Resource Based View
This view focuses on Value, Resource, Imitability and Organizational factors (VRIO) of capabilities and resources deposit within the firm. Ikea has out performed its competitors since the time it was born. Below is the analysis of Ikea based on VRIO analysis- Value – When different companies enter into the industry dominated by a single firm. Then, the firm dominating needs to focus on its value adding capabilities and resources. Ikea is a firm that has been dominating the industry in which it’s operating. The reason behind this success is the firm has some valuable resources and capabilities. For example. the firm has strong long-term commitment with the suppliers, which has been beneficial for the firm to get its products at lost cost and the company specializes in recycling five of its waste materials. It is known for its franchising missions, unlike other companies it does not get into the international markets via joint ventures or partnerships but through agreements. One of them is, in 2001 it entered into an agreement with Musicmusicmusic, Inc. to introduce industrial sound service.
Rarity – This means the firm needs to have certain resources and capabilities, which are not available by the others. Ikea possesses huge real estates for forests that are under its responsibility and management. The firm has adopted environmental conservational culture that does not allow it to accept timber, plywood, layer glued wood and veneer from forest of high conservation value. The company is popular for its designer products and classical furniture that range from Egyptian art to Asian style. Point to be noted is that the firm imports curve wood and bamboo heavy lacquers from China using which furniture is made by using high quality craftsmanship, which is all sold at a low cost. This makes the firm to have rare quality products which are most demanded by customers and therefore, giving a competitive advantage.
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