The Competitive Advantage of Ikea

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DEPARTMENT OF TECHNOLOGY AND BUILT ENVIRONMENT

The Competitive Advantage of IKEA and IKEA in China
Zhi Li June 2010

Master’s Thesis in Logistics and Innovation Management

Master of Science in Logistics and Innovation Management

Supervisor: Lars Steiner

Abstract
Title: Author: Supervisor: Purpose: The competitive advantage of IKEA and IKEA in China Zhi Li Lars Steiner The main purpose of this master thesis is to describe the IKEA concept and discuss the application in China. After research the history of IKEA, interview with the manager of IKEA store, and find the information from the web and thesis, use the theory of competitive advantage to describe the IKEA concept and the competitive advantage which is the way that IKEA used to get the success. Secondly, discuss the application in China and give IKEA the suggestions to develop the competitive advantage in China market.

Methods:

Because IKEA is not a public company, I cannot get too much data. I browsed the official website of IKEA to get much information about the introduction of IKEA’ corporate culture, strategies, copartner, history and the data of IKEA financial and work group. I find some English and Chinese books, thesis and reports try to find more data and more good ideas of Chinese scholars. Visit and observe the IKEA store and note my questions. I tried to have an interview with IKEA store in china, but failed. Fortunately, I got an interview with Hans Karlsson which is the logics manager of IKEA store in Gavle. He explained the competitive strategy of logistics, the competitive advantage about IKEA and the next step IKEA may do in china. Try to analysis the different culture and other problem that IKEA have to face. Analyze all the data and the idea I have got and use the theory of Michael Porter to finish this thesis. IKEA should have many innovations to adapt to the China market. “At IKEA our vision is to create a better everyday life for the many people. Our business idea supports this vision by offering a wide range of well-designed, functional home furnishing products at prices so low that as many people as possible will be able to afford them.”(Our vision and business idea, http://www.ikea.com/ms/en_US/about_ikea/the_ikea_way/our_busine ss_idea/index.html) It seems not achieved in China market yet. Firstly, IKEA should have greater cooperation with local suppliers to get more competitive advantage of cost leadership. Secondly, according 1

Conclusions:

to the specialty of China market, IKEA should have some more adjustment to satisfy so many China picky customers. Thirdly, IKEA should intensify propaganda work to let more customers understand and accommodate the IKEA model. As an outcomer, there is a long way to be the winner in this huge and potential market. After a long time to research the China market, IKEA already understand the China market more than before. With accelerating the speed of expand, the success of IKEA in China market is only the problem of time.

Key words:

IKEA, competitive advantage, IKEA model, China market

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Contents page
1. Introduction ........................................................................................................................... 6 1.1. Background .................................................................................................................... 6 1.2. Purpose ........................................................................................................................... 7 1.3. Research question........................................................................................................... 7 1.4. Structure of the thesis ..................................................................................................... 7 2. Theoretical framework .......................................................................................................... 8 2.1. The five competitive forces that determine industry...
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