Ikea the Global Retailer

Being one of the biggest global retailers, IKEA benefited a lot by the globalization of its business. The company started as a home-furniture retailer in Sweden and throughout the years began to expand. Through globalization, IKEA managed to increase its business revenue and profit by selling and making home-furniture in different countries all over the world. The company has setup over 300 retail stores in more than 30 countries.

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Other than that, they sell more than 8,000 different products, which attract customers from different places all over the world. The financial report of IKEA in the last year shows that IKEA made a profit of $2. 1 billion Kronor ($263 million US dollars) from the total sales of 12. 3 billion Kronor ($1. 76 billion US dollars) from their retail stores worldwide. Among the 301 stores, there are only 17 stores in Sweden, which shows that the major revenue of IKEA is not from its home country, but the global market.

The globalization of markets gives IKEA the advantage to sell their products worldwide while gaining profit as a company. Other than the 301 IKEA retail stores in the world now, IKEA plans to open approximately 26 new retail stores in different countries to increase the revenue of the company. Other than the globalization of market, IKEA also globalizes its production. Due to higher production cost of certain materials IKEA decided to globalize their production by producing all over the world.

In order to achieve the lowest production cost of each product, IKEA has setup a huge network in 53 countries with more than 1,300 suppliers. The Klippan love seat, a product that has been with IKEA since 1980, decreased in price by more than 40 percent between 1999 and 2005 due to the decrease in production cost from globalization. Through globalization of production, IKEA earned much more profit on each product, so as to increase the total revenue of the company.

IKEA’s success story as a company teaches me as an individual that you cannot limit yourself when it comes to expanding. If IKEA didn’t globalize not only would they not gain revenue nor would people be exposed to their great products and prices. Treating the entire world as a single integrated global marketplace allows a company to truly believe that the sky is the limit. You can make products in the US and sell in China or Japan and vice versa. The future looks bright for IKEA as a company because they have already made so much progress.


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