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IKEA essay
Introduction
In this assignment what propositions does firms need to put in order to succeed in market has been discussed along with other aspects of business concerns. This document analyzes the critical evaluation of IKEA's worldwide market and benefits and limitation of its entering world or foreign market has been concentrated with due theories and arguments with supporting or opposing views in detail. In this report factors which are important to apply in business has been mentioned. IKEA's suitable mode of entry into foreign markets with supportive strategies which would help organization to stand in the foreign markets like brand loyalty, low prices, etc has been discussed. Organizations strategy which it follows in global market with most popular human resource strategy for future benefits will be included in this report.

IKEA's value proposition

As the brands of IKEA are associated with low prices, simple and stylish products, the concept behind house wares and furnishing products have appealed to attract wide variety of segments and markets. These include both business and consumer markets exclusively. It has decided to go in view of ethnocentric for global marketing with their furniture products which can be shipped. The success value proposition of IKEA entails in high quality and well styled furniture which are readily available and reasonably priced. The company was successful in facilitating it's over different cultures and expanding its business over various countries. It is observed that initially, the company did not customize the services and products to local markets but it has kept standardized operations and products around the world. Hence the standardized approach of internationalizing has minimized the costs which can be considered as another success factor for IKEA. This strategy includes a model developed by IKEA where the company was able to keep the costs low. If it is considered from the customer's viewpoint, they can purchase the products for low costs even though they have to collect and assemble

the furniture from the stores. By this way the IKEA has reached the international procurement. On the other hand, longer shipping has added to its business expansion and it has adopted the culture to develop its sales in many countries. Its success value proposition is due to identifying the suppliers around the world, managing the furniture quality and keeping the price margins low. For its success value it has utilized the infrastructure of information technology and also has outstanding supply chain management. Any organization requires efficient systems which have been successfully adopted by IKEA which has developed efficient systems so that they can take orders from the suppliers then integrate them into products and deliver them to stores. Hence this was attained by its network of 14 stores around the world. By anticipating the customer wants and needs, the company has stored the inventory where the IT systems have managed the demand and supply from the stores and at the same time keeping the inventory prices low. It was also observed that its success value proposition entails in ensuring the ranges of products and its product design which are of good quality (IKEA, 2003). Among the business functions, the main element of marketing is dealing with customers. According to Armstrong, G. and P. Kotler (2006), the marketing process can be illustrated by the theories of IKEA's global marketing. The strategy is customer centered and the implementation of this strategy is through the theory of 4P's model. According to these authors the value of proposition can be increased by following the marketing process which is divided into 5 steps. Creating value for customer and building customer relationship is related with the first four steps. First is about IKEA's marketplace along with necessary needs and wants of customers. Second is about designing the marketing strategy of its furniture based on the customers, this takes place when the customers and markets are completely understood. Value of proposition will be decided with the customer's differentiation and their positioning in the markets. In the third step, IKEA must be ready to construct the marketing programs which transform the strategies into actual value of proposition for the customers. This program includes the global marketing strategy if marketing mix of 4 elements i.e. product, price, place and promoting the product. Next step is actually all through the marketing process i.e. to build a profitable relationship between the global customers. Its main goal is to establish the IKEA strong among the foreign markets with good relationships and partners too. The success of IKEA organization around the world is due to following factors:

Customers having new form of experience in shopping i.e. the company providing with high range of products which are affordable and are also of high quality. As these are the knocked-down kits for the customers so that they can carry the products to home and assemble themselves. The stores of IKEA mainly focus on

the sales of self-assembly quantities so that customers can assemble themselves (John L. Thompson and Frank Martin, 2005). It is also observed that the products of this company are standardized so that they can be purchased by various communities of people with various ways of life i.e. family, young etc. Another success factor is new form of value so that the customers are also considered as the suppliers of time and at the same time suppliers are considered as the customers of the company's technical services and business (Global marketing, 2008). Adapting the products that are very closer to the desire of customers, this can be explained by the reconfiguration of furniture size and also different kinds of services. Hence it designs its own products and also aims to meet the customers taste. IKEA chooses specific countries where it is able to respond the confined fashions and the opportunities so that it can quickly adjust to the range of customers at any stores (John L. Thompson and Frank Martin, 2005). Promotion adaption: this includes various images and slogans. These adoptions are very helpful; for globalizing the concept of IKEA along with its standardized packaging, product characteristics and distribution characteristics.

Therefore the idea of adaptations has succeeded the company in the world of global marketing. Certainly, the brand positioning strategy of IKEA has gained the global consumers with various cultural positioning, since brand is the symbol which represents the company for enhancing its business over global consumers along with the foreign consumers. Its brand name has been constructed around some particular foreign cultures like Swedish cultures using the Swedish names for furniture and colours of their flag and many more (Global marketing, 2008). The success behind the IKEA's furniture round the world is due to the different features in its designed models. It is positioned as the best selling company that is affordable also by offering the reasonable quality. It not only wraps the products fancily but also designs the material with environmental friendly. In this context, it follows the societal marketing concept which has affected its success. IKEA holds the pricing very well so that it's pricing policies highlights the customer values and incorporates with other 3Ps. Over many years, IKEA has launched the effective networks for delivering its products from dealers to the customers. Many logistic hubs are established around the world for transporting its products to supply them to different territories and countries. Apart from these marketing strategies, advertising on TV, delivering broachers and newspapers have paved a path for its success. Also the company is more concerned about the issues related to ethical and environmental. It is in collaboration with NGO's like World wide fund for nature and UNICEF contributing itself with large image and good relations

with the customers. Apart from its success through the marketing mix in the foreign markets, it has coordinated some programs in the world markets, industries to understand the effects of culture on customer reactions, understanding the cultural preferences, traditions and behaviors. It deals with various customers with different culture, language, income etc. from global companies and other customers.

IKEA's choice of entry modes and into foreign markets

The furniture manufacturers are concentrating on the domestic markets by investing locally with many branches in the same region. But for the first time it was IKEA who has entered in to the global market for an ethnocentric view of the global market. IKEA made many innovative moves to grow in the global market which involves their customer in the value chain of the products to reduce its cost. IKEA has a very good successful culture that facilitated its expansion in to the global markets. Some of their main choices of mode to entry into the foreign markets are

Low prices. Joint ventures. Brand reputation

Low prices: IKEA has its operations in nearly 35 countries worldwide and looking into the new emerging markets to start their outlet. The other most important concept that drives the IKEA is offering the furniture at low cost with best quality. They concentrate to supply of wide range, well designed furnishing home products at the minimum cost so that it is affordable by all the communities of the people. Their concept of high quality at low price enables to emerge into the global markets which contribute to serve many people round the globe (Grewal, 2008). Joint ventures: Since the time of its entrance into the global markets the advanced mode of entry is joint ventures. IKEA uses this strategic mode of entrance in to the global market in order to reduce the risk with local suppliers which are considered to have a valuable impact on the political, legal, financial, and cultural and many more issues. IKEA will be advantageous competitively through getting the local suppliers as its associates by the joint-venture as an entering model in to the foreign markets. Brand reputation: With this reputation in the global market IKEA entered into some of the foreign markets by using its brand name. This is one of the best entering modes into the foreign markets. By using its branding strategy IKEA was successful in culture positioning of the customers in foreign markets. The brand of IKEA represent the foreign consumer culture and as well as global consumer culture. Therefore IKEA was even successful to enter in to the foreign markets through their brand reputation (Global Marketing, 2008).

Risks and benefits in entering into the foreign markets by adopting the above mention entering modes are as follows.

The Company's main Objective has to be the global leader in the market. Company needs to be flexible always in terms of global marketing. A Company needs to have a financial resource to enter in to foreign markets. This can be expensive as it is necessary to do really huge adaptation and huge investments. As it is a huge market, there is a possibility to find local suppliers with low costs. Relatively high inequalities with low purchasing power. There may be the threats of new competitors in terms of losing its concept and competitive advantage and with much lower costs. In some countries the purchasing power is high and in some countries it is low. Especially US firms dominate the global market. Political and Economical Environment plays an important role in Company

Market Strategies in terms of Service and Product

When IKEA decides to enter global market it will be preferable for IKEA to follow these rules. Therefore IKEA needs to conduct a thorough market research and use of all the local expertise which can be available for lower costs (Global Marketing, 2008). An IKEA market strategy in terms of service providence to their customers is always a unique one. The stores and services of IKEA are very much different from the other furniture vendors. The stores are very much spacious and alienated into cheerful model rooms. This provides wide range of services to its customers to choose the furniture according to the measurements of their house along with the prices and variety of designs which are exhibited in kiosks. It also provides intricate childcare centers and restaurants with delicacies like lingo berry tarts and smoked salmon (Grewal, 2008). At the same time their product based market strategy also drew many customers to their store and kept it the top position in the global market of the furniture companies. In this strategy it issued variant catalogs of their products in different native languages so as to reach all sections of their customers. IKEA also adopted some of the experimental marketing strategies for the publicity of their products. In earlier years it has taken decision to decorate a chain hotel with their furniture which has become a beneficial market strategy for both the parties. Its main aim is to target the customers of that hotel and market their products. Even the chain hotel gets benefit to decorate their hotels with lavishing furniture at low cost. The most important strategy of IKEA is not providing the

exit for the customers who had entered in to their stores without having seen all the furniture in store. In this phenomenon there is scope that the customers may go for the more furniture which is not actually needed (Vadim Kotelnikov, 2005).

Marketing strategies for the new markets

When IKEA enters in to the new foreign markets, it has to make certain changes to its marketing strategies. It has to consider all its past experiences in other foreign markets like US and European where it has faced problems to fit into the local traditional bed lines. Even though IKEA follows a standardized strategy in its business process, it has to adopt some of the specific culture and traditions of the country in which it is establishing its store. In order to follow this IKEA has to allow the local centers to take its own decisions and at the same time they shouldn't deviate from their motto of low price and has to maintain the global brand (Global Marketing, 2008).

Global strategy of IKEA

Till early 1990s IKEA which is a Swedish company was world's biggest furniture retailer which was specialized in Scandinavian design to 55 countries people. This Swedish company initiated a move in the direction of globalization in the furniture business. In global market it has offered around 12, 000 designs for furniture needs. It has got high brand equity among the customers and also among the competitors. It was made possible because of IKEA's strong business strategies. Success of IKEA lies in combining good design of product with good quality with reasonable price. It has applied one global strategy called one design suitable to all. It has been designed keeping various cultural people in mind. Company believes in a fact that requirements of people in different countries won't be different from each other, they buy the same furniture. Its major concentration was in middle class people around the world. Spending habits were similar among customers globally this has been utilized by IKEA furniture works (ICMR, 2004). To make itself stronger in business company has realized to make its presence in global market in order get localized. It has got the ability to weave a story around itself which helps in developing its market value. IKEA has gained competitive advantage by varying its designed products and maintaining a cost control in the furniture retailing industry globally like in China, Canada, and Italy etc. Cost control was possible because company had an economical culture which has helped company to maintain its production or total manufacturing costs. Company has succeeded in its global strategy called one design suitable to all; it's a global development strategy in several markets. It was successful because it has identified the cultural diversity and has tried to fulfil customer needs according to their cultural interests. Localization touch to the company goods has made to reach local customers of various nations. It can be said that IKEA has faced many problems while entering into China market with respect to varied

cultural, market requirements. Company's strategies have worked in other markets but china market is different. It has learnt to apply other policies to attract Chinese customers (ICMR, 2004). IKEA has its own unique global strategy to open a fresh market for its products. In a way to maintain cost leadership, it is needed to have a strong efficient internal production which supposed to be greater than the competitive firms. IKEA's strategy is in a way that suppliers are generally situated in low-cost countries which have nearness to rawmaterials and dependable contact with distributors. Generally these suppliers provide high standard goods intended to market them in global arena, this advantage is gained by IKEA to grab the opportunity. Operating globally is not the intension of the company but also to search an effective arrangement of consistency, quality, minimum cost and technology, etc are major other factors which company concentrates on. It doesn't mean that company has totally ignored the cultural sensitivity, rather it responds to international emerging customer tastes and choices. Basic goods of IKEA are displayed in retail outlets situated around the world. It also concentrates on the local tastes of the customers according to the nation. The below figure displays the IKEA's strategy (Yihong Li, 2007): IKEA's other strategic policies are low prices, its features towards various nations, sourcing of production, economic planning's, logistics etc. have contributed in the success of IKEA's global strategy. Company has mainly relied on low cost strategies which are mentioned above to get into and to get successes in the global market (Krishna G. Palepu, Erik Peek & Victor L. Bernard, 2007). It has not only applied competitive strategies in spreading its business but even has followed a natural step towards achieving higher level in business world IKEA has applied environmental strategy. This policy influences the every aspect of supplier and retail functional operations. In European market setting strategy for future progression keeping in mind about the environmental rules is a tougher job to perform which IKEA has put in practice. It has used its personal designs to congregate with suppliers and has tried to influence strict dictatorial needs. For this, European and Scandinavian markets are perfect examples whereas in USA and Canada markets due to the predictable rise in customer awareness and strict rules requirements in which it wants to build itself and expand its branches in the retail market. This made company to face positively towards rules and regulations pressure and made to respect sentiments of common people. It is argued that core values make separation among ethical and innovative companies and won't allow adding innovations in the firm when compared with small competitive organizations. With its prosperous background and values IKEA creates itself as an example for distinction in competition along with social and ethical sense of duty. It has been a part in promoting green peace and has showed its social

responsibility which has also helped to gain publicity in public (World Resources Institute, 1998). Strategy followed by IKEA is good and it has meaning attached to it. It creates fine atmosphere in selling its products. But sometimes its frugal culture may not be suitable for all nations like United States of America where it has tasted difficulty to convey. At times it may cost company more in producing at one place and selling at another place, which is generally done in the IKEA's business. In such kind of transactions there can be delay in delivering the stock to the supplier or directly to the customer. It can be said that every time competitive advantage won't help company to face local markets, because market differs from country to country and in such cases following one strategy in every country may not be profitable for the business. For example competition for IKEA is more in US when compared to Europe market (Strategic Management, 2007).

HRM Strategies
IKEA has been established in the countries like China, Australia, UK and Malaysia. This shows how the company is different in showing its vision and how it is different from other stores. It provides wide range of goods with good design, function and low prices which is considered as their business strategy. IKEA follows that if organizations are in the same industry ten they follow various strategies for this they need some HRM strategies. Organizations like IKEA can implement such strategies by making use of the competence and resources. These strategies are the plans of the organizations for controlling people, structure, culture, training and development. The most appropriate strategy for the IKEA's future is the culture of the organizations. The overall culture of the organization has been related to the HRM strategy. It determines the management style and the leadership of the organization. IKEA as a successful international company has been benefited by the national and corporate culture and has benefited from the cultural competitive advantage. The organizational culture includes the environmental policies for organizational and individual behavior. This has highlighted the IKEA's flat organization as it has decentralized the process of decision making and also the autonomy of employees in order to carve their careers and jobs within the guidelines of culture and policy. Hence the organizational culture encourages the leadership and initiative levels of the company. Hence the members of the company are considered as the entrepreneurial leaders and are promoted to enhance their talents for the company. Providing the best products and reducing costs are the policies offered to the consumer. Control in this corporation comes from quality requirements and costs and along with the culture reinforces these requirements through value like hard work, individual responsibility and efficiency. IKEA can be considered to be the best example which tightens or loosens the competitive economies

and core values that helps in the development of company's future (James C. Collins and Jerry I. Porras, 1994). For its future development IKEA has to make few products internal and reliable on its hundreds of its network suppliers. Hence such mutual long-term partnerships with the suppliers will deeply root the corporate history of IKEA and the character of such ties is also considered as a part of the organizational culture. The key suppliers of the company can make use of the IKEA as a vehicle to stay innovative since innovation is the only way for the suppliers needs to keep hold of powerful buyers; thus IKEA is considered as a powerful enough to face the future concerns. Over last few years, as a global player IKEA has established itself in Europe including the East, South and in North America. With its various cultural differences it has established its single markets in Sweden, Germany, France, Hong Kong, Singapore, and Middle East and has recently entered markets of China and UK. It has embedded the decision making practices for the employees which has encouraged for them to take the initiatives thus considering them as the main people for the development of the working practices. Such type of organizational culture has propagated the explanations and discussions instead of training programs (Terence Jackson, 2002).

Human Resource Management strategies

The company has launched new management strategies for its managers so that they will be capable of expanding their competitive advantage in the foreign markets. These strategies support the managers to enhance their entrepreneurial, innovative and independent abilities (Helen, J. 1996):

Gaining knowledge through sample: In order to enhance the demanding strategies, IKEA evaluates trains and transfers its managers to other stores of the countries and encourages the executives to be trained from them. Decentralized management: Managers of all the countries are planned to run the IKEA's business as per the local settings and conditions. Customers can be assister as per their local requirements hence the local conditions are significant for the employees. Employee's turnover changes from place to place. Decentralization is one among the strategies human resource management, since every unit of employees is from different nationalities with a deliberate policy. The company has altered the way to create the learning situations among the employees. Learning to set work: IKEA recognizes the self-managed learning as the best approach. Mainly the employee's work in learning sets or groups that provides mutual support and challenges. Managers recognize their leaning needs, identify the development objectives and decide the way to reach them. These groups

help them to evaluate the progress. Its main focus is to assist the group members to recognize the self managed learning and to design and put into practice their programs for other country managers. This idea of IKEA motivates the employees to develop the company. It makes the individuals to take responsibilities and perform with their colleagues. It is a main tool which challenges and supports for the development and strengthens the value of IKEA's the across the global workforce (Helen, J. 1996). Structure for Training the employees: The program for self-managed learning assists the employees to think newly about generating the learning situations. The managers obtain the opportunities to train the international teams. The selfmanaged learning program provides a framework for training the employees in the company that can be under further operations in the company. Main application is to train the senior managers, store managers and their successors. Main themes in this program are business learning, forecasting business, strategic purchasing and trends in the market. Main strategy of the human resource strategy is to have flexible, entrepreneurial ad innovative managers. Gathering individuals at the process: The above programs gathers people to learn various processes and offers them the practical experiences that occur in problems including change, choice, motivation and other activities which are a part of the improvement process. For its future success IKEA's presents decentralization and communication are the main learning keys. Learning helps the employees to improve and enhance their job performances. Their abilities are motivated to work and develop the company as an international firm. The company develops the business strategies are more rapid than their competitors to sustain its leadership in the market (Helen, J. 1996).

Conclusions
From the above discussion it has been observed that IKEA is top furniture company around the globe. To enter in to the new markets IKEA has adopted some of the marketing strategies like value proportion. It is observed that the success value proposition of IKEA is by identifying the low price margins, managing the high quality furniture and indentifying the best suppliers for the business process in different parts of the world. Some of its marketing strategies are based on the services adoption and product based. The services provided by IKEA are in such way that it will attract more customers to their stores. It also followed some of the experimental marketing strategies by going in to partnership with some of the chain hotels to promote their products by decorating the hotels with lavishing furniture. Their main marketing strategy of their business process is by adopting the some of the policies like entering in to the joint ventures. It also adopted strategies like providing products at low prices and maintaining the brand reputation in the market so as to keep them in one of the top position.

From the above disunions it was observed that IKEA has to keep track of their existing market strategies and also go for some of the innovative and experimental strategies. It has to develop strategies considering the past experiences in entering in to the new markets like USA and Europe. IKEA is following the global marketing strategy in their business process. They have adopted this strategy to maintain its global standards in the business. Global strategy will help IKEA to approach all communities of people and to provide different types furniture according to the local cultural and traditional aspects. Human Resource Management strategies for the future of IKEA are learning by sample, communication and decentralization. These strategies will assist the employees to enhance and develop their performances in the job. IKEA supports their employees to come out with innovative decisions which will explore the abilities of the employees to work in the multinational IKEA organization. These are some of the marketing and HRM strategies followed and to be followed by IKEA to maintain their position in the global market.

Bibliography
Armstrong, G. and P. Kotler (2006), "Marketing: an introduction", 8th Ed. New Jersey: Pearson Education, Inc... Global Marketing (2008), "Global Marketing - IKEA Case", [Internet] available at URL: , [accessed on 10th December, 2009]. Grewal (2008), "Marketing", published by Tata McGraw-Hill, pp. 480. Helen, J (1996), "Ikea's global strategy is a winner formula" Marketing Week, Volume: 18, Issue 50, pp. 22-24. ICMR (2004), "IKEA's Globalization Strategies and its Foray in China", [Internet] available at URL: < http://www.icmrindia.org/casestudies/catalogue/Business%20Strategy/IKEA%20Globaliz ation%20Strategies-Foray%20in%20China-Intro2.htm>, [accessed on 10th December, 2009]. IKEA (2003), "IKEA CASE Study", [Internet] available at URL: , [accessed on 10th December, 2009]. James C. Collins and Jerry I. Porras (1994), "Built to Last", New York Harpers Collins. John L. Thompson and Frank Martin (2005), "Strategic management: awareness and changes", Edition 5, Published by Cengage Learning EMEA, pp. 873.

Krishna G. Palepu, Erik Peek & Victor L. Bernard (2007), "Business Analysis and Evaluation: text and cases", Published by Cengage Learning EMEA, pp.788. Strategic Management (2007), "Global Strategic Management", [Internet] available at URL: , [accessed on 10th December, 2009]. Terence Jackson (2002), "International HRM: across-cultural approach", Published by SAGE, pp. 252. Vadim Kotelnikov (2005), "Experimental Marketing", [Internet] available at URL: < http://www.1000ventures.com/business_guide/marketing_experiential.html>, [accessed on 10th December, 2009]. Yihong Li (2007), "IKEA Success in Chinese Furniture", [Internet] available at URL: < https://oa.doria.fi/bitstream/handle/10024/33382/jamk_1198235756_7.pdf?sequence=1> , [accessed on 10th December, 2009]. World Resources Institute (1998), "IKEA and The Natural Step", [Internet] available at URL: < http://pdf.wri.org/bell/tn_1-56973-249-3_teaching_note_english.pdf>, [accessed on 27th December, 2009].

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