IKEA: A Case Study Of Business Management

The philosophy states “ Our vision is to create a better everyday life for the many people. Our business idea is to offer a wide range of well-designed, functional, home furnishing products at prices so low that as many people as possible can afford them.” IKEA needs to create products following this motto but have these products molded to the tastes and styles of the U.S. population. The prices must still be low but IKEA must force the message that even though the price is low that does not mean the quality of the product is poor. This message will be key for expansion in the U.S. to be a success. IKEA must maintain their shopping experience as that is a strong competitive advantage, and tweak their philosophy so it fits the American lifestyle. If they do this then they will have success in expansion.

* Diversification can be a good way that IKEA does to sustain growth after it loses some cache. Product innovation and market development such as IKEA’s expanding goal in U.S. market. It is a risky strategy but with careful selection of the right kind of businesses, considerable improvements in profitability can be experienced.  To try and maintain growth, IKEA is considering diversification outside of the furniture market.

It can also help them gain a temporary competitive advantage because other firms will not be able to imitate them to speak regarding IKEA’s strategy , IKEA’s strategy has continually been to style and develop product supported consumers’ everyday wants, keeping costs low and providing purposeful, engaging and reliable furnishings and solutions. property has been at the basis of IKEA’s strategy throughout its evolution. In 2012 it launched its folks and Planet Positive property strategy, that sets out the company’s approach to achieving positive social and environmental impacts. This property strategy brings all the weather of vision, values and mission along to drive innovation and rework the IKEA business. this may strengthen IKEA’s aggressiveness by securing long access to big raw materials and energy provides, maintaining and developing its provider base, developing relationships with co-workers and customers, and increasing market share

IKEA is a multinational group of company that design and sells home furnishing products and home accessories. IKEA founded in 1943 in Sweden by 17 years old Ingvar Kamprad, who was ranked as one of the wealthiest people in 2013. The IKEA’s name is an abbreviation of ‘Ingvar Kamprad Elmtaryd Agunnaryd’. Ingvar Kamprad is founder name, Elmtaryd is the native farm and Agunnaryd is his native village located in Smaland, South Sweden. In 1943, Ikea operates mail order sale business where to sell everything such as pen, photo frame, watches and ladies leggings. Until 1958, the first IKEA store was opened in Amhult, Smaland. As of 2015, IKEA group has grown into worldwide brand own and operate 373 stores

With further global expansion, in order to maintain profitability it was crucial for IKEA to establish the main potential customer group, who would not only appreciate the product concept but will be able to afford it and recognise it as being a "good-value”. The IKEA concept proved to be successful in the developed countries and free trading markets, but the same acceptance can’t be anticipated in the countries with large variations in exchange rates, high inflation and/or high import tax and other restrictions, e.g. bureaucratic obstacles in Russia and China.

Considering the previous mission statement with a unique customer vision IKEA is clearly antagonistic with specific customers’ needs. That lack of adjustment to customer needs is the main reason for not getting the same results in China than in Northern Europe.

Local partners could help IKEA to understand better the customer’s behaviors in the host market. The psychic distance would be reduced and consequently IKEA could adapt its products, its stores layout following its local partner advices. Traditionally IKEA used to push Swedish design into the new markets without considering the local needs. If they could find a local joint venture understanding well the local needs they could provide more suitable products.

IKEA is rumored to be a very standardized retailer, i.e., a certain set of marketing strategies is used that are the same around the world. This indeed sets IKEA, operating on markets in Europe, US as well as Asia and Australia, apart among international retailers. Often the theoretical conclusions in international

With such situation, IKEA faces several challenges in this competitive market. In order to prevent to be substituted, IKEA need to improve on marketing strategy. I have two ideas of marketing strategy which is online store and IKEA collaborate with real estate.

Once IKEA identified and understood the consumers (i.e. abandoning metric measured appliances and beds for American standards of size and comfort), they were able to double revenues, from $600 million in 1997 to $1.27 billion in 2002. From this analysis, it is possible to infer that IKEA combined their already successful cost leadership strategy with the properly identified needs of its target market, the American consumer. With this modification of the value chain, IKEA increased revenues and is pointed in the right direction to achieve their growth goals for 2013. As seen in Appendix 1, their projected growth is well into 8% per year, in relation to total projected growth.

Customizing local markets to reflect individual cultures is another of Ikea 's core competencies that have allowed them to be able to hold on to a large market of global lower-middle to middle class consumers, something that even Wal-mart has yet to accomplish. And with just 5-10% of the furniture market accounted for in each country Ikea operates in, there is plenty of room for growth. "Awareness of our brand is much bigger than the size of our company," states CEO Anders Dahlvig.

In some instances IKEA’s expansion to a new country had lacked sufficient research. This is evident from its expansion to United States and Japan. IKEA entered Japan with a local partner but had failed to win over Japanese consumers as they had underestimated the significance of cultural differences. The rush into Japanese market and Japanese customers’ unacceptance for flat pack and self-assembling their own furniture were some of the reasons for failure. Whereas, in US, IKEA had initially replicates its existing business model and products when in expanded its business operations in that country. However, there arise need to customize its products to cater the local customers’ needs. For instance, American customers demand for bigger beds and closets. Hence, several marketing strategies were also changed for the American

Several opportunities lie ahead for IKEA due to recent purchase trend from DIY stores in the furniture sector. Opportunities also arise from factors influencing consumer purchase decisions such as desire of quality, special discounts and offers, and excellent and competitive customer service.

IKEA’s strategy before the mishaps in America could be characterized as going against the norm charting their own path to success using low priced manufactures to secure lower selling prices aimed to target those who were of older age and of middle class standing. Their new strategy was to target those of a younger demographic, young married couples, college students, and 20-30 something singles. By reemphasizing design, promoting through hip quirky advertisements, and encouraging consumers to do away with their old furniture, IKEA revenues doubled in a four-year period. IKEA today has adapted somewhat of a local customization strategy where their store layouts will resemble that of many local household layouts as proven by their success in China where they failed to expand beforehand. They also keep their prices extremely low in some areas as China by sourcing a large percentage of products in the area of operation.

* The threat like many great in any sector would be the occurrence of any local competitor acting in the same industry with a similar tactic or also obtain a competitive advantage in costs, which would make IKEA had to change its strategy again trade to go ahead with the mission