Know-How Exchange : Student Questions

Hi, Les.

Having done a minimal amount of research into Ikea’s strategy, I believe that this company can be a good study in standardization and adaptation when moving into new markets. First, I reviewed information from Ikea on their strategy presented at:
https://www.ikea.com/ms/en_GB/about_ikea/press_room/student_info.html

This website and the links provided discuss in detail product and distribution standardization, but local adaptation of the promotional activity and even the retail outlets (for instance, in the UK, Ikea has three different food service concepts).

I also found an article written by some scholars at the University of Tampere in Finland (imagine that – an article written about a major Scandinavian company at a Scandinavian university) which discusses Ikea’s strategy for moving into a new market – India. This article substantiates Ikea’s claims on standardization of product and distribution, and adds that the business model for expansion – franchising – also adds to the standardization. It also discusses local adaptation in promotions.
https://www.geocities.com/Eureka/Park/1692/ikea.html

Finally, I found an article in The Academy of Management Executives from November 2001, Volume 15, Issue 4, pg 48 entitled “Are you sure you have a strategy?” by Hambrick and Fredrickson which provides a model for strategy and then analyzes Ikea’s strategy with that model. Again, the same points are made concerning standardization and adaptation.

So, there is ample support for showing how Ikea combines standardization and adaptation in their business model.

For your thesis, I believe a good direction might be to lay out Ikea’s model – specifically what is standardized and what is adapted locally. Then, discuss how successful is with this model. This could be in terms of the success of expansion as measured by the revenue growth in new markets or it could be in terms of profit growth, or a combination of both. Discussing Ikea’s methods of managing their supply chain, product design, and distribution, as well as the methods used to ascertain information on adapting their local message would be a good piece after this. Next, you could discuss risks or weaknesses in the strategy (for instance, when Ikea standardizes on product – Scandinavian style furniture, what happens when this is no longer trendy with the target demographics? How quickly can they turn their supply chain around?) Then, discuss what Ikea presently does to minimize these risks. Finally, you can add any observations you have in other actions that Ikea should take going forward.

Les, whatever direction you pick for your thesis, you should play this by your thesis advisor to make sure the direction is one he approves of. Acceptance of your thesis through the process and successful review depends on his or her insight into the review team, and to a large extent, his “selling” to the review team.

I hope this helps refocus you. Good luck!

Wayde

hi les

great response from wayde.

check these sites on IKEA.....

https://www.brandchannel.com/papers_review.asp?sp_id=186

https://www.ikea.com/

https://www.ikea.com/ms/en_US/

https://www.sweden.se/templates/cs/Print_BasicFactsheet____6759.aspx

hope this helps.

cheers!!