Strategies and International Business in IKEA Comapany Essay

Strategies and International Business in IKEA Comapany - Essay Example To begin with, the company lowered the prices of its goods and services in the home country and in the global market (Coe, 2009). This factor made it attract more customers from the competitors. Consumers are sensitive to prices and any slight difference would make them shift and enjoy the relatively lower prices. Because of the higher priced competitors’ products, IKEA managed to record increase in their customer base. Secondly, IKEA engaged in continuous designing of their products to improve their quality and preference. They also engaged in continuous introduction of new innovative products. Moreover, the company used the trademark to protect its goods from being counterfeited by the competitors. Trademark would also make IKEA products be distinct from those of the competitor's top help avoid confusion and to help in developing a brand (IKEA, 2010). In addition, IKEA opened their retail stores in the countries in which it operated to increase the availability of its products and to ensure customers get the direct attention from their agents (IKEA, n.d.). The opening of stores abroad would also ensure that the different customers’ demands are integrated into the production of the company’s goods. IKEA strength is gained from the variety of products it offers and the low prices it offers for their products. Through this, it reduced the costs through lowering storage space and reduced labor cost. The opening of the retails in Germany, Switzerland and US further made IKEA enjoy the wide market coverage and smooth its sales in case the product performance is not good in some of the geographical coverage. However, IKEA suffers from the problem of controlling quality in the global market without hiking the prices of their products (Coe, 2009). To sell their products at low prices mean that IKEA has to sacrifice the profit margin. The environmental regulation further poses a threat to the company since the materials used in manufacturing their furniture requires destruction of trees hence a potential threat. Several reasons prompted IKEA chose Switzerland as the first country to internationalize.  

It has been said that modern developments such as ABC are sometimes Essay - 1

It has been said that modern developments such as ABC are sometimes implemented because they are fashionable and not because they provide extra information to management. (Discuss the above statement) - Essay Example Job costing is another modern development, where the management gets information concerning the costs for each job order, their specifications and scope. Contract costing is yet another development that provides the management with information concerning heavy expenditure which takes a long period of time (Brimson, J. A. 1991). Historically, most of the companies placed their focus on the creation of value rather than investing in assets and organization. The dramatic development of companies led to the realization of the need to have practical accounting systems. The development of the ABC system has led to a positive change in productivity by espousing the identification of inefficient products, the allocation of more profits on resources, and cost reduction (Gosselin, M. 2005). However, most firms are experiencing problems ascribed to the implementation of ABC and in extreme cases; the implementation of the system fails to work out. For instance, in highly developed countries, some of the companies fail to grow and became stagnant owing to the use of ABC. Most companies that carry out a cost-benefit analysis on the use of ABC discontinue the implementation of the system since it is costly. The management should get constant updates on a company’s cost performance (Grieco, P. L., & Pilachowski, M. 1995). In using ABC system, some of the overhead costs are difficult to separate and the allocation of the cost on a product unit poses difficulties. An example of such an overhead cost is the Chief Executive Officer’s salary; this does not provide the management with appropriate reports on costs (Hansen, D. R., & Mowen, M. M. 2000). The ABC method allocates business costs to its products on a proportionate basis or based on assumptions. This translates into the generation of inaccurate reports on costs by the management. Affording the management accurate information