantial amongst the people. For it to maximize its profits there is the necessity for the assessment of its external and competitive environment it will enable them to identify their key opportunities hence take advantage to threats from its competitors. It is through this approach that will allow IKEA in generating a high growth it requires to retain a strong reputation identity in the market. In as much as IKEA is aiming to go further than maximizing reputation and profitability, it will eventually create better lives for its consumers every day for them also to increase their purchases continually. Additionally, the adoption of the various approaches is crucial for ensuring success of the firm through increase of the market share. Exploitation of the various benefits of globalization is crucial for the growth of the business.