Question;Chapter 16 - IKEA;Instructions;IKEA, currently the world?s largest;furniture retailer, was founded in Sweden in 1943. The early years consisted;of selling pens, pictures frames, wallets, and other bargain items out of a;catalog. Today, the company generates over $23 billion in annual sales from;stores which focus exclusively on the furniture and home decorating market;located all over the world. IKEA retail locations are roughly three times the;size of a typical Home Depot. In designing its store layout, IKEA is;responding to consumer interest in one-stop shopping?finding what the;consumer wants in one store rather than having to visit numerous stores. In;addition, IKEA makes it easier for customers to shop once they enter the;store. It sets up furniture displays in ?lifestyle? themes that show the type;of furniture that singles, couples, or young families might need. The company;also uses vignette displays to suggest how a customer can put together;various items to create a certain look. These types of displays are perfect;for the generation that is no longer interested in buying furniture to last a;lifetime but rather that fits their lifestyle now.;Presently, one of the most important;decisions facing IKEA is how and where it should look to expand its business;and its revenues. The company has announced its desire to add new store;locations in Russia, Germany, France, China, Italy, Japan, U.K., Finland;Spain, and Switzerland. However, IKEA is more than just a bricks-and-mortar;retailer. In recent years, the firm has also become a popular online store.;Its website is very popular, it got 450 million hits during the year 2007;alone. Despite its renown among online furniture shoppers, IKEA recently;announced plans to focus on the instore experience as ?the only sales;channel.? It does not plan to invest more money in home shopping or online;sales channels. The company bases this decision on its belief that the chain;can give customers the best offers and the lowest prices when it makes its;products available only through its bricks-and-mortar stores. Despite IKEA?s;successful history, there are no guarantees for the future in the;hyper-competitive world of retailing. Is focusing solely on the in-store;experience the right decision? Can IKEA reach its growth and revenue goals;without online sales? In the U.S. alone, Internet sales of home furnishings;are over $150 billion a year, and industry experts forecast continued annual;growth at double-digit rates. Would IKEA be better to continue to push online;sales at least in some areas of the world?;1. What is the decision facing IKEA?;2. What factors are important to;understanding this decision situation?;3. What are the alternatives?;4. What decision(s) do you recommend?;5. What are some ways to implement your;recommendations?
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