Ikea Case study By Hanin Rwaished Advantages of same product in all IKEA Catalogues? IKEA offers a wide range of well-designed, functional home furnishing products at very low costs. 1)The advantages of distributing same product catalogs across the world :1.1 Reaches a large number of people 1.2 People from all around the world would be aware of IKEA’s distinctive product variety. 1.3 IKEA’s products are not customized for local markets, however they are kept to standardize products and operations worldwide. 1.4 IKEA’s catalogue sells a Sandinavian lifestyle that customers around the world embrace. Disadvantages of same product range catalog distributed globally;1) Although IKEA had standardized products and their operations which kept the costs low it led however to:1.1Ignore the different tastes and preferences of the market 1.2 Ignore the different ways that people purchase furniture. 2)This lead IKEA to change the model of operating by:2.1 Giving greater ownership to its subsidiaries. 2.2Maintaining the ability to adapt furniture 2.3 Customizing to suit the local market. *The result: Costs increased, but this localization approach was necessary for sales. The effectiveness of the catalogue as a marketing tool:1) Its ability to closely target an actual catchment area in the sense:1.1 Waste is minimized 1.2 Client’s ad dollar is more effectively spent. 2) Catalogues are used predominantly as a “Call-to-store” meaning, it is particularly effective for:2.1Reaching the prime IKEA demographics of families with children 2.2Reaching people who are setting up a new home. 2.3Their ability to sell a wide range of product through a single “event”. 2.4Their ability to deliver important information. As a result: The IKEA catalogue serves as a permanent invitation to the IKEA store. It provides constant inspiration, and serves as an invaluable source of product information throughout the year. It also contains details on how to get to the nearest IKEA store and its opening hours. Cultural Differences…Chinese Market 1/2 IKEA enters china by adopting joint venture with Chinese companies, due to the policy of Chinese government to:* Achieve the principle of equality and mutual benefit. 1) IKEA in the Chinese market:* Customers saw IKEA as an expensive western brand due to their relatively low income. Hence:1.1 IKEA had to reduce their prices which was a major challenge for them. 1.2 IKEA had a difficulty in reaching a large target group. 1.3 IKEA faced was the violent competition with other imitates firms and products. Cultural Differences…Chinese Market 2/2 Language barrier is another challenge when they entered the Chinese market. As a result:1) IKEA used the strategy of pronounce-oriented names:1.1By translating their name to chinese. (MOOJI) 2) The name consists of two characters which means:2.1 Comfortable and family 2.2 Represents their product and corporate identity. Results:1) Family is an important word which connects to collectivist culture of China. 2) Chinese customers depend more on visual representations hence character is an important factor. 3) IKEA chose to produce their product locally, hence:3.1 It can offer a large volume of products with low price which will enable IKEA to compete with other competitors in the Chinese market. Cultural differences…Danish Culture. 1) IKEA was founded in Sweden, The Swedish flag outside the store, the store’s colors are the colors of the Swedish flag, and the Swedish names on all the different products underlines that it is a Swedish company. 2) IKEA management is very human oriented. 3) Very keen on making sure that the staff are happy and the side effect of that will give them incentives to work a lot better. 4) Danish people are all treated equally and must have the same rights, regardless of their social or ethnic background. This is key characteristics of the type of:- 1) management you will find in IKEA Sweden. Everything is very human orientated and a lot of 2) energy is put on that co-workers should feel confidence and trust to and from their bosses. If 3) not they would not be temtped to try new ideas and come up with new ideas and not be afraidof making mistakes. In conclusion; IKEA Sweden has a business culture that are well in tune with a typical Scandinavian business culture China IKEA commercial:- http://www.youtube.com/watch?v=fgHzdKIHToY&NR=1 Danish IKEA commercial: http://www.youtube.com/watch?v=N9yjq- xcMOw&feature=related UAE IKEA commercial:http://www.youtube.com/watch?v=6C7oqXewyCE Conclusion: The reason why IKEA has such a strong business culture is to survive, if they kept on changing their values and culture to meet all the different cultures all around the world they would get lost. IKEA, as a company, is in tune with the theories on how to manage multinational cooperation in general. They do a great job preserving their culture by making sure that the employees and managers are in tune with the culture – through questionnaires such as “Voice” and regular meetings.