IKEA may be the world's most successful global retailer. Established by Ingvar Kamprad in Sweden in 1943 when he was just seventeen years old, the home furnishing superstore has grown into a global cult brand, with 230 stores in 33 countries that host 410 million shoppers a year and generate sales of 15 billion ($23 billion). Kamprad himself, who still owns the private company, is rumored to be the world's richest man. IKEA's target market is members of the global middle class who are looking for low-priced but attractively designed furniture and household items. The company applies the same basic formula worldwide: Open large warehouse stores, festooned in the blue and yellow colors of the Swedish flag, that offer 8,000 to 10,000 items from kitchen cabinets to candlesticks. Use wacky promotions to drive traffic into the stores. Configure the interiors of the stores so that customers have to pass through each department to get to the checkout. Add restaurants and child care facilities so that shoppers stay as long as possible. Price the items as low as possible. Make sure that product design reflects the simple, clean Swedish lines that have become IKEA's trademark. And then watch the results - customers who enter the store planning to buy a $40 coffee table and end up spending $500 on everything from storage units to kitchenware. IKEA aims to reduce the price of its offerings by 2 to 3% per year, which requires relentless attention to cost cutting. With a network of 1,300 suppliers in fifty-three countries, IKEA devotes considerable attention to finding the right manufacturer for each item. Consider the company's best-selling Klippan loveseat. Designed in 1980, the Klippan, with its clean lines, bright colors, simple legs, and compact size, has sold some 1.5 million units since its introduction. After originally manufacturing it in Sweden, IKEA soon transferred production to lower-cost suppliers in Poland. As demand for the Klippan grew, IKEA decided that it made more sense to work with suppliers in each of the company's big markets to avoid the costs associated with shipping the product all over the world. Today, there are five suppliers of the frames in Europe, plus three in the United States and two in China. To reduce the cost of the cotton slipcovers, production has been concentrated in four core suppliers in China and Europe. The resulting efficiencies from these global sourcing decisions enabled IKEA to reduce the price of the Klippan by some 40% between 1999 and 2006. Despite its standard formula, however, IKEA has found that global success requires that it adapt its offerings to the tastes and preferences of consumers in different nations. IKEA first discovered this in the early 1990s, when it entered the United States. The company soon found that its European-style offerings didn't always resonate with American consumers. Beds were measured in centimeters, not the king, queen, and twin sizes that Americans are familiar with. Sofas weren't big enough, wardrobe drawers were not deep enough, glasses were too small, curtains were too short, and kitchens didn't fit U.S.- size appliances. Since then, IKEA has redesigned its offerings in the United States to appeal to American consumers and has been rewarded with stronger store sales. The same process is now unfolding in China. The store layout

in China reflects the layout of many Chinese apartments: since many Chinese apartments have balconies, IKEA's Chinese stores include a balcony section. IKEA has had to adapt its locations in China, where car ownership is still not widespread. In the West IKEA stores are generally located in suburban areas and have lots of parking space, but in China they are located near public transportation and IKEA offers delivery services so that Chinese customers can get their purchases home.

Questions :

Is IKEA likely an MNE?

Group of answer choices

No, because IKEA is not listed on foreign stock exchanges.

Yes, because Ingvar Kamprad is rumored to be the richest man in the world.

No, because IKEA is an exporter.

Yes, because it owns assets in other countries in the form of retail stores.

Question 2Question 21 pts

Does IKEA engage in international business?

Group of answer choices

Yes

Not enough information to tell

No

Question 3Question 31 pts

Based on the case, which of the following advantages of international expansion does IKEA clearly exhibit?

Group of answer choices

Exploring reverse innovation.

Exposure to foreign currency fluctuations.

Extending a product's life cycle.

Optimizing the location of value chain activities.

Question 4Question 41 pts

Based on the case, which of the types of risk is clearly IKEA exposed to?

Group of answer choices

Volatility risks.

Management risks.

Globalization risks.

Political/economic risks.

: Question 5Question 51 pts

Which of the following would be an example of standardization as it pertains to multinational strategy?

Group of answer choices

The company applies the same basic formula worldwide: Open large warehouse stores, festooned in the blue and yellow colors of the Swedish flag, that offer 8,000 to 10,000 items from kitchen cabinets to candlesticks.

The same process is now unfolding in China. The store layout in China reflects the layout of many Chinese apartments: since many Chinese apartments have balconies, IKEA's Chinese stores include a balcony section.

Established by Ingvar Kamprad in Sweden in 1943 when he was just seventeen years old, the home furnishing superstore has grown into a global cult brand, with 230 stores in 33 countries that host 410 million shoppers a year and generate sales of 15 billion ($23 billion).

And then watch the results - customers who enter the store planning to buy a $40 coffee table and end up spending $500 on everything from storage units to kitchenware.

Question 6Question 61 pts

Which of the following would be an example of adaptation as it pertains to multinational strategy?

Group of answer choices

Make sure that product design reflects the simple, clean Swedish lines that have become IKEA's trademark.

The store layout in China reflects the layout of many Chinese apartments: since many Chinese apartments have balconies, IKEA's Chinese stores include a balcony section.

After originally manufacturing it in Sweden, IKEA soon transferred production to lower-cost suppliers in Poland.

IKEA aims to reduce the price of its offerings by 2 to 3% per year, which requires relentless attention to cost cutting.

Question 7Question 71 pts

Were there likely pressures for IKEA to lower costs?

Group of answer choices

No.

Not enough information to tell.

Yes.

Question 8Question 81 pts

If there werepressures to lower costs, which passage below best exemplifies such pressures?

Group of answer choices

IKEA's target market is members of the global middle class who are looking for low-priced but attractively designed furniture and household items.

Despite its standard formula, however, IKEA has found that global success requires that it adapt its offerings to the tastes and preferences of consumers in different nations

Established by Ingvar Kamprad in Sweden in 1943 when he was just seventeen years old, the home furnishing superstore has grown into a global cult brand, with 230 stores in 33 countries that host 410 million shoppers a year and generate sales of 15 billion ($23 billion).

There were likely no pressures to lower costs.

Question 9Question 91 pts

Were there likely pressures for IKEA to adapt its products to local tastes?

Group of answer choices

No.

Not enough information to tell.

Yes.

Question 10Question 101 pts

If there werepressures for local adaptation, which passage below best exemplifies such pressures?

Group of answer choices

The company applies the same basic formula worldwide: Open large warehouse stores, festooned in the blue and yellow colors of the Swedish flag, that offer 8,000 to 10,000 items from kitchen cabinets to candlesticks

After originally manufacturing it in Sweden, IKEA soon transferred production to lower-cost suppliers in Poland.

There were likely no pressures for local adaptation..

The company soon found that its European-style offerings didn't always resonate with American consumers.

Question 11Question 111 pts

Based on the above questions, which of Bartlett and Ghoshal's strategies is likely most appropriate for IKEA?

Group of answer choices

Multi-domestic.

International.

Global.

Transnational.

Question 12Question 121 pts

Considering the following data: according to Hofstede's research, Sweden scores a 71 on the individualism dimension of national culture (more individualistic). China scores a 20 (more collectivist). If you were a Swedish employee of IKEA who was sent to China to manage an IKEA store, which of the following situations might you encounter due to these cultural differences?

Group of answer choices

Individual Chinese employees asking for raises if their job performance was better than their co-workers'.

Chinese employees forming a union to get equal pay for all store workers.

Chinese employees preferring strict rules to reduce their uncertainty at work.

Individual Chinese employees demanding bonuses when they have strong sales records.