IKEA is known around the world for its stylish, quality, and low-cost furniture and home furnishings. The company’s success is based on a strategy of operational excellence in production, supply chain operations, and marketing.
IKEA—wildly popular in Europe—has leveraged its brand reputation to penetrate markets in other countries. However, its penetration of the U.S. market has been hampered by a weakened economy and the inconsistency between the traditional U.S furniture market and IKEA’s low-cost operating philosophy.
IKEA must find a balance between its operational excellence strategy and U.S. consumers’ demands for customization, good service, convenience, and quality.
1. Which factor – value or image – is the biggest reason for IKEA’s growth and popularity? Which is more important to developing and maintaining customer relationships in the U.S. market? Explain.
2. Speculate on what might happen at IKEA stores as they are tailored to fit tastes in local U.S. markets. Is the company’s trade-off of service for low cost sustainable in the long term? Explain
3. IKEA has asked you to provide a local market report for your area. They are interested in how to best launch a new IKEA store in your location. What specific recommendations would you make to IKEA?
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