International Business: Germany Europe and the World –

The IKEA Case StudyProf. Dr. Markus Raueiser

Cologne Business School, Germany

WELCOME!

Prof. Dr. RaueiserDean of International Business Department

• Regional networking, innovative cluster & strategisches

Mgmt

• Deutsche Bank AG & KPMG Peat Marwick LLP, New

York

The Nature of International Business

▪ All value-adding activities – including sourcing, manufacturing, and marketing – can be performed in international locations.

▪ International trade can involve products, services, capital, technology, know-how, and labor.

▪ Firms internationalize through various entry strategies, such as exporting and foreign direct investment.

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Dimensions of International Business

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Key Concepts in International Business

▪ International business: Performance of trade and investment activities by firms across national borders.

▪ Globalization of markets: Ongoing economic integration and growing interdependency of countries worldwide.

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Key Concepts (cont’d)

▪ International trade: Exchange of products and services across national borders; typically through exporting and importing.

▪ Exporting: Sale of products or services to customers located abroad from a base in the home country or a third country. Boeing and Airbus export billions in commercial aircraft every year.

▪ Importing or Global Sourcing: Procurement of products or services from suppliers located abroad for consumption in the home country or a third country. Toyota imports many parts from China when it manufactures cars in Japan.

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Key Concepts (cont’d)

• International investment: • Transfer of assets to another country or the • acquisition of assets in that country. Also known • as ‘foreign direct investment’ (FDI), we will focus• On this type of investment.

• International portfolio investment: Passive owner-ship of foreign securities such as stocks and bonds in order to

generate financial returns.

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The ‘Flows’ of International Business

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Who Participates in International Business?

▪ Multinational enterprise (MNE): A large company with substantial resources that performs various business activities through a network of subsidiaries and affiliates located in multiple countries. E.g., Caterpillar, Samsung, Unilever, Vodafone, Disney.

▪ Small and Medium-Sized Enterprise (SME): Typically, companies with 500 or fewer employees, comprising over 90% of all firms in most countries. SMEs increasingly engage in international business.

▪ Born global firm: A young, entrepreneurial SME that undertakes substantial international business at or near its founding.

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The Retail Giant from Sweden

31.10.2019 IKEA | © Prof Dr. M. Raueiser

IKEA’s Business Areas

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1943 20121973

IKEA and Sustainability

Implementation of IKEA’s sustainability strategy “People &

Planet Positive”

INGKA Foundation

Ownership of IKEA was transformed to

Stitching INGKA Foundation in the

Netherlands

IKEA in Switzerland

First Ikea store was opened outside of

Scandinavia in Switzerland

Founded by the Ingvar Kamprad from Sweden

I: IngvarK: KampradE: Elmtaryd (farm where he was brought up)A: Agunnaryd (Kamparad’s hometown

The largest furniture retailer

Ikea has been ranked as the largest

furniture retailer

20081982

€16.3 billion

€22.5 billion €1.6 billion

€1.2 billion

IKEABusinessFunctions

Our business idea is “to offer a wide range of well-designed, functional home furnishing products at prices so low that as many people as possible will be able to afford them”.

- Business Function

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IKEA’s Business Functions

Is IKEA an international enterprise?

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Latest Advertisement

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Marketing and Design in Sweden

Why does IKEA designs in Sweden?

Production in Bangladesh, China, Poland

Why does IKEA produce in Asia and Eastern Euope?

Headquarter in the Netherlands

Why is IKEA’s Headquarter in the Netherlands?

Sales worldwide

How can IKEA sell its products worldwide?

Discussion

30.10.19 IKEA | © Prof Dr. M. Raueiser

Headquarter

Why is IKEA’s Headquarter in the

Netherlands?

Netherlands

The business is a private company owned by Inter IKEA Systems B.V

Accounting issues

Tax purpose → 10% taxavoid over €1 billion in tax

payments over the 2009–2014 period

Taxation

Marketing and Design

Why does IKEA designs in Sweden?

Sweden

Get a modern PowerPoint Presentation that is beautifully

designed.

Main marketing tool is the catalogue

History of the founder Ingvar Kamprad

Products and furniture are designed in Sweden to maintain

the Scandinavian spirit

Nordic Identity

Production

Why does IKEA produce in Asia and Eastern Europe?

China, Bangladesh, Poland

China and Bangladesh produce more than 50% of Ikea’s Retail

Wood-based products come from Poland

Lower cost

Sales

How can IKEA sell its products worldwide?

Worldwide

There are

Ready-to-assemble furniture

Made for mass consumer market

433 IKEA stores operating in 52 countries

5% of Retail Sales are online

Functional product portfolio

China27%

Poland 19%

Italy 7%

Lithuania 5%

Sweden 4%

Germany 4%

Others 34%

IKEA’s Key Success Factors

“We work hard to achieve quality at affordable prices for our customers through optimising our entire value chain, by building long-term supplier relationships, investing in highly automated production and producing large volumes.”

30.10.19 IKEA | © Prof Dr. M. Raueiser

China- Store layout reflects

the layout of a typical Chinese apartment

- Special balcony section

- Location near public transportation as owing a car is not widespread

- Additional offers of home delivery

U.S.- Implementation of

King/ Queen and Twin Size

- Implementation of huge sofas

- Implementation of deep wardrobes

- Implementation of bigger glasses

Adaption to consumer needs

Locations are based on consumer behavior

Mantain IKEA Standards

IKEA Worldwide

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CBS AND COLOGNE

STUDY IN COLOGNE

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STUDENT CITY• Population:1 Million

• App. 97 000 students

• Sports & Recreation

• Cologne Carnival

MEDIA AND TRADE• Hub for multinational companies

• Trade Fairs

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COLOGNE BUSINESS SCHOOL

• International Business Focus

• International & practice-oriented

• Fully English-taught study programs

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• 3+1 Double Degree Programs

• German language courses

1500 STUDENTS

• 400 international students per year

• More than 70 nationalities on campus

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Email: international.office@cbs.dePhone: (+49) 221 / 93 13 09 – 476Web: cbs.de

3+1 BACHELOR DOUBLE DEGREE PROGRAM

Binus University (Sarjana Ekonomi or Sarjana Komputer) )

Cologne Business School (B.A.)

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B.A. in International Business, specialisation in:

▪ International Trade

▪ Marketing Management

▪ Financial Management

▪ International Business

▪ Accounting & Finance

▪ Marketing

▪ Info Systems

APPLICATION PROCESS

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3+1 PROGRAMS & STUDENT EXCHANGE/ STUDY ABROAD

Step 3:Complete the online application

Application deadlines: 1 May for Fall semester (Start August)1 November for Spring semester (Start January)

3+1 Candidates - Use the application form sent to you by Binus International

Step 2:Visit the CBS Webpage: https://cbs.de/en/internationality/international-students/visiting-students/

Step 1:Contact Binus International