IKEA, Research Paper Example

I have not yet shopped at IKEA myself, mainly because I have had no reason to purchase home furnishings. I am familiar with the stores, however, and I will probably shop from the company in the future. The reasons for this are very much in keeping with what drives the company’s success. As far as I know, the items sold by IKEA are well-made and produced with a consistent degree of quality. Equally importantly, all the marketing stresses the affordability of the products. Certain items are more expensive than others, but the higher cost seems to be based only on the size and functions of these items. Everything is in proportion, in terms of pricing, and this leads me to believe that no other marketing agenda is present; it’s mostly about utility.

Then, I confess that I, like many other consumers, am attracted to the simplicity of IKEA merchandise. The products are modern and designed to let the owner create whatever impression is desired, either in maintaining a modern look or changing the IKEA basics with décor. I think I will shop at IKEA, then, because it offer high-quality, sleekly designed products at affordable prices.

In terms of firm-specific advantages, IKEA seems to enjoy a unique corporate construction. More exactly, it is operated in a democratic way unlike the hierarchies of most Western companies of this size. The corporate culture emphasizes the role every employee plays in the company’s success, and this is an unusual strategy or ideology. The same focus on economy also offers significant advantages to the company’s basic growth and activity. For example, IKEA’s insistence on cutting costs encouraged its creating supplier relationships with underdeveloped nations other companies would likely ignore. This in turn relates to IKEA’s structure in creating and marketing its products. Everything is planned with an eye to both high-quality and reducing costs, so a formula is in place that provides strict guidelines in design and manufacture. This is a formula likely not present in other makers of home furnishings. With regard to country-specific advantages, IKEA’s presence in the U.S. greatly reveals how its unique strategies adapt to different markets and needs. While it was not an initial success in the U.S., IKEA reconstructed both its products and its message to capture the new market, and has actually shifted American thinking in regard to home furnishings.

It is interesting that the downsides to shopping at IKEA reflect some of the same elements that go to the company’s success. For example, just as IKEA relies on formula and strategy, so too must the customer “do their homework.” IKEA supplies tools for customers to note their potential purchases, but the customer is responsible for knowing their own needs. Then, the customer is put to work: they must pick up their own purchases, bring them home, and often assemble them. This goes to IKEA’s ability to keep costs low, but it demands a great deal of time and effort from the consumer. It is also noted that IKEA products do not travel well from home to home, and this is a great disadvantage for customers who expect many years of life from their home furnishing items.

In general, the target customer of IKEA may be said to be a combination of one already existing and one created by the company, at least to a degree. The Scandinavian simplicity of IKEA had strong appeal in those Northern European countries from the start, as might be expected. IKEA there was simply offering the people the look and quality to which they were accustomed. This customer, however, had to be “created” in the U.S., and presumably in other, non-Scandinavian countries as well. The traditional attachment to furniture had to be broken, and IKEA encouraged new markets to take a lighter view of their furniture. This then influenced younger people less concerned with tradition, just as younger buyers are more eager to move with a new trend. At any age, however, the IKEA target customer is the free-thinking, professional person willing to try something new, eager for modern style, and glad to save money.

The IKEA business model is actually reflected in its corporate slogan: “Low Price with Meaning.” More exactly, this is a vast, international concern that operates from a guiding focus on a certain level of quality achieved by a consistent and complex method of cutting costs. As noted, employees are encouraged to assist in this process, and IKEA is uninterested in observing employee rank or status. This renders it republican, if not democratic, in terms of a model, even as a basic corporate hierarchy is in place. Most of all, it is a business model determined to always adjust to market demands and make the most out of new marketing and production potentials.

IKEA has changed the existing home furnishings market in an exponential way; as the company has expanded, it has offered a growing challenge to traditional outlets, and the challenge is all the greater as the expansion continues. In compelling the American consumer to rethink furniture, IKEA then draws business away from those manufacturers and dealers who always offered furnishings as “lifetime commitments.” Given the size of IKEA, these are immense challenges, and major retailers like Wal-Mart and Office Depot, once relying solely on lower pricing, seem to be trying to adopt the IKEA aspect of low price as going hand in hand with trendiness and style. In plain terms, IKEA is such a massive enterprise that its model is itself a continuing challenge to competitors, who must either try to echo IKEA’s formula or appeal to what is left of traditional markets for more expensive furnishings.

While IKEA’s success in international markets, and particularly its “conquest” of the U.S., indicates that its expansion is virtually unlimited, the company should be careful in how it proceeds. The IKEA goal of 50 stores in the U.S. by 2013 has certainly been exceeded, and it is likely that more outlets would only increase sales and the company’s standing. At the same time, however, there is a danger in becoming too “monolithic,” as Wal-Mart discovered. It seems that, when immensely successful retailers reach a certain point, they achieve a kind of critical mass, and further expansion actually erodes the image and the financial success. As IKEA’s president Anders Dahlvig notes, Scandinavian design is a niche market. Taken too far, then, the niche element is lost and IKEA loses its actual identity.

I have not yet shopped at IKEA myself, mainly because I have had no reason to purchase home furnishings. I am familiar with the stores, however, and I will probably shop from the company in the future. The reasons for this are very much in keeping with what drives the company’s success. As far as I know, the items sold by IKEA are well-made and produced with a consistent degree of quality. Equally importantly, all the marketing stresses the affordability of the products. Certain items are more expensive than others, but the higher cost seems to be based only on the size and functions of these items. Everything is in proportion, in terms of pricing, and this leads me to believe that no other marketing agenda is present; it’s mostly about utility.

Then, I confess that I, like many other consumers, am attracted to the simplicity of IKEA merchandise. The products are modern and designed to let the owner create whatever impression is desired, either in maintaining a modern look or changing the IKEA basics with décor. I think I will shop at IKEA, then, because it offer high-quality, sleekly designed products at affordable prices.

In terms of firm-specific advantages, IKEA seems to enjoy a unique corporate construction. More exactly, it is operated in a democratic way unlike the hierarchies of most Western companies of this size. The corporate culture emphasizes the role every employee plays in the company’s success, and this is an unusual strategy or ideology. The same focus on economy also offers significant advantages to the company’s basic growth and activity. For example, IKEA’s insistence on cutting costs encouraged its creating supplier relationships with underdeveloped nations other companies would likely ignore. This in turn relates to IKEA’s structure in creating and marketing its products. Everything is planned with an eye to both high-quality and reducing costs, so a formula is in place that provides strict guidelines in design and manufacture. This is a formula likely not present in other makers of home furnishings. With regard to country-specific advantages, IKEA’s presence in the U.S. greatly reveals how its unique strategies adapt to different markets and needs. While it was not an initial success in the U.S., IKEA reconstructed both its products and its message to capture the new market, and has actually shifted American thinking in regard to home furnishings.

It is interesting that the downsides to shopping at IKEA reflect some of the same elements that go to the company’s success. For example, just as IKEA relies on formula and strategy, so too must the customer “do their homework.” IKEA supplies tools for customers to note their potential purchases, but the customer is responsible for knowing their own needs. Then, the customer is put to work: they must pick up their own purchases, bring them home, and often assemble them. This goes to IKEA’s ability to keep costs low, but it demands a great deal of time and effort from the consumer. It is also noted that IKEA products do not travel well from home to home, and this is a great disadvantage for customers who expect many years of life from their home furnishing items.

In general, the target customer of IKEA may be said to be a combination of one already existing and one created by the company, at least to a degree. The Scandinavian simplicity of IKEA had strong appeal in those Northern European countries from the start, as might be expected. IKEA there was simply offering the people the look and quality to which they were accustomed. This customer, however, had to be “created” in the U.S., and presumably in other, non-Scandinavian countries as well. The traditional attachment to furniture had to be broken, and IKEA encouraged new markets to take a lighter view of their furniture. This then influenced younger people less concerned with tradition, just as younger buyers are more eager to move with a new trend. At any age, however, the IKEA target customer is the free-thinking, professional person willing to try something new, eager for modern style, and glad to save money.

The IKEA business model is actually reflected in its corporate slogan: “Low Price with Meaning.” More exactly, this is a vast, international concern that operates from a guiding focus on a certain level of quality achieved by a consistent and complex method of cutting costs. As noted, employees are encouraged to assist in this process, and IKEA is uninterested in observing employee rank or status. This renders it republican, if not democratic, in terms of a model, even as a basic corporate hierarchy is in place. Most of all, it is a business model determined to always adjust to market demands and make the most out of new marketing and production potentials.

IKEA has changed the existing home furnishings market in an exponential way; as the company has expanded, it has offered a growing challenge to traditional outlets, and the challenge is all the greater as the expansion continues. In compelling the American consumer to rethink furniture, IKEA then draws business away from those manufacturers and dealers who always offered furnishings as “lifetime commitments.” Given the size of IKEA, these are immense challenges, and major retailers like Wal-Mart and Office Depot, once relying solely on lower pricing, seem to be trying to adopt the IKEA aspect of low price as going hand in hand with trendiness and style. In plain terms, IKEA is such a massive enterprise that its model is itself a continuing challenge to competitors, who must either try to echo IKEA’s formula or appeal to what is left of traditional markets for more expensive furnishings.

While IKEA’s success in international markets, and particularly its “conquest” of the U.S., indicates that its expansion is virtually unlimited, the company should be careful in how it proceeds. The IKEA goal of 50 stores in the U.S. by 2013 has certainly been exceeded, and it is likely that more outlets would only increase sales and the company’s standing. At the same time, however, there is a danger in becoming too “monolithic,” as Wal-Mart discovered. It seems that, when immensely successful retailers reach a certain point, they achieve a kind of critical mass, and further expansion actually erodes the image and the financial success. As IKEA’s president Anders Dahlvig notes, Scandinavian design is a niche market. Taken too far, then, the niche element is lost and IKEA loses its actual identity.