IKEA pursued a global strategy when expanding in Europe in the 1970s-1980s, selling standardized products worldwide. This strategy was very successful, growing from 10 stores in 1974 to 125 stores across 26 countries by 1994. However, when entering North America in 1985, IKEA struggled due to differences in tastes and the exchange rate. To adapt, IKEA customized products to North American tastes and sourced more locally, leading to a 30-40% sales increase and 37 American stores by 1994.
IKEA pursued a global strategy when expanding in Europe in the 1970s-1980s, selling standardized products worldwide. This strategy was very successful, growing from 10 stores in 1974 to 125 stores across 26 countries by 1994. However, when entering North America in 1985, IKEA struggled due to differences in tastes and the exchange rate. To adapt, IKEA customized products to North American tastes and sourced more locally, leading to a 30-40% sales increase and 37 American stores by 1994.
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IKEA pursued a global strategy when expanding in Europe in the 1970s-1980s, selling standardized products worldwide. This strategy was very successful, growing from 10 stores in 1974 to 125 stores across 26 countries by 1994. However, when entering North America in 1985, IKEA struggled due to differences in tastes and the exchange rate. To adapt, IKEA customized products to North American tastes and sourced more locally, leading to a 30-40% sales increase and 37 American stores by 1994.
Copyright:
Attribution Non-Commercial (BY-NC)
Available Formats
Download as PPTX, PDF, TXT or read online from Scribd
Brief History Established in the 1940s in Sweden
Become one of the world’s largest retailers of
home furnishing
Push to expand globally
Strategy: production oriented
Decided what it was going to sell and then
presented it to the worldwide public
Swedish roots in its international advertising
Strategy: global network of suppliers
2,700 firms in 67 countries
Exclusive contract and low prices
Work closely with suppliers to build savings
Huge economies of scale
The Result 1974: 10 stores, only 1, located outside Scandinavia, and annual revenues of $210 million
1994: A group with 125 stores in 26
countries and sales of close to $5 billion New challenge in North America 1985-1990: Six stores in North America
Not quickly become profitable and by 1990
operations were in trouble ◦ Exchange rate ◦ Product’s taste and physique problem Solution • Customize its product offering to North American taste
• Boosted the amount of products being sourced locally
form 15% in 1990 to 45% in 1994 Result • Sales immediately increased by 30 to 40%
• By 1994 expanded the number of American stores to
15 and now 37 Conclusion What strategy was IKEA pursuing as it expanded throughout Europe during the 1970’s and early 1980s—a multidomestic strategy, global strategy, or international strategy?
Why do you think this strategy did not work
as well in North America as it did in Europe? Answer Global strategy for Europe and International strategy for North America
Don’t work well because:
◦ Big different tastes and physique ◦ Exchange rate Thank you for your attention!
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