Tuesday, September 3, 2013

Ikea's Strategic Supply Chain Expansion in China

After reading Margonelli's article "How Ikea Designs Its Sexy Price Tags", I was very interested in exploring the company's strategic plan for expanding their supply chain. Margonelli stated that Ikea strives "to discover ever-cheaper labor in ever-cheaper markets." She further explains that Ikea manages to maintain and increase their variety of suppliers by creating local offices which monitor the products but more importantly "foster competition" and "keep production costs low."

I was able to find an article, "Ikea builds on success in Jiangsu", which explains how Ikea is opening a manufacturing facility in China as a part of their strategic plan to quickly expand their supply chain in the Asian market. This article stresses how important the Chinese market is for the future of Ikea's supply chain, especially with regards to their strategy to maintain quality products at lower prices. The article also explains how building new factories closer together in China allows for the optimization of the value chain with regards to the manufacturing and selling of Ikea's products.

While I believe that Ikea's decision to rapidly expand their supply chain into the Asian market is strategic, when will Ikea reach a point where competitors (locally or globally) imitate their strategies, from production to distribution, in order to take a piece of their market share?


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