Situational Analysis University of Phoenix STR/GM581 International Strategic Planning & Implementation Steven Hall Situational Analysis IKEA is a global home-furnishing retailer founded in 1943. “In 2008, IKEA had 253 stores in 24 countries plus 32 stores owned by franchisees and 20 stores expecting to open in 2009” (The Times 100, 2009, p. 1). This paper will show the organization’s mission, vision, and values. In addition, this paper will show a consideration of broad environmental forces affecting the firm, and the potential for global expansion. Finally, this paper will show an assessment of industry structure using the Porter Five Forces Model, and a critical assessment of organizational SWOT (Strength, Weaknesses, …show more content…
A strong global brand that attracts key consumer groups, which promises the same quality and range worldwide. 2. A strong concept based on offering a wide range of well-designed, functional products at low prices. 3. A democratic design reaching an ideal balance between function, quality, design, and price. IKEA’s cost consciousness means that low prices are taken into account when each product is designed from the outset. 4. Delivering products directly from the supplier to IKEA stores slashes handling costs, reduces road miles, and lowers the carbon footprint. (The Times 100, 2009, p. 3) IKEA’s weaknesses include: 1. The size and scale of its global business could make it hard to control standards and quality. 2. IKEA also needs to differentiate itself and its products from competitors. 3. IKEA believes there is no compromise between being able to offer good quality products and low prices. 4. IKEA needs to keep good communication with its consumers and other stakeholders about its environmental activities. (The Times 100, 2009, p. 3) IKEA’s opportunities include: 1. A growing demand for greener products 2. A growing demand for low priced products. 3. Trends in the current financial climate may result in consumers trading down from more expensive stores demand for reduced water usage and lower carbon footprints. (The Times 100, 2009, p. 3) IKEA’s threats include: 1.
Able to diversify its product range to meet market demand including women’s wear, men’s wear, accessories and home wares.
* IKEA’s low cost structure has been the very core of its success. It’s low-cost and high-quality strategy fits with the current state of the economy. Offering convenience factors within IKEA’s stores would fit well with IKEA’s low cost structure. It maintains its low-cost business model by creating a different furniture shopping experience. IKEA supplies customers with all possible materials needed to complete their shopping when they enter the store (that are, measuring
As explained in the “bargaining power of consumers”, it is hard to substitute the products that are offered by IKEA. This is further intensified by the fact that IKEA has formed a brand perception that makes it stand out amongst its
In order for IKEA to achieve design and sustainability objectives, they follow and balance four dimensions of design. The four different dimensions followed are form, function, quality, sustainability, and low price (Rafiq Elmansy, 2014). IKEA has already made changes by using cotton and water from sources that can be renewed. IKEA did this while posting strong sales figures. In 2014, its sales increased 5.9 percent from 2013 to $32.1 billion (Pantsios, 2015).
The services and products offered by IKEA provide value to its customers in various ways. For one, the products and services are very affordable. The products and services are not priced highly and therefore, the average customer can enjoy them. At the same time, the products are of high quality. From IKEA’s slogan “low prices but not at any price”, it is clear that the company prices its products lowly but that does not mean that the quality is compromised. IKEA satisfying its customer’s needs through providing them value for their money as they provide quality products that will last for a long time, and at affordable costs. The fact that the company has set the minimum acceptable standards for its wood, implies that it is also keen on quality and on the environmental impact of its action of making furniture ( Edvardsson, Enquist & Hay, 2006).
IKEA is an international company which designs house products and sells them in the form of ready to assemble furniture. It is one of the world’s largest furniture companies. It is founded by17 years old Ingvar Kamprad in Sweden in 1943. The most important fact about the company is the attention to control the cost of the products, which allows them to lower the prices. Even today they are continuing to expand in the world by looking forward to new product developments. The number of stores of IKEA in the United States is 14 at the moment and they aim to have 50 stores by 2013.
IKEA implements new product service design and development to offer their quality products at a cheaper price to suit people’s contemporary needs and circumstances. They focus on the price and quality, design and function, environment and health of their new product service design and development to minimize waste and
IKEA is using a different operation strategy from their competitors. The operation of IKEA has to cope with large volume because their products are highly repeatability and specialised. The variety of products the operation needs to create is low to medium as they offer
We believe what is good for society is good for IKEA. We are passionate about creating a successful business where we act in a responsible way through small and large actions. It is a way of being. This is why sustainability is a cornerstone in the IKEA strategic direction – it is highly prioritized and serves as a driver of further innovation and development. Economizing with resource, finding new ways of doing things and developing our knowledge and expertise are important parts of our business idea and heritage. A low price company must be a low cost company, and this includes being careful with earth’s limited resources. IKEA has unique capabilities and tremendous enthusiasm to make a positive contribution across the world – from the forests of Siberia to the cotton fields of India and all the way into people’s homes in New York, Lisbon and Shanghai. Our customers rightly expect us to not only to make our products in a responsible way, but also to help them live more sustainable
IKEAs brand image is built on their long term strategic focus to produce products from sustainable materials in an aim to care for the environment and earth’s natural resources. This aligns with IKEAs vales to promote social, environmental and economic development. IKEAs concept of customers shopping for mass produced, standardised products in a ‘self-service’ environment allows for cost efficiency
In this business report on the global retail business IKEA, it will cover the nature of business, influences on operations, operation processes, operation strategies and how the business can sustain competitive advantage. IKEA was founded in 1943 by Ingvar Kamprad in Älmhult, Sweden. The business established after and with the money his father awarded him for succeeding in his studies, Kamprad sustained a cash inflow by selling pens, wallets, watches, picture frames, table runners, jewellery and nylon stockings at reduced prices to customers. Although, later on in 1958, IKEA was introduced as a leader of Swedish Furniture Company as they started to produce local furniture by the Swedish local manufacturers, which gained positive attention from their customers. Eventually, developing flat packs of furniture for storage and self assembly, making their signature style of IKEA and turning the small business into a global sensation.
IKEA organized their stores in a different way than its competitors. While its competitors put its items in
IKEA aims to deliver all five of its brand attributes including low price, sustainability, form, function, and quality. However, Sykes acknowledged that low price is the first driver in product development. Unlike the most companies’ product development process that starts with consumer trends or competitive whitespace, IKEA starts with a target price point. Doing so keeps IKEA true to their commitment to providing better everyday life for the many people. Sykes said: “True innovation comes when you design quality furniture that’s affordable by
At the outset, it may be useful to characterise IKEA in terms of the characteristics of demand (also known as the four Vs, see Slack et al. p 20). First, IKEA is clearly a high volume operation – as indeed most international retailers are – which lends to systematising operations but which implies capital intensive processes and therefore cost considerations will be crucial. Second, IKEA offers a large number of products (up to 14000 depending on the country/store) so there is high variety in the