Business recent international activities
In the recent past, an array of the largest brands are facing threats as a result of slow growth in most developed economies and an increasing population in most homegrown brands. As getting the targeted sales to form local customers tend to become difficult, these companies are turning most of their attention to places where they can be able to attract most customers. In a nutshell, the most emerging markets are being identified in oversea countries where these companies can get cheap labour as well as access a vast market for their products and services. For some of these companies to become successful in the global market, they require a good understanding of the lifestyles, ideologies and cultural backgrounds of the target market areas for their goods to record a high number of sales. Furthermore, the standardization of the image, logo, brand name, brand positioning and packaging enables these brands to be recognized in many markets. In some cases, different brand values come to exist in other countries. Countries such as German prefer the notion of directness while Indonesia prefer acts of kindness. South Korea love many energetic brands. This paper sets to discuss how IKEA Company has recently achieved success in its expansion in the international market. Additionally, some of the strategies incorporated by this company towards achieving global success get widely explained.
IKEA is a Swedish firm worldly known for being the best furniture retailer. The company has managed to record over $30 billion in the recent past representing 2.5% of the international sales through the countries that the company operates (Cano-Kollmann et al., 2016). The company prides itself of selling inexpensive products of the Scandinavian design such as accessories, furniture, kitchens, and bathrooms in its 231 stores distributed across Asia, US, Europe, Austria and the middle east. For quite a long time, IKEA has widely been known for its exceptional concept, varied range of goods, flat packing and low pricing (Qureshi, 2016). To achieve this recent tremendous success, IKEA incorporated an array of objectives and strategies, and other ways of handling difficulties such as rivalry faced while imitating most IKEA products, and the dangers that were associated with using these strategies to achieve their targeted goals.
Firstly, IKEA managed strategies the art of making flat-pack design in its equipment at reasonable prices. This technique enabled the company to get regarded as the world biggest furniture retailer. The most consumer in many parts of the world developed interests in furniture products made by IKEA because they turned out to be affordable, durable and uniquely designed (Duval, & Kassoti, 2020). With this tremendous world market demand, IKEA was forced to expand its branches to other parts of the world to meet the needs of all their potential customers. Notwithstanding that, IKEA managed to make its products to fit all the customers from different financial capabilities. For instance, IKEA has recently started manifesting products that meet the financial abilities of low-income earners and those that meet the qualifications of high-income earners (Duval, & Kassoti, 2020). The recent world pandemic of the novel coronavirus affected many customers in the international markets as they lost their sources of income. IKEA developed this strategy of satisfying all its consumers by manufacturing products that could easily be purchased by customers with low income or those facing financial hardships as a result of the effects of COVID-19.
Furthermore, IKEA Company made a significant step by starting banking globally. The current market society is full of an aggressive intensified competition (Panahi, 2016). The adverse effects of this competition are that it leads to a slowdown in the world economic growth and severe risks management demands. IKEA managed to adopt worldwide banking as it is currently changing from being a protected industry to being deregulated. The survival of IKEA will strictly rely on the ability to take all the corners and succeed in making adequate profits that help in paying their shareholders, employees as well as build enough capital.
Additionally, incorporating this banking technique will enable the company to capture a leading share of all the capital that flows in countries of operation (Spinoglio, 2020). It will also be able to remain flexible in shifting its resources as required to most fast-growing areas and achieve profits in its business. The best place of winning global status is through banking with the European banks. These banks are in good shape due to its determination of not dominating the world like the way Japan and the United States did. The European banks have excellent conservative management characterized by an adequate capital base and reasonable rates of return on loans (Panahi, 2016).
Notwithstanding that, the borders have recently decided to create the European Economic Community where most of the European banks will have a command on the market shares, especially in their home countries. This will enable the banks to harvest an edge of many European customers. Some of the customers purchasing IKEA products from Europe will tend to have an easy time making their payments through European banks, leading to a lot of profits to IKEA Company (Spinoglio, 2020).
Notwithstanding that, cost efficiency is another employed strategy by IKEA Company, especially after the global striking of the novel coronavirus pandemic. The firm can utilize its skilled workforce by training them to play diversified roles to save on costs incurred while manufacturing the produce (Cano-Kollmann et al., 2016). Additionally, there is a control over the expenses available and provision of efficient operation techniques to maximize the value of their customers. IKEA has managed to achieve this strategy by making sure it improves its cost efficiency in the global market by reducing the costs of their labour and enhancing the level of its operational efficiencies. Such a move has also seen the company expand internationally as more nations still request for products from IKEA Company.
There is a high record of stiff competition coming from rival companies in contemporary society. What IKEA had done to curb this menace is to make sure most of its products and service have a differentiation. This involves delivering a high-quality service or providing customers with value-added service and goods. Such a strategy is very significant, especially when a company is planning to achieve growth in international trade. Qureshi (2016) adds that the process of service differentiation has helped IKEA company to gain aggressiveness in competing in most foreign markets hence leading to the realization of competitive advantages.
Another strategy entails environmental scanning. IKEA has managed to conduct many interactions with customers in various external environments. These trading activities make the stakeholders in IKEA to have a deeper understanding of its customer requirements and effective ways of responding to many environmental changes (Duval, & Kassoti, 2020). Environmental scanning is a unique process of management adopted by IKEA to get all the relevant external information such as market trends, customer expectations and government regulations. Such kind of information helps in internalizing the decision-making process of the company.
To achieve a significant external environmental relationship, IKEA has put a lot of focus on building and maintaining a good buyer-seller relationship. Qureshi (2016) asserts that this relationship creates an excellent experimental knowledge that is a requisite towards developing international markets. In most cases, firms equipped with excellent skills in building good customer relationships and those deployed to achieve a closely managed partnership with international customers have a more probability of realizing international success (Panahi, 2016). Furthermore, IKEA has implemented good customer support in the global market by making sure they express positive words in the word of mouth and feedback, especially when a customer buys goods or receives services from them. The ability of IKEA to carter for the needs of its customers gets better when compared to the competition. This technique is more likely to help in sustaining competitive advantages for a certain period. Setting international targets begins with identifying customer needs that involves solving most of the customer problems, making implementation plans as well as making transaction decisions (Cano-Kollmann et al., 2016). IKEA has also managed to survive in the international markets, especially during the post coronavirus pandemic. The company has collected market information on customer satisfaction. This allows the company to take positive critics to improve its areas of weaknesses and respond to their customer needs and demands. This also enables the IKEA Company to gain stability in new international markets (Qureshi, 2016).
References
Cano-Kollmann, M., Cantwell, J., Hannigan, T. J., Mudambi, R., & Song, J. (2016). Knowledge connectivity: A plan for innovation research in international business.
Qureshi, K. (2016). The role of business relationships between SMEs and network actors in defining standardization and adaptation strategies of SMEs: insights from business-to-business firms engaged in international activities (Doctoral dissertation, University of Essex).
Duval, A., & Kassoti, E. (Eds.). (, 2020). The Legality of Economic Activities in Occupied Territories: International, EU Law and Business and Human Rights Perspectives. Routledge.
Panahi, O. P. (2016). IKEA Group on the International Stage. Asia Pacific University of Technology and Innovation.
Spinoglio, M. A. (2020). Market Communication Strategy: A case study of IKEA.