IKEA has been pursuing a global strategy. This approach makes it possible for the company to acquire cheaper products. The products are then marketed globally thus supporting the firm’s performance. The firm has also reduced business and operational costs.
However, the strategy generated numerous concerns after cases of child labor emerged. The global strategy is “difficult to manage because of the need to coordinate strategies and operating decisions across country borders” (Hitt et al., 2010, p. 228). The issues of product quality, labor practices, and business ethics continue to affect IKEA. The important thing is for Marianne Barner to identify new partners that engage in ethical business practices. This decision will eventually support the firm’s profitability.
The case of IKEA shows how global strategies can produce numerous issues and concerns. An international strategy ensures that a company markets its products to more consumers. This strategy makes it possible for organizations to leverage their respective economies of scale. The approach minimizes business risks while at the same time speeding up operations. Costs of production can also be reduced significantly.
The approach also supports the lifecycles of different products. For instance, older products can be launched in emerging markets. This strategy also makes it possible for many companies to obtain new talents from different locations. As well, such companies must incur extra costs to attract more customers. The strategy can also fail especially when it is not managed well. Various global strategies result in different operational risks. Uncertainties and economic changes can also affect the performance of many international corporations.
Reference
Hitt, M., Ireland, R., & Hoskisson, R. (2010). Strategic Management: Concepts and Cases. Boston, MA: Cengage Learning.