IKEA is one of the most well-known home furnishing brands in the world. The Swedish furniture has its production operations based mainly in Europe including Poland, Russia and Sweden. Its only non-European manufacturing plant in Virginia, the United States has been shut down in 2019 due to the cut of production cost. Nevertheless, due to the growing demand of DIY home furniture in the Asian markets, IKEA is considering the necessity to open new manufacturing plant in Indonesia to support the emerging demand. Use the following criteria to make suggestion whether the company should concentrate or decentralise its manufacturing operations based on; 1. Differences in political & economic system 2. Technological factors (i.e. fix cost, minimum efficient scale) 3. Product factors (i.e. value-to-weight, serve universal)

IKEA is one of the most well-known home furnishing brands in the world. The Swedish furniture has its production operations based mainly in Europe including Poland, Russia and Sweden. Its only non-European manufacturing plant in Virginia, the United States has been shut down in 2019 due to the cut of production cost. Nevertheless, due to the growing demand of DIY home furniture in the Asian markets, IKEA is considering the necessity to open new manufacturing plant in Indonesia to support the emerging demand. Use the following criteria to make suggestion whether the company should concentrate or decentralise its manufacturing operations based on; 1. Differences in political & economic system 2. Technological factors (i.e. fix cost, minimum efficient scale) 3. Product factors (i.e. value-to-weight, serve universal)

Microeconomics: Private and Public Choice (MindTap Course List)

16th Edition

ISBN:9781305506893

Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson

Publisher:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson

Chapter9: Price Takers And The Competitive Process

Section: Chapter Questions

Problem 15CQ

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