Ikea Case Study

1. Has IKEA taken a standardization approach or an adaptation approach in its markets around the world? Do you think the company’s approach is the right one for the future? Explain

IKEA main approach is standardization with a small degree of an adaptation approach. They use a global strategy which is when they offer the same products with the same marketing strategy in national markets. (Wild). It is the basis of standardization which is keeping everything the same in all markets. IKEA is known to have their stores painted in the same colors and the arrangement of the merchandise the same. All the furniture has the name “Ivar” or “Sten” and models numbers. There stores are basically self-service with customers looking and writing down the names of the merchandise, pulling it off the shelves and building it at home. The main benefit of global strategy is the cost saving to produce the same product and market standardization which they feel will result in cost savings for the customer and that is there plan. Companies that follow global strategy can take advantage of scale and location economies because they produce inventories of products or components in a few locations. The research and development is limited to a few areas which causes a problem because the company can overlook the important differences that the buyer is looking for in different market. There is a small degree of adaptation which in the ability to change the product to a specific area or region that so it will be useful to the market in which is it being sold. An example of this is in the instance of Central and European emerging markets. These emerging markets have low purchasing power so the stores offer a smaller selection and some of the furniture was design to fit into smaller areas. They adjusted the merchandise based on what the consumer can use but it also took away from the selection. “IKEA offers the same product range in all countries--8,000 to 10,000 products depending on the store's size. But the company adapts the layout of the store, presentation of the goods, home solutions offered, and prices according to national economic and cultural conditions”. (Miller). If they did research about cultures and living conditions they could have designed stores based on the customer’s needs in specific areas. IKEA also has to realize that the target market in places like the United States are different then the markets in other countries.

I think that it is good approach to some degree because by producing all products in a key location and keeping everything standardize they are keeping cost low. They also have dedicated followers so regardless of what they have or what their approach is they will have those customers. On the other hand with the globally changing market people might demand products that are more suited for their life styles. In order to gain more customers in different regions you need to have adaptation.