Topics: IKEA, Strategic management, Good Pages: 5 (1250 words) Published: February 25, 2013
Ikea has been offering a wide range of well-designed home furnishings and functional living solutions at a lower price so that many people can afford them. This business idea supported their vision of creating a better everyday life for the many people (Ikea, 2012). Ikea’s Value

Value is what customers see and willing to pay for that exceeds the cost of the product. Ikea’s value chain offers their customer a value which results in a profit margin. Ikea’s customers are mainly attracted by their high quality products, affordable price, functional design and family-friendly environment. Affordable Price

Low prices are the cornerstone of the IKEA vision, business idea and concept (Ikea, 2012). Ikea offers well-designed, functional home furnishing products at affordable prices which make it available to everyone. As price is always a concern for customers, Ikea are constantly trying to be more efficiently and always cost-effectively.

High Quality Products
Ikea has always been able to produce high quality products that would appeal to a wide range of demographic markets. This is a core concept that customers will consider when selecting for home furnishings and Ikea is capable to offer an affording price without sacrificing the quality. Good and functional design

Customers are also attracted by Ikea’s affordable contemporary design. Ikea adapts the latest designs and include functional living solution in the products to sell within local markets. By working together with skilled manufacturers, IKEA designers find ways to get the most out of a raw material and constantly looking for smart solutions to meet customers’ needs (Ikea, 2012).  Family-friendly Environment

Ikea offers a wide array of family friendly services to make customers’ shopping experience more complete. The Smaland in the entrance lobby is a free supervised play area for customers to leave their children to play. There are also play area in the restaurant for children, family parking, family restroom and shopping strollers (Ikea, 2012).

Store Design
Ikea has unique way of displaying their products. They displayed their furniture in a real room setup, with the details of each displayed product. Customers were provided paper and pencils to list down product details. IKEA‘s intention was to take customers through all of its products so that even a customer who entered the store with a planned shopping list would check out other products which might interest them. (Dahman et al, 2011).

External Environment Analysis
Pest Analysis
Political factor
Increasing globalization and protectionism challenged Ikea to compete against unknown forces and to source the best quality and financially viable products. Ikea also has to be wary of protectionist policies of many countries as they may impose high tariffs on goods imported. However, IKEA may stand to lower its costs as government begin to lower taxes or provide subsidies to help businesses stay afloat in this economic crisis (Dahman et al, 2011). Economical factor

The fluctuating commodity and raw material prices result in rising purchasing costs for IKEA. This will have an impact on the margins and might lead to increase of the product prices. This may also decrease consumers’ purchasing power and they may be reluctant to change new furniture and spend less on luxury items. All this may result in decreasing of sales and thus, reduced margins (Dahman et al, 2011). Social factor

Ikea has been maintaining social equality and show complete understanding of the consumers by developing the stores accordingly. Ikea includes other facilities in the stores like a supervised children play area which parents are able to leave their children there while shopping. There is also a children play area in the restaurants. Technological factor

Other than catalogue, Ikea make use of technology to promote their products through the internet. Customers are able to access detailed information about the...
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