How has the globalization of markets and production benefitted IKEA? Globalization as we know it is the phenomenon of the world economies becoming reliant and integrated with one another. This is otherwise known as the trend characterized by denationalization where the world now becomes a global marketplace. IKEA is recognized to be a globalized brand with the ability to spread their own culture and values to over 300 stores in over 38 countries. The globalization of market refers to the merging of taste and preferences of consumers from all around the world resulting in an emergence of a single global marketplace.
IKEA has thus used this occurrence to their advantage by shaping their business model to emphasize on standardization, customization and functionality. IKEA’s motto “ One design suits all” is a simple yet effective business model that has helped them cater to all the diverse markets around the world today. In general IKEA products are standardized across markets and have high functionality that cater to the needs of people in every country. IKEA also functions on the principle of offering furniture at low and affordable prices.
Despite its low costs, products are still of high quality due to the ability to mass produce their products. Similar to Macdonaldization, IKEA has been able to answer to the uniform taste of consumers in todays society and at the same time spread its own culture identity internationally. IKEA only uses different marketing and advertising strategies for their various markets to better cater to the local consumers. Globalization of production refers to the outsourcing of raw goods and services to other locations around the world in order to maximize quality and minimize costs of various factors of production.
In the case of IKEA, due to the high levels of standardization in all their products they are able to manufacture products in bulk and thus enjoy the cost savings from the economies of scale. This way, cost of production is kept low and goods are always efficiently produced. Furthermore, IKEA is also known to use a unique supply chain strategy where they outsource productions of product/furniture parts to low cost developing countries located nearby their store locations (e. . China, India). From this, IKEA is also able to establish good relations with local suppliers in many locations to negotiate mutually beneficial contracts to get high quality products at lower costs. This method of merging intercultural communication into their business model allows IKEA overcome potential problems and succeed in globalizing their production. At the same time this also helps IKEA drive local competition out of their way.