Global Economic Environment and Marketing Essay

Global Economic Environment and Marketing - Essay ExampleThis has lowered the cost of production for the association which in turn has provided them cost leadership. This also allows the company to maintain its environmental standards (The Times Newspaper, 2009). The key economic factors are Firstly, the exercising of renewable raw materials and smarter social function of them along with a dedicated relationship with suppliers have contributed to the companys performance. Secondly, the economies of scale enjoyed by the company in terms of huge production scales. This has that lowered production costs. Thirdly, it has strategically placed its sourcing materials close to the supply chain to reduce costs. This factor further reduces the cost of handling by the company and contributes to its profit. Lastly, the use of innovative technologies has increased the profits of the company over the years. This paper aims to understand the impact on the marketplaceing strategies of IKEA on ac count of globalization and the impact on the changing customer behaviour. Potential economic impact on marketing strategies IKEA initially operated with ten stores at the time it had opened. The increasing integration of the world economies on account of globalization has made IKEA operate a large number of stores to present day. The number of stores has raised to 345 in 42 countries in 2013 (IKEA Group, 2013b). IKEA has expanded its business enterprise across the continents of US, Asia along with the countries of Europe. The business environment it had to face in the different countries was different. For example, when it entered China, it faced a unique problem at hand by succeeding(a) its low pricing strategy. The Chinese customers were confused with the low prices of products, while the local companies began to copy the design. In China, the company chose to enter in a joint fortuity and customize its products to meet the aspirations of the clients (Chu, Girdhar and Sood, 201 3). Porters five forces can be applied to understand the marketing strategy of the firm. Firstly, the competition from other firms becomes an important factor. IKEA has created a highly competitive market for its business. Secondly, the threat of new entrants can pose a problem to a firm. This threat is relatively less for IKEA because of high levels of market saturation and high capital investments. Thirdly, the bargaining power of suppliers is one of the forces. In case IKEA, all the suppliers strive to maintain a good relationship with the firm. IKEA has kept up(p) strategic relationship with the suppliers, but reduced their bargaining power. The threat from substitute products is another component in Porters five forces. This threat is again weak in relation to IKEA because of its large scale. The bargaining power of the buyers is also less due to the large scale of operation of IKEA. This section concentrates on almost of these forces in shaping IKEAs choice (Luxinnovation G .I.E., 2008). Competitive advantage The factor which has contributed significantly to become the greatest competitive advantage for the company is cost leadership. This has in general owes to the self-sufficiency of the company. The company strives to provide for the home furnishings that are contemporary in sense of style, robust in quality and offers it at reasonably fair prices. IKEA does not depend on the third party manufacturers instead the employees of the company design the low cost furniture which can be readily assembled by the customers