Ikea Case Study
IKEA
Dr. Okan Geray
Please read the IKEA case from the textbook and answer the following questions:
1. Explain, in detail, the aspects of IKEA strategy that make it a Hybrid strategy.
A hybrid strategy is where the costs are low and the perceived benefits are high. In the case it is mentioned that IKEA is not for the rich and flamboyant but for the smart and practical people. This is clearly seen with the designs where it holds universal acknowledgement rather than cultural or national ideas. It blends into its furniture styling and design with low cost and has large stores where they guide their customers and incline them towards buying certain products that are displayed.
The styling and design is then supported by low cost, on request or immediate delivery, which allows them to not only buy the product immediately but also transport them without must hassles. The flat packs allow logistical advantage and cost benefits and an informal infrastructure motivates the staff. The procurement is very intense and brings cost benefits and is also widely spread out across the world with suppliers in China and Sweden and their head quarters are based in Norway for tax savings.
In the above ways IKEA brings higher benefits at lower costs to the consumer and therefore is a hybrid strategy.
2. Why is this strategy difficult for competitors to imitate?
It is difficult for competitors to imitate because IKEA is a global furnishings company where as other competitors are highly focused into particular regions. This inaccessibility of its competitors limits its breadth of customer reach. Some of its competitors are not even specialised in furnishings but are more towards general stores there for specialisation benefits are lost. IKEA runs a strict cost cutting budget where it focuses more on costs and lesser towards design
IKEA not only does provide furniture but also provide furnishing solutions where it has different variants of products to suite customer needs. It
Dr. Okan Geray
Please read the IKEA case from the textbook and answer the following questions:
1. Explain, in detail, the aspects of IKEA strategy that make it a Hybrid strategy.
A hybrid strategy is where the costs are low and the perceived benefits are high. In the case it is mentioned that IKEA is not for the rich and flamboyant but for the smart and practical people. This is clearly seen with the designs where it holds universal acknowledgement rather than cultural or national ideas. It blends into its furniture styling and design with low cost and has large stores where they guide their customers and incline them towards buying certain products that are displayed.
The styling and design is then supported by low cost, on request or immediate delivery, which allows them to not only buy the product immediately but also transport them without must hassles. The flat packs allow logistical advantage and cost benefits and an informal infrastructure motivates the staff. The procurement is very intense and brings cost benefits and is also widely spread out across the world with suppliers in China and Sweden and their head quarters are based in Norway for tax savings.
In the above ways IKEA brings higher benefits at lower costs to the consumer and therefore is a hybrid strategy.
2. Why is this strategy difficult for competitors to imitate?
It is difficult for competitors to imitate because IKEA is a global furnishings company where as other competitors are highly focused into particular regions. This inaccessibility of its competitors limits its breadth of customer reach. Some of its competitors are not even specialised in furnishings but are more towards general stores there for specialisation benefits are lost. IKEA runs a strict cost cutting budget where it focuses more on costs and lesser towards design
IKEA not only does provide furniture but also provide furnishing solutions where it has different variants of products to suite customer needs. It