Ikea Strategy in Egypt

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Master of Business Administration
IKEA Company

Term Project
STRA 703- Strategic Management
Presented to
Prof. Dr. Thomas Diefenbach

Merham Yousri
, Mona Mansour
And Passant Fouda
Table of Contents
1.Introduction about IKEA4
1.1.How the concept IKEA Began5
1.2.IKEA concept, Mission and Vision6
1.3.The main reason behind IKEA6
2.The Main Strategic Problem in IKEA7
3.PESTAL Analysis of the Macro- Environment7
3.1.Political and legal Side in Egypt7
3.2.Egyptian Economy9
3.3.Egyptian Socio-Cultural environment10
4.Porter’s five forces Model11
5.IKEA Resources, Competences and capabilities11
5.1.IKEA Resources11
5.1.1.Financial resources12
5.1.2.Physical resources13
5.2.IKEA Competences and capabilities14
6.SWOT Analysis15
6.1.The Following Strategies would be great for IKEA:16
6.1.1.SO strategies:16
6.1.2.WO Strategies:17
6.1.3.ST strategies:17
6.1.4.WT Strategies:17
7.IKEA’s Current Strategic Position19
7.1.Competitive Advantage19
7.1.1.Cost Leadership19
7.1.2.Product Differentiation19
7.2.Bouman’s Strategy20
7.3.Ansoff’s Product/ Market-Matrix20
8.Strategic Options21
8.1.To Target new segments for example; Resorts and hotels not only good Standards people and expatriates.21
8.2.IKEA should perform detailed Market research and studies of individual market tastes and get a feel for its Unique Customer.21

1. Introduction about IKEA

What would be considered a great idea in the era of furniture? A dream of many customer would be high quality products and low of prices for these product because in the old days, you either got high quality and paid its share or went for cost but suffered low quality. Following the idea of his own Smaland province, Ingvar Kamprad invented the IKEA concept. Why not make the most out of limited resources? That is what Ingvar decided to do. By following in the footsteps of his fellow Smalandians, he decided to work hard, live well and make the most out of limited resources. In 1940s, after applying what he learned in the furniture business, IKEA was born. From the initials of his name and the place where he grew up, IKEA now owns more than 300 stores in more than 35 countries and has a workforce of more than 130,000 workers in order to bring to the world a functional, great quality and much lower price than competitors’ furniture. In this paper, we would discuss the political, economic, environmental, strength, weakness, threats, opportunities, technological, and legal aspect of opening IKEA here in Egypt and why we believe it is a good idea for IKEA to open in the Egyptian market. We would then make recommendation for IKEA and also analyze IKEA concept further in relation to being an international company.

2.1. How the concept IKEA Began

The IKEA Concept began when Ingvar Kamprad, an entrepreneur from the Småland province in southern Sweden, had an innovative idea. In Småland, although the soil is thin and poor, the people have a reputation for working hard, living frugally and making the most out of limited resources. So when Ingvar started his furniture business in the late 1940s, he applied the lessons he learned in Småland to the home furnishings market.

Ingvar's innovative idea was to offer home furnishing products of good function and design at prices much lower than competitors by using simple cost-cutting solutions that did not affect the quality of products. Ingvar used every opportunity to reduce costs, and he scraped and saved in every way possible - except on ideas and quality. This is how the IKEA Concept began. The name IKEA comes from the initials of Ingvar Kamprad, I and K, plus the first letters of Elmtaryd and Agunnaryd, which are the names of the farm and village where he grew up. Today, the IKEA trademark represents the leading home furnishings brand in the...
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