IKEA Case analysis; Hill & Jones

Topics: IKEA, Strategic management, Marketing Pages: 20 (5855 words) Published: November 12, 2013

IKEA
CASE ANALYSIS

Table of Contents

Executive Summary3
Introduction
Company History
Objectives
External Environment
Remote Environment
Industry Environment
Operating Environment
Threats
Opportunities
Internal Environment
Tangible Resources
Intangible Resources
Capabilities
Core Competencies
Strengths
Weaknesses
SWOT Matrix
Strategies
Conclusion
Bibliography

Executive Summary
This analysis detailed the history of IKEA Company since its establishment by Ingvar Kamprad in 1943 to the world wide expansion and future it faced in 2008. IKEA was striving for future expansion and growth in sales, but was faced with what to do in order to achieve these. With poor previous attempts at global expansion, lack of investigation into future countries in which IKEA wanted to expand to, and no diversity on its board of directors; IKEA would have to find a way to achieve company success and accomplish these goals. IKEA had a number of threats, opportunities, strengths, and weaknesses to consider. The three threats IKEA faced were: 1) competition, 2) changing government laws and regulations, and 3) economic and social changes. The opportunities for IKEA were: 1) global expansion, 2) product demand, 3) low switching costs, 4) market demographics, 5) external relationships, and 6) a successful global business model. The strengths for IKEA were: 1) marketing and branding, 2) outsourcing and supplier management, 3) mass customization of products, and 4) research and development. IKEA’s weaknesses were identified as: 1) company organization and 2) the failure to research geographic markets before expansion.

Using this SWOT analysis, we recommended that IKEA develop strategies for expanding globally by opening new stores in Beijing, China; Wuhan, China; New Delhi, India; and Jakarta, Indonesia, and also thoroughly investigate the geographic markets before this expansion. They also need to develop a third strategy to recruit a more diverse board of directors by recruiting more independent directors. These three strategies would aid IKEA in maintaining a competitive advantage in the furniture industry.

Introduction
IKEA was one of the world's largest furniture retailers, recognized for its unique Scandinavian style. The majority of IKEA's furniture was flat pack, ready to be assembled by the consumer. This allowed a reduction in costs and packaging. IKEA carried a large range of products, including home furniture and accessories.

IKEA’s success was based on its integrated low cost leadership and differentiation business level strategy: an integrated set of actions designed to produce distinct goods (or perceived to be so) at low cost to narrow market segments. Low prices were one of the cornerstones of the IKEA concept and helped to make customers want to buy from IKEA. This low price strategy was coupled with a wide range of well designed, functional products. IKEA created products that were entry level items for young families and newlyweds.

The success of IKEA also relied on its corporate level strategy, transnational/regionocentric. Through this strategy, IKEA attempted to blend its unique item design with the preferences of each target market they sold goods in. Company History

IKEA was founded by entrepreneur Ingvar Kamprad in 1943. He began by selling pens, wallets and watches by going door to door to his customers in his home country of Sweden. When he started selling his low priced furniture, his rivals did everything to stop him. Local suppliers were banned from providing raw material and furniture to IKEA, and the company was not allowed to showcase its furniture in industry exhibitions. What did IKEA do? It innovated to stay in business. It learned how to design its own furniture, bought raw material from suppliers in Poland, and created its own exhibitions. In 1949, IKEA published its...


Bibliography: Hill, Charles W.L., and Gareth R. Jones. Strategic: Management An Integrated Approach. 9th
ed. Mason, OH, 2010. Print.
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