Critical Issues Of IKEA

IKEA

In This project I am ignoring IKEA as a food and textile company and focusing on IKEA as a whole home furnishing Brand and not any specific product

Critical Issues at IKEA:

First: Lack of adaptation designs to Culture and country.

The IKEA idea is to provide a variety of home furnishing products that are affordable to the many people. It is accomplished by merging quality, design, function and value.

The company operates in more than 37 countries worldwide with more than 37 stores. However their product remains standardized everywhere with the modern and classic Scandinavian style.

As UAE in an emergent furniture market and beside locales more than 150 nationalities are living together in the country. Many families are mixed where

Product Strategy

IKEA pursues a standardized product strategy that means that the product collection is supposed to be matching in all IKEA’s stores all over the world. IKEA’s products must meet strict IKEA requirements for design, durability, safety, use, and care of environment. As mentioned earlier all IKEA’s products reflect light Scandinavian style. All IKEA products are designed by IKEA and then sourced globally since the products are produced by an outsourced company under solid quality-controlled conditions. (Usunier and Lee 2009)

The product strategy recommended is to introduce adapted product to UAE culture plus the multicultural environment of UAE resident it doesn’t mean to change the whole current product strategy but IKEA can use its innovative competencies in designing stylish and effective furniture to introduce new product especially if you look at catalogues of the last years you won’t see major changes in terms of new style.

Core actual and augmented product for IKEA:

The core product of IKEA is Home furnishing, the actual product is the well designed affordable, stylish, modern, Scandinavian and functional home furniture whereas the Augmented product will be all the products and services that support the actual product such as the after sales service, the delivery , the flat packaging idea, the physical evidence and so

Thus, the challenge will be on how to maintain the same brand image in long term especially in UAE where the market is open for competition.

Price Strategy:

“Low prices are the cornerstone of the IKEA vision, business idea and concept. The basic thinking behind all IKEA products is that low prices make well-designed, functional home furnishings available to everyone. After all, our vision is to create a better everyday life for the many people We are constantly trying to do everything a little better, a little simpler, more efficiently and always cost-effectively. All IKEA units play an important part in creating our low prices which we are then able to offer our customers.” (ikea.com)

Thus IKEA’s pricing strategy is based on low cost leadership. Products are sold at everyday low prices across markets where it currently operates; In IKEA Prices are up to 20% cheaper than the competitors on similar products and price variations are simply a result of fluctuations in exchange rates (Dahlving, 2012). IKEA increased its market share significantly by applying this market penetration