Ikea in russia

Case Study Report
IKEA in Russia

Emily Kane - 491340
Eleanor Jones - 491338
Silvia Blanco - 490319
Luis Felipe Hernandez - 490819

4th March 2011

Executive Summary
IKEA began as a small company in Sweden selling small household items but in 1945 began selling furniture. IKEA has expanded to other European countries, Canada and Australia. Currently, IKEA is the market leader in thedistribution of furniture and home decorative items. IKEA entered the Russian market in 1991 but did not open its first store until 2000 in Moscow.
 
IKEA stayed in Russia during their economic downturn gaining respect from the Russian public and government. To say competitive IKEA has tried to lower cost without losing quality in their products. They are able to do this because of a goodrelationship with their supply chain and customer involvement. IKEA does half of the work and have the customers do half. IKEA does not adapt their products for each market they are in. This has proven beneficial for IKEA.

IKEA has a strong brand and a unique vision. They want to transfer the IKEA culture and values into Russia. Russian stores have become a training site to teach eachemployee IKEA values.
 
IKEA was able to come up with solution to the problem that Russian homes are small and often house 2 or 3 families without changing their products drastically. IKEA was able to convey to the Russian people that having a beautiful home does not have to cost a fortune. Within the Russian store the employee paid special attention to making sure the Russian customers feelwelcome. One issue still facing IKEA is the difficulty finding local suppliers.

IKEA has several strengths that outweigh their weaknesses in the Russian market. IKEA is an established company and has invested time and money in Russia and that is seen though the opening of new stores and extensive training programs. IKEA does have a problem with finding local suppliers but that could change whenRussia grows economically. IKEA decided to change the customers values instead of changing the product line and it worked in the Russian market because the Russians were looking for a change. But they could have changed small things like the names of some product to connect better with the Russian consumer.
 
Currently, IKEA has not made a profit in the Russian market but they areoptimistic that profits will be coming soon. IKEA has been successful in changing the traditional Russian values to IKEA values. In the Russian market there are three stores with more to come in the next few years. IKEA should continue in their plan for a Mega Mall because it emphasizes change and that is what the Russian public wants.

Table of Contents

Introduction p.4
CurrentMarketing Strategy p.5
Situation Analysis p.6
Problem Definition p.6
SWOT/ TOWS Analysis p.7
Evaluation of Alternatives p.8
Conclusion p.9
Recommended Courses of Action p.10
Bibliography p.11

Introduction
The story of IKEA began in 1943, in Småland (Sweden), by Ingvar Kamprad. The name of IKEA came from the two first lettersof his founder’s name (Ingvar Kamprad), the first letter of the farm (Elmtaryd) and town (Agunnaryd) where Ingvar grew up. At the beginning, it was only a small business and Ingvar used to sell pens, wallets, picture frames, table mats, clocks, jewelry and nylon stockings. In 1948, he started selling furniture.
Since the 60’s, IKEA started to expand and opening stores in other Europeancountries, in Canada and in Australia. In 1982, the IKEA group is formed and it became property of the Foundation Stichting INGKA, based in The Netherlands. The reason why IKEA group became property of a Foundation was that his, Ingvar Kamprad, wanted to create an independent and long-term organization.
Nowadays, IKEA is the market leader in the distribution of furniture and decorative items for the...