Strategic Management Report
This report provides an analysis, evaluation and recommendation on the strategic management of IKEA. Methods evaluating and analysis includes SWOT analysis, Pestle Analysis, Porters five forces and finally internal environment analysis. This report will show findings on the internal and external forces of the company and then illustrate on how the company deals and curb with these factors and gains its comparative advantages in its market. To the end of the report, a recommendation will be given based on the factors of environment to generate a strategy for the company.
1.1 Background to Organization
The chosen organization is IKEA. This organization is founded in 1926 by Ingvar Kamprad in Sweden. Originally IKEA sold everything from pens and wallets to watches and ladies stockings. It attracted people by the lower price. In the late 1950s, Ingvar decided to stop selling everything expect furniture items. In 1959, IKEA had 100 employees. 1.1(a) Products
IKEA’S products are in varieties kinds of styles which can meet different kinds of people’s needs. Also, the furnitures in IKEA have many different functions. Besides, IKEA pays attention to the materials they used that all the materials are environmental and will not affect our health. 1.1(b) Finances
IKEA keeps profits flat during the global economic crisis. According to a DI estimate, the Swedish furniture giant's profit was over 50 billion kronor in 2009. However, Ikea also had slashed 5,000 jobs to cope with the drop in demand brought about by the global economic crisis. 1.1(c) Organizational structure
Despite IKEA’s Swedish roots, the owner of IKEA is a Dutch company. The operator of the majority of the stores worldwide is a separate entity, the IKEA Group which is a private group of the companies owned by a Dutch charitable foundation. Of the 202 IKEA stores in 32 countries, 180 are run by the IKEA Group. Please refer to the diagram below for the structure.
IKEA is a successful family business by Ingvar Kamprad and one of the most important thing in this family is that every worker in this family feels they are one of the part in it and they’d like to make their efforts to improve the family. Besides, Kamprad realized that the best way to encourage his employees is to set an example by his hard working, commit his mistakes,confident and so on. 2.1 Strengths
(a) IKEA has it’s strong global brand which attracts the key customer group. Now, almost everyone knows the brand of IKEA in developed and developing countries. (b) IKEA is famous for it’s cheap price that a large quantity of people can afford the cost for their furnitures. (c) The 'democratic design' reaching an ideal balance between function, quality, design and price. IKEA's 'Cost Consciousness' means that the low prices are taken into account when each product is designed from the outset. 2.2 Weakness
As we know, IKEA is an international company which may causes some problems. Because of the size and scale of its global business, it is hard to control the standards and quality. (b) Although IKEA believes there is no compromise between being able to offer good quality products and low prices, the cheaper price makes it hard to keep a balance of the quality. 2.3 Opportunities
Like other companies, IKEA also uses its strengths to take advantage of the opportunities that arise. In such a society which more and more pays attention to the environment, IKEA starts to make the environmental products that it begins to use the renewable energy. Similarly, facing the competitive environment, IKEA has to lower it’s price to attract more customers which should cut the use of air transport and reduce packaging. 2.4 Threats
The slow economic development slows down the consumer spending and disposable income that fewer people can afford the cost of their...
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