Strategic Analysis of IKEA

3947 WordsDec 13, 201416 Pages
International business strategy The Strategic Analysis of IKEA Laura Burns 11027915 Executive Summary This report is a strategic analysis of Swedish home furnishing giant, IKEA. The report gives an overview of corporate strategy, using Ansoff’s matrix as a tool for analysis, allowing us to see how IKEA have developed their strategy. The business strategy is then discussed using Porter’s five forces model as a tool for external analysis. Internal analysis can be identified using either the value chain or the resource based view, this report uses Porter’s value chain. An evaluation of the strategy is then explained using Rumelt’s 1980 criteria. Ethical considerations are then discussed including sustainability and the IKEA foundation.…show more content…
IKEA invested £15m into reducing the cost of bedroom ranges alone; this shows IKEA’s strategy to be one of reinvestment into the company in order to pass on savings to the customer. Ansoff’s Matrix Ansoff’s Matrix can be used as a tool to help identify areas of corporate strategy (see appendix 3). Market penetration is a strategy of increasing share of current markets with the present product range. IKEA’s scope as a company remains unchanged but the company’s increased power leads to greater market share with buyers and suppliers. As IKEA operates such high volumes they are able to enjoy economies of scale, which further lowers prices. Product development is where a business delivers modified or new products to existing markets. For many businesses this would be high cost and high risk but as IKEA has strong relationships with suppliers, has in-house designers as well at outsourcing, the company is able to continually develop its product range. Market development is when a business offers existing products to new markets, including in new geographical locations. IKEA‘s strategy is to grow and expand into new countries; in 2012 the company opened 11 new stores across 9 different countries. IKEA has identified that different cultures in

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