Its expansion into the US market. It adopted an ethnocentric strategy for going international – where it had standardized products and standardized operations. This helped to keep costs low, but ignored the different tastes and preferences of the US market and the way they purchased furniture. IKEA had to change the model of operating, giving greater ownership to its US subsidiary, to become polycentric – stores in the US had the ability to adapt furniture and customize to suit the local market. Costs increased as a result, but this localization approach was necessary for sales.

IKEA has looked towards emerging markets e.g. China for growth. Further adaptation to products has been necessary – including pricing strategy. Income levels of consumers is lower and stores needed to be located within the cities as car ownership is lower. IKEA has experienced greater competition from national brands.

ANSWER ALL THE QUESTIONS( 2 x 20= 40marks)

1. Assume that you are a competitor of IKEA, discuss what all procurement strategies you adopt to beat the competition.

2. Discuss how the new procurement and purchase strategies will help you in business