The international success of IKEA

Abstract

The IKEA story began in 1943 when a young Swede, Ingvar Kamprad, was offered by his father a sum of money as a graduation gift. Ingvar Kamprad used the money to start a business which he called IKEA.

This young business executive's idea was to position his company to a market segment that offered a wide range of furniture at a very low price. After the Second World War, the distribution market of furniture was both highly dispersed and strongly controlled by local manufacturers of furniture.

This was particularly the case in Sweden where the furniture industry was organized to increase the barriers to entry and limit the competition in this market. The main goal of this organization was to reduce competition and therefore it did not bring down the prices. Thus, the furniture market was only for wealthier households, and did not match a small portion of the population.

Moreover, the furniture market was a fragmented market in domestic industries, and focused on a strictly local application. This situation continued until the early 1990s, because of the lack of internationalization.

Corporate culture is not the only key to success, the marketing mix is an element that also participates in the success of IKEA. With approximately 9,500 products listed, IKEA offers a wide range.

In stores, there are of course the furniture, but there are also elements of decorations as cooking utensils. The furniture is both functional and cheap. However the furniture store turned out to be expensive, so to reduce the costs, the furniture in a kit concept was born, and the Swedish firm is now the specialist.

All products are manufactured by IKEA, and each product is unique, it is assigned a reference and a name of Swedish origin always. IKEA adapted by market its products. For example, China yellowsofas are available in contrast to Europe, because in China the color yellow refers to sadness, grief and loss. The Chinese market such products would find no purchaser.

With its national success, Swedish opened its first store outside its bases, with his closest neighbor Norway in 1963. Scandinavian expansion continued into the 1970s with the opening of stores in Norway and also still in Denmark, providing broad coverage of northern Europe.

Then, once the northern European market gained, IKEA, with surprise entered the European market, starting with Switzerland,known for being very traditional, and became leader again. It therefore continued its European expansion by setting up stores in Germany, Austria, France and Belgium. IKEA continued to expand in Western Europe and entered for the first time the market in North America and that of Eastern Europe.

Before moving into Canada and Australia, the Swedish firm in the 1970s had established a network of franchises. The result of this "experiment" was marked by a total success and therefore the international development of the sign. Then, between 1980 and 1985, IKEA opened stores in Saudi Arabia, Kuwait, Iceland and accentuated its policy of expanding in the United States.

IKEA has always kept its own identity even after becoming an international company, that is to say that the company conveys its Swedish origin, sells furniture in a kit with excellent price / quality ratio that is available to all.

Whatever the location, the logo and name of the Swedish giant are the same everywhere (blue and yellow colors, and name of IKEA).

Tags: IKEA, international expansion and success story