IKEA: Furniture Retailing on a Global Scale With a product range of more than 12,000 articles and annual sales

of more than 28 billion dollars, IKEA is the largest furniture retailer in the world. IKEAs business model is to source furniture sold as a kit from low-cost suppliers and assembled at home at low prices. In total there are 1,500 suppliers in more than 50 countries. Furniture is sold via a colorful catalogue, a website, and retail stores. The stores are massive, warehouse style, and emphasize self-service. (Check out the catalogue at www.ikea.com/ms/en_US/ and the firm at www.ikea.com/). IKEA mails 160 million catalogs in 17 languages each year. The Swedish firm operates over 200 stores in more than 30 countries. The U.S. accounts for 11 percent of total sales, but Germany is IKEA's biggest market, with nearly one-fifth of total sales. IKEA is expanding into Asia, especially Japan. As a global firm, most decision-making is centralized at company headquarters in Sweden. However, some decisions are decentralized, such as those regarding advertising strategy, ad content, and media decisions. Worldwide, sourcing, retailing and distribution are geographically dispersed. Corporate culture emphasizes a flat organization, informality, and management closeness to customers. Only four layers separate the president from the check-out/warehouse worker. This speeds up decisionmaking. Few sales clerks are necessary, their job consisting mainly of displaying the assembled pieces and restocking. Once a year an antibureaucratic week is organized, when managers wear sales clerks uniforms and do everything, from operating cash registers to driving forklifts in warehouses. Managers understand worker attitudes firsthand and how they relate to customers. Top management remains close to the real world (suppliers, customers, and salespeople). Cultural differences have hampered relations between IKEA and its American managers. Initially international expansion was based on total standardization of the product mix. Today management pays more attention to national differences. For example, European-style beds are narrower and longer than U.S. beds, raising problems for the fit of sheets. IKEAs target market is young people in all ages, mainly with high income, high education, white-collar work, low concern for status, and low conservatism and dogmatism. The firm targets specific, global market segments, such as college students, young couples, homosexual couples, divorced persons. Each IKEA store follows a centrally developed marketing model, with advertising budgets and objectives developed at headquarters. What are the key factors contributing to IKEAs success? Is IKEAs standardized approach to global marketing working? Can the standardization approach work in all markets where IKEA operates or intends to enter? IKEAs furniture has a very utilitarian look and feel. To what extent does this allow the firm to pursue a global strategy? Using Yips framework (organization structure, people, culture, management processes), analyze IKEAs approach to global strategy. What types of strengths and weaknesses do you detect? What could be the cultural reasons for IKEAs problems with store managers and employees in the U.S.? Can continued growth be expected? What proactive steps should IKEA management take? Is IKEAs management structure a good model for global companies in general? Why or why not?