By looking at globalization as a catalyst for growth Ikea has also been able to successful manufacturer highly customized Nordic and Scandinavian designs in lower cost regions of the world (Roncha, 2008). This has had the net effect of giving customers the opportunity to own advanced design furnishings without having to pay designer prices (Roncha, 2008). The idea of providing exceptional value at a low price is the essence of the Ikea value proposition as a company.

QUESTION 3: What does the IKEA story teach you about the limits of treating the entire world as a single integrated global market place?

The Ikea story shows that by taking a more heterogeneous approach to markets and seeking to capitalize on the unique strengths of each area from both a supply chain and retailing perspective pays off. Ikea has been able to make the highly fragmented global nature of retail markets work for them by coordinating store items in specific regions to the supply chains serving those regions (Ghauri, Veronika Tarnovskaya, Elg, 2008). In effect Ikea has been able to build demand-driven supply networks that keep each of their stores stocked with unique, high quality products. Considering the fact that each store has between 8,000 to 10,000 items that are sourced from approximately 1,300 suppliers it is clear how effectively Ikea is managing their...

Ikea has been able to do what many other retailers have not, and that is capitalize on the cost and production efficiency advantages of a global base of suppliers while also retaining the uniqueness of their product strategies.
While Ikea plans for major variations between regions both from a branding and retail execution standpoint (Tarnovskaya, Elg, Burt, 2008) the company has successfully created a global supplier network that minimizes inventory carrying costs by having retail locations serve as distribution centers (Ghauri, Veronika Tarnovskaya, Elg, 2008). Ikea has worked to create a differentiated shopping experience while combining a very high level of supply chain efficiency into their retailing the strategies. The result is a demand-driven supply network that capitalizes on the unique aspects of integrated global retail markets

References

Pervez N. Ghauri, Veronika Tarnovskaya, & Ulf Elg. (2008). Market driving multinationals and their global sourcing network. International Marketing Review, 25(5), 504-519. http://www.financialplanneruk.org/magazine/test19.pdf

Roncha, A.. (2008). Nordic brands towards a design-oriented concept. Journal of Brand Management, 16(1-2), 21-29.

Veronika Tarnovskaya, Ulf Elg, & Steve Burt. (2008). The role…