Lesson Learnt From IKEA
There are a lot of lesson learnt from the case of IKEA globalisation. Basically, I am agreed with point laid by the presenter such as develop economies of scale, reduce production cost and create better customer value by providing affordable cost. Upon the commencement of its operations in Japan, IKEA faced significant difficulty differentiating its brand and products from domestic furniture retailers such as Nitori, who was popular and well-entrenched among the Japanese, and offered similarly inexpensive products. In order to maintain its competitive advantages and guarantee its long-term success in the Japanese market, IKEA Group took a number of measures in response to these challenges. We can also learn that one strategy doesnt fits all. IKEA has to be sensitive and remain vigilant in factors such as differences in culture, customer behaviour, taste and preference pattern. IKEA opened its first store in China in 1998. Although the company’s global strategy had worked well in the past in most of the markets it had entered, it quickly learnt that success in the Chinese market required a different strategy in the areas of marketing and human resource. IKEA also had to alter two of the most important aspects of its time-tested and proven global strategy when it came to China while elsewhere in the world, IKEA had always located its stores in less expensive areas and sold its furniture on the do-it-yourself (DIY) principle, these elements had to be changed in China.
Unfortunately, I am not totally agreed with the facts that of statement of IKEA product made by presenter that it is not about the product but more to experience. It is more than that as good product of IKEA is a product of low price, high quality and distinguished design, good customer service. IKEA try to establish a brand image that represent gentle, Swedish-style, environmentally friendly furniture. Their good design does attract many people.
The recommendations given by the presenter are practical and can provide more advantages to IKEA. However, if would be more focus can be derived from regional issues that IKEA can take strategic decision such as diversify strategies in China in term of starting to provide delivery service with a little charge and even free of charge for deliver their products for those area near. This approach can compete with the local furniture manufacturer. As the global business operational costs increase for example labour cost. IKEA may look for alternative opportunity to source its business from developing country. Cambodia can be IKEA potential business expansion due to the broad agriculture activity and strong GDP growth in recent years.
Innovation is a key in adding value to development of organization. IKEA has a very different innovation perspective compare to others organization. The critical factors to continue IKEA success in innovations are all level of consumer centric innovation, further analyses the segmentation markets by research and innovative marketing campaign to match local preference. For IKEA to lead furniture industry as a market driver, the firm should periodically review and enhance the existing strategies. Adaption of blue ocean strategy enables IKEA to seek the value of innovation by cost reduction and differentiate it products to meet customer needs. Continually review the business strategy provides bigger picture and direction for an organization to attain growth in future.