A Journey to the American Market

IKEA, a Swedish furniture company, is struggling to create an American customer base despite its attempts to provide good value and tasteful design without making customers feel cheap. The main issues include the mismatch between IKEA's Scandinavian-designed products and American preferences for comfort and size, as well as delays in delivering customized orders due to the need for parts assimilation. To succeed in the US market, IKEA needs to strike a balance between its design style and American demands for comfort, use its own resources to adapt to local tastes, and focus on customer experience.

Running head: CASE STUDY ANALYSIS ON IKEA INVASION IN AMERICA
Case Study Analysis on IKEA Invasion in America
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1CASE STUDY ANALYSIS ON IKEA INVASION IN AMERICA
Table of Contents
Introduction:....................................................................................................................................2
Facts of the Case Study:..................................................................................................................3
The key issues relating to the Case:.................................................................................................4
Solutions and Possible Alternatives and their Evaluation:..............................................................5
Possible Recommendations:............................................................................................................6
Conclusions:....................................................................................................................................6
References:......................................................................................................................................7

2CASE STUDY ANALYSIS ON IKEA INVASION IN AMERICA
Introduction:
IKEA is a multinational group that is headquartered in the Netherlands and is responsible
for selling ready to assemble furniture, home accessories as well as kitchen appliances. Since the
last ten years, the furniture retail company has maintained its position as the largest furniture
retailer of the world. It is the vision of the company to create a quality of life which is better for
all the people and hence includes a wide range of well-designed functional home furnishing
products. The prices of the products on offer by the company are extremely low, so much so that
it is affordable for all and sundry. This is the reason that the company has slowly but gradually
gained a significant position in the market. The company has taken it upon themselves to obtain
a high level of quality for their customers by implementing several policies like the optimisation
of the entire value chain, building of long-term supplier relationships, investments in highly
automated production as also the production in large volumes. The policy of the company is to
go beyond the concept of home furnishing and create a better and more comfortable standard of
living for the people.
Although the first store was opened by the company in the early nineteenth century and
the customers were happy with low prices, the company faced several problems with the
consumer preferences. Therefore to make a steady hold on the American Market the company
had to change several aspects of the products and also concentrated on the enhancement of
customer services. The company also provided low quality products, lot of parking space,
restaurants as well as facilities relating to childcare. All these aspects led to IKEA’s success in
the American Market.

3CASE STUDY ANALYSIS ON IKEA INVASION IN AMERICA
Facts of the Case Study:
The case study discusses the story of how the IKEA Company overcame its problems and
dominated the American Market. The company was founded by Ingvar Kamprad in the early
1943. The company started off by selling basic household goods, and later by selling home
furnishings. Subsequently the first showroom was opened by Kamprad and after that the
company started to design low priced furniture. After that the largest Scandinavian store was
opened which was the largest furniture display store (Moon, 2004). Right from the start of the
first stores of the company, the magnetic appeal was contagious. Another reason thousands of
residents in Sweden visited the stores was due to the extremely low price of furniture. Another
key feature in case of the company is the designing or arrangements of flat packaging of the
furniture. The innovation and improvements in the design became the trademark of the IKEA
Company. The innovation, low cost, the sustainable policies were not enough for the company as
several issues and problems were also faced by the company before it could dominate or make a
name in the American Market (Adams, 2015).
The company followed an interesting product development process and it was overseen
by the product strategy council consisting of managers at the senior level. The respective
authorities and managers helped in establishing priorities for the IKEA’s product line-up. The
consumer preferences, the existing as well as the emerging trends in the market in furniture, were
taken care of. Price matrices were utilised for successful calculations in terms of the margins of
profit to be kept for the products, the target price of the product as also the required adjustments
in order to meet the existing demands. The basic price changes, the four basic styles comprising
Scandinavian, Modern, Country and Young Swede were taken into consideration for the price
range of high, medium and low. The price matrices differed for each type of the product. The

4CASE STUDY ANALYSIS ON IKEA INVASION IN AMERICA
target price selection of the products was followed by manufacturer selection for producing it.
The engineers employed with IKEA were responsible for deciding the necessary materials for
making the product. The company always aimed to balance cost efficient labour with the product
standards. Opportunities for expansion in the different parts of the world were always sought by
the company. Once a price point was successfully established, the suitable materials decided
upon, the actual process of design would begin. The competition that was existent in the market
was also utilised to the company’s advantage. The company aimed at providing products which
were low priced and were meaningfully placed as well. The products were tastefully designed,
which in no way made the customers feel cheap (Copic, 2015).
The key issues relating to the Case:
It might be stated that despite the several possible ways in which the company ensured
that the products they made and sold were good, provided great value, did not make the
customers feel cheap, gave better options for transportation after buying the products, it faced
several problems. The American customer base was not being created despite all these attempts.
It was found that the Americans did not like the type of furniture which was being manufactured
by IKEA and also faced issues with the comfort provided by the furniture (Björk, 2015). Since
different countries were responsible for providing different parts of the furniture, the proper
assimilation after the orders of the customers were difficult to be met. Some customers had
issues with the fact that they had to assimilate everything on their own as also transport their
purchases home. It also led to problems in case of people who did not have their own transport.
Many people did not identify their personal home decors with the Scandinavian design of
furnishings (Harapiak, 2013). The reports revealed that the beds as also the kitchen cabinets
which were manufactured by the company were not suitable enough to fit the American sheets as

5CASE STUDY ANALYSIS ON IKEA INVASION IN AMERICA
well as the appliances, according to the American standards of comfort, the sofas were not
comfortable. In many cases there would be delay in delivering the furniture if the parts of a
particular furnishing item were not properly assimilated. In case certain customers the waiting
period from getting a product selected to ultimately receiving it at home was a long and
tenacious procedure and many were unwilling to wait too long. It was also reported that the
kitchen cabinets and beds did not fit the American households. All these factors posed several
problems for the company (Sparks & Langford, 2012).
Solutions and Possible Alternatives and their Evaluation:
The best possible solution for the company is to create a balance between the
Scandinavian design and the demands for the comfort at par with the American homes. The own
resources should be utilized by the IKEA to prosper in the American market. The compromise on
any aspect of the business or furniture manufacture should not be encouraged. A possible
alternative includes asking the customers for the measurement of their beds and their homes in
order to send furniture which matches the existing sizes of American beds, kitchen cabinets and
so on. In case this is done, the customers need not be worried about buying furniture which does
not match with the requirements of the American market. Suggestions can be taken from the
customers themselves in case of any possible suggestion or preference in terms of furniture
design. Pre-booking facilities can be made for that furniture which takes time to manufacture. In
the time between pre-booking and final delivery the possible parts of the furniture can be
assimilated and properly delivered to the customers. The product matrix help in benchmarking
and decision making based on it should be continued and if possible improved. The 30-50%
lower cost in comparison to the existing competitors of IKEA should be maintained and if
possible be improved (Mochon, Norton & Ariely, 2012).

6CASE STUDY ANALYSIS ON IKEA INVASION IN AMERICA
Implementation of the possible alternatives in the business operations would ensure that
the customer count would be more and the invasion of IKEA in America would be more
grounded (Morsing & Roepstorff, 2015).
Possible Recommendations:
It can be recommended clearly from the case study that the company should continue
operating in the way it is and also continue to provide more and more services in addition to the
childcare, parking lots, spending leisure, arranging for transport and whatever it already
provides. As long as the services are provided to the customers at affordable prices and the
demands for innovation are met, the customer base of the company will never suffer.
Region % purchase
Europe 66%
North America 3%
Asia 31%
Figure 1: Purchase by region
Based on the figures for the different regions, it can be recommended that the policies be
so developed as to increase the purchase in those areas where it is relatively les in comparison to
other countries. In order to achieve the goal of 2013, IKEA needs to apply the market leader
strategy by expanding the size of the total market, the developing and defending of the market
share are also essential. The company should find new users, uses as well as the volume of usage
of the current customers. It requires cultivating a new concept of furniture which is a
representation of the changing lifestyles of the people. IKEA requires positioning itself by

7CASE STUDY ANALYSIS ON IKEA INVASION IN AMERICA
changing the mindset of the consumers by several consumer communication channels (Jonsson,
Rudberg & Holmberg, 2013).
Conclusions:
On the basis of the case study as well as the available information on IKEA, it can be
stated that the country has a long way to go in future. The furniture market of America is
extremely fragmented. To increase the market share it is necessary for the IKEA to give time and
importance to focussing itself as the one-stop centre for all the requirements of household
furnishing. IKEA should also focus on the shoppers’ experience it provides apart from the low
price products. The vision for future growth needs to be kept in mind before the company
focuses on the avenues for retaining its customer base. The sustainable solutions as well as
continuously lowering prices should be maintained. Keeping in mind the range of services that
the company provides, it can safely be said that the possibilities of success for the company are
huge and no external force can prevent it from becoming a global furniture manufacturing giant.

8CASE STUDY ANALYSIS ON IKEA INVASION IN AMERICA
References:
Adams, N. (2015). Design by Ikea: A Cultural History.
Björk, U. J. (2015). “Far Darker than the IKEA Paradise of Sensible Volvos”: American
Perceptions of Sweden Filtered Through Crime Fiction. American Studies in
Scandinavia, 47(2), 63-79.
Copic, M. (2015). MKTG 772 Strategic Brand Management.
Harapiak, C. (2013). IKEA's International Expansion.
Jonsson, P., Rudberg, M., & Holmberg, S. (2013). Centralised supply chain planning at
IKEA. Supply Chain Management: An International Journal, 18(3), 337-350.
Mochon, D., Norton, M. I., & Ariely, D. (2012). Bolstering and restoring feelings of competence
via the IKEA effect. International Journal of Research in Marketing, 29(4), 363-369.
Moon, Y. (2004). IKEA invades America. Harvard Business School.
Morsing, M., & Roepstorff, A. (2015). CSR as corporate political activity: Observations on
IKEA’s CSR identity–image dynamics. Journal of Business Ethics, 128(2), 395-409.
Sparks, R. J., & Langford, J. (2012). An Examination Of Traditional Business Case Studies-Are
They Outdated In Today's Technology Connected Environment?. Journal of Business
Case Studies (Online), 8(2), 217.