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Running Header: Ikea’s Global Strategy: Furnishing the World

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As a firm Ikea has many advantages. One of the most profitable advantages of

IKEA as a firm is the fact that they sell the same furniture all over the world. Because

their products are the same internationally they “reap huge economies of scale from

the size of its stores and the production runs necessary to stock [their stores] (Peter

& Donnelly, 411).” This economy of scale allows IKEA to be able to measure up to

their competitors on quality while still offering a low competitive price which is

approximately 30 % lower than competitors.

Additionally, another firm-specific advantage that IKEA possesses is their

ability to minimize cost through their global sourcing network. This network allows

IKEA’s designers to collaborate and work very closely with suppliers, so that savings

are built into all its products from the beginning. IKEA is also able to maintain large

capacity of inventory within their stores due their “ready-to-assemble” knockdown

kits. This is an advantage for IKEA because their customers do not have to wait for

the store to deliver the furniture; everything is in stock and ready to be taken home

the day they purchase.

Lastly, another firm-specific advantage of IKEA is their flat management

structure. This structure is an advantage for IKEA because they are able to innovate,

reorganize and make decisions quickly due to the fact that the chain of command is

not as extensive as most retailers. Individual employees were assigned more

responsibility and had more freedom than the traditional retailer, which ultimately

means that when a decision needs to be made on behalf of the company the decision

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