Class 1 - Text -IKEA's Global Success
Class 1 - Text -IKEA's Global Success
In this entry to my
1 blog series about
successful
multinational
companies, I will
check out the
furniture chain IKEA.
IKEA has been the
world’s dominant
furniture chain since
2008, according to
Forbes magazine.
Swedish
2 entrepreneur Ingvar
Kamcrad was only 17
years old when he
started the company in 1943. These days, the chain has about 400 stores selling
appliances, furniture and other household items in over 40 countries around the world.
So how have they managed to become such a global hit? Well, to me it seems that three
features of the chain stand out; their dedication to research, their affordable prices and
their eco-friendly reputation.
3 The executives at IKEA have long understood the need to research other markets in
order to succeed globally. The company is constantly conducting research on how
people use their furniture and what they are looking for. They recently conducted
research in eight cities worldwide. This is how they learned, for example, that Korean
customers want a special kimchi refrigerator.
But in order to sell at discount prices, they need to make and sell a lot of the same thing
4 to keep costs low. This way, they can get low prices from suppliers, and charge super-
low prices to their customers. As a result, they can keep their prices economical even
during periods of inflation. This is why they will show the same products in different ways
in their stores, depending on the local culture. A British bedroom display might have a
British flag bedspread on it, whereas one in Tokyo may have a traditional mat on the
floor. In China, IKEA’s fastest-growing market, domestic manufactures make most of the
products they sell in order to keep transport costs low.
A final selling point for may customers is the image of the company. They sell their
5 furniture in flat boxes which use less space and paper and are easier to transport. A
company representative recently said that they are working on creating new products
out of materials we currently throw away, such as recycled plastic and foil. In some
markets, they plan to market an electric bicycle, and in Seoul, they recently planted a
tree to celebrate the opening of a new store.
Next week, I’ll look at other multinational companies which specialize in household
6 goods and automobile production.