What Are Ikea's Firm Specific Advantages? Country-Specific Advantages?

What are IKEA's firm specific advantages? Country-specific advantages?

IKEA's firm specific advantages are clear-cut as the low cost furniture manufacturer and retailer aims to the young and price-conscious consumer (Peter & Donnelly, pg. 430). IKEA has been "developing innovative modular designs whose components could be mass produced and venturing early into Eastern Europe to build a dedicated supplier network, IKEA could offer quality furniture in modern Scandinavian designs at very low prices" (Peter & Donnelly, pg. 430). IKEA established exclusive partnerships with independent furniture makers prohibiting them from "selling to other stores" (Peter & Donnelly, pg. 430). IKEA's retail layout is a clean and open warehouse setting with attractive furniture displays throughout the store for customer inspiration and purchase. This type of set-up allows inventories to remain higher for availability as furniture is packed "ready-to-assemble knockdown kits" (Peter & Donnelly, pg. 431). The customers are able to conveniently pick up their purchase and assemble their furniture at home. Another firm specific and competitive advantage identified with IKEA is the product line is standardized, allowing for a global reach and economies of scale. IKEA undercuts to match rivals by 30 percent on price (Peter & Donnelly, pg. 431). IKEA limits marketing expenditures and specifically relies on "word-of-mouth" for advertising and its catalog (Peter & Donnelly, pg. 431). IKEA's management structure is flat, and continues to "innovate and reorganize itself" (Peter & Donnelly, pg. 431).

What are the cultural factors that make expansion abroad in retailing difficult? What has made it possible in IKEA's case?

Cultural differences affect the applicability of the experienced marketer's professional skills directly. A cultural misunderstanding can by avoided if companies take the time to learn the different cultures, "thought patterns, personal space, material possessions, family roles, and relationships, personal achievement, competitiveness, individuality, social behavior, and other interrelated issues" (Peter & Donnelly, pg. 192). IKEA has a dedicated network with over 2,300 suppliers in 67 countries which attributes to their success and growth. IKEA's consistency in quality to retail abroad can largely be attributed to the standardization of their product line. To prepare for entry abroad, IKEA would "send a team of three or four managers that could speak the local language and had experience in an existing IKEA store" (Peter & Donnelly, pg. 432). There management relied on this small group to be self-sufficient and handle "greater responsibilities and more freedom than usual in more traditional retail stores"