Why should businesses trade internationally?
Introduction
Ikea: This company was founded around 1943 and was implemented as a furniture catalogue
business in Sweden. In modern times, it is widely known as one of the top home furnishing
brands that comforts their customers all around the world, bringing design and affordability.
Their purpose is to create an “better everyday life” for many of their customers, whilst offering
a wide range of well-constructed furniture at affordable prices for people to buy. The size of the
company is quite immense since they are an internationally known retailer with a leading value
of 21 billion US dollars. As of now, they are the world’s leading furniture company with an
estimated value of the global furniture markets. Ikea tends to use an aggressive scale by
reducing the transportation, assembly and inventory costs, making sure that they locate any
country that had willing customers to purchase these fees. The company’s ownership is
controlled by many numbers of operating companies and non-profit organizations. This was
implemented in response to the Swedish Taxation Ikea had to face.
Reference: https://www.ikea.com/gb/en/this-is-ikea/about-us/
Lidl: The supermarket was founded in 1994, having their first store being opened in Germany.
Over the few decades, the company now has over 900 stores and 13 regional distribution
centers across the United Kingdom, recruiting many employees. Their purpose is to take pride
in ensuring that their customers are provided with the highest quality products at the most
affordable prices. For this to happen consistently, the company must work closely with its
suppliers to ensure operations are working smoothly. The size of Lidl has grown a great deal,
making the company become one of Europe’s leading food retailers because of their bargains
and customer service. Their revenue equates to 100.8 billion euros, operating within the
hypermarket chain called “Kaufland.” Lidl works on a passive scale such as strategizing on
stocking everyday items that move quicker than others. The variety of products available at Lidl
are the type of high demand things that increase the gross profit for the company. Lidl’s
ownerships are controlled by the Schwarz group, which is a family-owned multinational group
that operates in grocery industries.
Reference: https://www.lidl.co.uk/about-us
,International business
These types of businesses refer to the trade of goods and services across various markets at a
global or transnational level. It involves cross-border transactions of goods and services
between multiple countries. Ikea is part of an international business because they import
furniture from Sweden and the Netherlands.
Types of business activities in IKEA:
Exporting business
Ikea has a thorough corporate structure, suggesting that the company isn’t going to be a public
limited company. The company can be both cost-effective and environmentally friendly by
using flat packs, transporting goods by rail and sea whenever possible, and employing fuel-
saving techniques. IKEA products are sold in over 400 IKEA stores in 52 countries and bear label
"Design and Quality, IKEA of Sweden." IKEA decided to export goods internationally to other
countries in Europe to justify their key values which is ensuring “to provide smart solutions for
homes by implementing three criteria: good design, functionality and low prices.” This is crucial
for their business because they wanted to target their niche market, ensuring an increase in
share prices and revenue.
Importing business
Most of their operations, management and designs of the furniture are made in Sweden and
their manufacturing sector has been imported to China within many other Asian countries. This
is important because importation is crucial to the economy, sourcing cheaper prices for goods.
Rather than scouring the globe for priced products to sell, IKEA starts with design specifications
and a price objective, then seeks solutions from manufacturers who can meet those
specifications and that objective. Given their global market, the incentive is powerful, and it
frequently leads to innovative new manufacturing processes and effective material uses. This
consists of constant expansions of IKEA into new markets, as well as the ever-changing
economies of the countries where IKEA seeks to source its products, means that the specifics of
what is manufactured and where it is manufactured, are constantly changing but are mostly
began by countries in Asia. The main reason IKEA imports is because it lowers manufacturing
costs and many businesses today find that importing products, parts of products, and resources
is less expensive than producing them locally. There are numerous examples of entrepreneurs
discovering high-quality products at low prices, even when total import costs are considered.
Instead of investing in modern, expensive machinery, entrepreneurs choose to import goods
and save money. In most cases, they would just end up ordering in massive quantities to get a
better price and reduce costs, which can be the right approach.
Multinational enterprises
, I would say that IKEA is a multinational business because they operate as a global integrated
business in many countries so that they can reduce costs as much as possible through making
use of the economics of scale on their product that they offer worldwide, as a result, this builds
up their brand recognition and hopefully increases their product demand. It is important for
companies like Ikea to expand internationally so that they can receive customers from other
countries, resulting in an increase in sales revenue. This will allow IKEA to simultaneously lower
their operational costs, making them save money and look for cheaper suppliers across the
world. One of the benefits of businesses like IKEA operating internationally so that they can
widen their supplier network, ensuring that they find better resources for cheap across the
globe. IKEA managed to do this by optimizing their products and supply chain management,
resulting in internal competitiveness across other retailers and distributors in the supply chain
to reduce their costs. Their objective would be to create an advanced supply chain whilst
offering high quality resources so that they can reduce their shipping costs, increasing their
profit margins.
Associated businesses
Another type of activities IKEA is involved in are “associated business”, using internal logistics
in the store. Their key responsibilities are to monitor and record deliveries being made so that
there is an efficient flow of goods in the store, making it essential to enhance customer loyalty
and maintain higher sales. IKEA is one of the world’s privately held companies managed by
family ownership in Sweden. A benefit for associating businesses is increasing profitability,
growth and gaining exposure to the new markets and other potential business segments Ikea
may have. This would be an excellent way for businesses like IKEA to take advantage of other
businesses by forming partnerships that would help increase their market share and
recognition amongst other companies in the furniture industry, ensuring that the customers are
aware of the company’s products. Overall, this will assist them in making the buying decision.
There is also a social factor that involves associated businesses, building strong and meaningful
relationships with the stakeholders so that they can continue supporting the company through
investments. Most of the time businesses would assist other organizations by offering resources
or working in partnership to offer international trade. This relates back to logistics and
marketing, where the company would have minimized the total cost of delivery by still offering
high quality furniture. A positive impact of this results in lowering the environmental impact.
However, their supply chain goal being to keep advantage on lowering the price on products,
they still must find a direct and cost-effective way to transport goods from the suppliers to the
customers. This approach would achieve a poor environmental impact so it cannot be ideal for
the business.
Reference: https://www.tradegecko.com/blog/supply-chain-management/ikeas-inventory-
management-strategy-ikea
Introduction
Ikea: This company was founded around 1943 and was implemented as a furniture catalogue
business in Sweden. In modern times, it is widely known as one of the top home furnishing
brands that comforts their customers all around the world, bringing design and affordability.
Their purpose is to create an “better everyday life” for many of their customers, whilst offering
a wide range of well-constructed furniture at affordable prices for people to buy. The size of the
company is quite immense since they are an internationally known retailer with a leading value
of 21 billion US dollars. As of now, they are the world’s leading furniture company with an
estimated value of the global furniture markets. Ikea tends to use an aggressive scale by
reducing the transportation, assembly and inventory costs, making sure that they locate any
country that had willing customers to purchase these fees. The company’s ownership is
controlled by many numbers of operating companies and non-profit organizations. This was
implemented in response to the Swedish Taxation Ikea had to face.
Reference: https://www.ikea.com/gb/en/this-is-ikea/about-us/
Lidl: The supermarket was founded in 1994, having their first store being opened in Germany.
Over the few decades, the company now has over 900 stores and 13 regional distribution
centers across the United Kingdom, recruiting many employees. Their purpose is to take pride
in ensuring that their customers are provided with the highest quality products at the most
affordable prices. For this to happen consistently, the company must work closely with its
suppliers to ensure operations are working smoothly. The size of Lidl has grown a great deal,
making the company become one of Europe’s leading food retailers because of their bargains
and customer service. Their revenue equates to 100.8 billion euros, operating within the
hypermarket chain called “Kaufland.” Lidl works on a passive scale such as strategizing on
stocking everyday items that move quicker than others. The variety of products available at Lidl
are the type of high demand things that increase the gross profit for the company. Lidl’s
ownerships are controlled by the Schwarz group, which is a family-owned multinational group
that operates in grocery industries.
Reference: https://www.lidl.co.uk/about-us
,International business
These types of businesses refer to the trade of goods and services across various markets at a
global or transnational level. It involves cross-border transactions of goods and services
between multiple countries. Ikea is part of an international business because they import
furniture from Sweden and the Netherlands.
Types of business activities in IKEA:
Exporting business
Ikea has a thorough corporate structure, suggesting that the company isn’t going to be a public
limited company. The company can be both cost-effective and environmentally friendly by
using flat packs, transporting goods by rail and sea whenever possible, and employing fuel-
saving techniques. IKEA products are sold in over 400 IKEA stores in 52 countries and bear label
"Design and Quality, IKEA of Sweden." IKEA decided to export goods internationally to other
countries in Europe to justify their key values which is ensuring “to provide smart solutions for
homes by implementing three criteria: good design, functionality and low prices.” This is crucial
for their business because they wanted to target their niche market, ensuring an increase in
share prices and revenue.
Importing business
Most of their operations, management and designs of the furniture are made in Sweden and
their manufacturing sector has been imported to China within many other Asian countries. This
is important because importation is crucial to the economy, sourcing cheaper prices for goods.
Rather than scouring the globe for priced products to sell, IKEA starts with design specifications
and a price objective, then seeks solutions from manufacturers who can meet those
specifications and that objective. Given their global market, the incentive is powerful, and it
frequently leads to innovative new manufacturing processes and effective material uses. This
consists of constant expansions of IKEA into new markets, as well as the ever-changing
economies of the countries where IKEA seeks to source its products, means that the specifics of
what is manufactured and where it is manufactured, are constantly changing but are mostly
began by countries in Asia. The main reason IKEA imports is because it lowers manufacturing
costs and many businesses today find that importing products, parts of products, and resources
is less expensive than producing them locally. There are numerous examples of entrepreneurs
discovering high-quality products at low prices, even when total import costs are considered.
Instead of investing in modern, expensive machinery, entrepreneurs choose to import goods
and save money. In most cases, they would just end up ordering in massive quantities to get a
better price and reduce costs, which can be the right approach.
Multinational enterprises
, I would say that IKEA is a multinational business because they operate as a global integrated
business in many countries so that they can reduce costs as much as possible through making
use of the economics of scale on their product that they offer worldwide, as a result, this builds
up their brand recognition and hopefully increases their product demand. It is important for
companies like Ikea to expand internationally so that they can receive customers from other
countries, resulting in an increase in sales revenue. This will allow IKEA to simultaneously lower
their operational costs, making them save money and look for cheaper suppliers across the
world. One of the benefits of businesses like IKEA operating internationally so that they can
widen their supplier network, ensuring that they find better resources for cheap across the
globe. IKEA managed to do this by optimizing their products and supply chain management,
resulting in internal competitiveness across other retailers and distributors in the supply chain
to reduce their costs. Their objective would be to create an advanced supply chain whilst
offering high quality resources so that they can reduce their shipping costs, increasing their
profit margins.
Associated businesses
Another type of activities IKEA is involved in are “associated business”, using internal logistics
in the store. Their key responsibilities are to monitor and record deliveries being made so that
there is an efficient flow of goods in the store, making it essential to enhance customer loyalty
and maintain higher sales. IKEA is one of the world’s privately held companies managed by
family ownership in Sweden. A benefit for associating businesses is increasing profitability,
growth and gaining exposure to the new markets and other potential business segments Ikea
may have. This would be an excellent way for businesses like IKEA to take advantage of other
businesses by forming partnerships that would help increase their market share and
recognition amongst other companies in the furniture industry, ensuring that the customers are
aware of the company’s products. Overall, this will assist them in making the buying decision.
There is also a social factor that involves associated businesses, building strong and meaningful
relationships with the stakeholders so that they can continue supporting the company through
investments. Most of the time businesses would assist other organizations by offering resources
or working in partnership to offer international trade. This relates back to logistics and
marketing, where the company would have minimized the total cost of delivery by still offering
high quality furniture. A positive impact of this results in lowering the environmental impact.
However, their supply chain goal being to keep advantage on lowering the price on products,
they still must find a direct and cost-effective way to transport goods from the suppliers to the
customers. This approach would achieve a poor environmental impact so it cannot be ideal for
the business.
Reference: https://www.tradegecko.com/blog/supply-chain-management/ikeas-inventory-
management-strategy-ikea
