A customer in Riyadh buys a table from IKEA, only to discover when it arrives home that it is not a ready-made table, but a collection of panels, screws, and assembly instructions. The same scene could play out with another customer in London or Tokyo.

What seems like an extra task for the buyer is a core part of the Swedish company’s business model. Selling furniture in flat-pack boxes does more than change the shopping experience; it also helps lower storage and transport costs.

But can a company rely on the same model around the world, despite differences in consumer tastes and needs?

When standardizing products becomes an economic advantage

One of the concepts covered in Dr. Stephen Rosenbaum’s international business course at Al Yamamah University is the Global Strategy. Companies use this strategy to standardize their products and activities across markets, with the aim of achieving efficiency and benefiting from economies of scale.

Economies of Scale refers to a decrease in the average cost of producing a unit as production volume increases, within certain limits.

IKEA offers a practical example of this idea. Rather than designing entirely different products for each country, the company relies on a wide range of furniture that can be produced and distributed internationally. Flat-pack packaging makes more efficient use of shipping and storage space, while consumers assemble many products themselves.

In this way, cost reductions are not limited to manufacturing; they extend to product design, packaging, transportation, and how the product reaches the customer’s home.

Does the same product suit all consumers?

Despite the economic advantages of standardization, applying the same model in every country can pose challenges related to home sizes, consumer habits, and customer expectations around services.

An academic study comparing IKEA’s strategies in Sweden, the United Kingdom, and China shows that the company does not rely on complete standardization across all aspects of marketing. Instead, it combines standardized elements with adaptations suited to local markets.

This balance matters: local adaptations can help the company meet consumers’ needs, but they may increase costs if they lead to a proliferation of products and more complex operations.

The experience offers a lesson for Saudi companies aspiring to sell their products globally: there is no need to design a new product for every market, nor to impose a single standardized product on everyone. What matters is identifying which elements can be standardized without compromising the customer experience, and which are worth adapting.

The economic value of a global strategy lies not in selling the same thing everywhere, but in knowing what should remain standardized and what needs to change.

Academic reference:

Burt, S., Johansson, U., & Thelander, Å. (2011). Standardized Marketing Strategies in Retailing? IKEA’s Marketing Strategies in Sweden, the UK and China. Journal of Retailing and Consumer Services, 18(3), 183–193.

https://doi.org/10.1016/j.jretconser.2010.09.007