Describe how IKEA’s expansion has reenergized mature markets around the world and changed the competitive situation:
Analyze the successful of IKEA in Sweden:
• IKEA focused on young and price-conscious customers that can be seen as target market.
• From this case, I think that the successful of IKEA comes up with the applied Leadership Cost combining with Difference for its strategy to gain competitive advantage to other competitors.
- IKEA used Leadership Cost strategy very well by :
1. Recruited their own suppliers who only sell to IKEA
2. They also reaped huge economic of scale from a huge quantity production. Because of this approach, IKEA trimmed costs to a minimum to offer low-cost product to young and price-conscious customers.
- IKEA also applied Difference strategy very well as following:
1. IKEA applied the “ready-to-assemble knockdown kits” which means IKEA’s customer could pick products up immediate that makes different to other competitors which customer have to waiting for the store to delivery the furniture.
2. IKEA not just sell furniture products to customers, they sell the idea of creating a “living space” that attract customers and bring the success of IKEA.
Describe the IKEA’s expansion which has reenergized mature markets around the world and changed the competitive position.
Again, IKEA also adopted the same successful formula in Sweden market in IKEA’ expansion strategy like low-cost price, local and global supply chain, the formula of customer-assembled furniture, word of mouth advertising and so on. However, to develop and sustain in oversea market, IKEA was applied the adaptation strategy to satisfy the customer of particularly market. These were some concepts of IKEA’s expansion as following:
The “Leadership Cost + Difference” strategy, which was a successful formula of IKEA in their home town market, is been continuing to apply by IKEA to oversea markets like Germany, Canada and Unites State. However, IKEA carried out the “Think Global, do Local” to oversea markets that means
o IKEA also offer low-cost product by used IKEA’s global sourcing network of more than 2,300 suppliers in 67 countries.
o To capture the oversea market, IKEA was continuing to develop unique formula which was very success in Sweden market like:
1. Offer assemble furniture and packaged kits which was displayed in IKEA’s store.
2. IKEA’s customer can pick furniture products up immediate because IKEA have more than 10,000 products stocked, no spending time for waiting like other competitors
3. Clear instructions were given as to where the kits could be found, and that customers did not have to wait too long at the checkout line.
4. IKEA sells the idea of creating a “living space” to customer, not only sell furniture.
o Polycentric strategy is carried out by IKEA, so IKEA was not standardizing product for all country, but they adapted their products, managerial skill, advertising different in different country.
These are some examples about adaptation of IKEA:
1. In the United State market, because the European-style bed which was offering in European market by IKEA, is different with American style, so the size of bedroom furniture was redesigned to satisfy with the demand of American’s customer.
2. Store layout was altered to conform more to American aesthetics and shopping styles.
3. Word of mouth is a traditional advertising method of IKEA in so many Europe market, however IKEA had focused on media advertising campaign which is a best marketing way in United State market.
4. The slogan “It’s a big country. Someone’s got to furnish it” was made only for United Stated market.
5. And the way of manage in IKEA was also different in each country. Depending on the culture of each country, IKEA followed an appropriate managerial strategy to this country. For example, individual employees were assigned greater responsibilities and more freedom than usual in more traditional retail stores in Europe and Japan, but IKEA did not apply this approach for in United State.
o For organizational strategy, IKEA sent a team of three or four expatriate Swedish manager to instill the IKEA ethos in the local organization. This team hired the local employees and trained them about technology, sell skills, product displayed skills and so on and they also organized the store layout and established the sales.

Overall, throughout this case, it can be seen that IKEA retailer and manufacturer totally conquered some mature market like Germany, Canada and United State by implemented the polycentric strategy very well with so many adaptations to satisfy demand of particular market. “Cater to local taste as much as possible” was a key successful concept of IKEA’s expansion and IKEA was very successful in shifting in furniture buying behavior in United State market and other market as well. And choosing furniture has become a matter of personality, lifestyle, and emotions as well in some country where IKEA penetrated.