The Risk Of IKEA

The safety aspect for risk management will evaluate the potential for human loss of life and or injury. The potential for major incident or accident, such as fire, explosion, or spill, including environmental damage. The necessity for security within the company is a highly need aspect of safety that can lead to risk. The revenues aspect for risk management will evaluate the loss of customer base, recovering of capital loss and recognizing uncoverable capital loss, and loss of opportunity in marketing of the product. The necessity for revenue risk management is key. The costs aspect for risk management will evaluate the costs that were incurred due to preventable problems. Also, costs due to increased warehouse space, vendor changes, and discount changes. A significant risk in cost for this company is the cost of legal defense. The legal aspect for risk management will evaluate regulatory compliance failures and actions that could result

Question 2a: Identify two of your firm’s ownership advantages that allow it to successfully compete internationally. Please explain your answers?

This paper aims to demonstrate a detailed description of the elements of ‘IKEA’ company based on its famous name in the furniture industry.

The risks are particularly high for IKEA, which does business in more than 40 countries. It has more than 9,000 Scandinavian terms in its catalog, which is constantly being revised and updated.

IKEA stores have been present in five big areas in the world which are North America, South America, Europe, Russia, Asia and Australia as of 31 December, 2014. IKEA group have stores located in 42 countries which include Australia, China, Taiwan, Malaysia, Singapore, Denmark, France, Germany and etc. IKEA group sell their products in to these 42 countries with their domestic currencies such as Australian Dollar (AUD), Yuan (RMB), Taiwan New Dollar (TWD), Malaysian Ringgit (MYR), Singapore Dollar (SGD), Danish Krone (DKK), Euro (EUR) and etc. The reason of using domestic currency is because this is easier for the customers to buy IKEA products in their country.

The key risks that the company faces are economic conditions, competition, key employees, suppliers, availability of credit, financial risks, business continuity, revenue dependence, cost saving, leased property portfolio, as well as, some other minor risks. The amount of risks faced by the company is high, and the realization of those risks is a good possibility in light of the performance of the company.

The success of the industry was the huge experiences in the product differentiation, cost leadership and retail market. IKEA unique concept is that furniture is sold in kits that are assembled by the customers at home. The company remains one of the world most successful multinational retailing firms, operating globally. This report will explains IKEA internal and external environment using PESTLE, PORTER FIVE FORCE AND SWOT. Furthermore IKEA globalisation and localisation strategy breakdown will be examined, CSR and ethic and recommendation will be also examined.

IKEA is one of the largest multinational companies in the world dealing with several products. The company sells and designs furniture appliances and home accessories at an affordable price. Ikea has over three hundred stores worldwide enjoying the good name it has created for itself. While they are one of the most profitable furniture companies in the world there are significant challenges and threats that have been overcome and are still needed to be tackled.

First thing been identified about IKEA is that it is not just a furniture trader but provides solutions to lot of people for an affordable price. Here the affordable price does not mean low quality product but it originates lower cost products. So the first strategy in IKEA is the Overall Cost Leadership. They maintain their cost in a lower level without destroying to its quality. IKEA as a prominent furniture franchiser it faces for an enormous demand in every day. According to the volume they have hefty show room which has adjusted capacity distribution. Thus, they are sustaining a restaurant chain along with their store with their occupant and also cultural foods. They have used the strategy of Developing Complementary Services in managing their demand. IKEA started in Sweden but now it has blow-out to 40 countries with 330 stores. It is a comprehensive company it has expands the company to every country. IKEA been identified as Globalization Strategy and the influences they used in entering to these countries. Before they decide in entering to a country it conducts a research on the viability and sustainability of it. For an example they have once tried to enter to the New Zealand market but according to the investigation finding there will be an enormous traffic jam in Auckland if they open a store so they give up the idea. As the conclusion of the strategies of IKEA they used 3 main strategies to become successful in shorter time period. They are; Overall Cost Leadership Developing Complementary Services Globalization Strategy – Franchiser – Multi Country

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.

The stores have restaurant, childcare facilities and plenty of parking. Customers can drop off their kids at the playroom and have delicious meal when they are tired. All of these not only provide customer with a comfortable shopping environment but also let them make an ‘IKEA trip’ and enjoy the fun of buying. Besides, IKEA’s distinctive show rooms help creating differentiation. Products are strategically placed in different small spaces like rooms which allow customers imaging this furniture in their own home. This makes everything looks more attractive.

The organization has mastered the art of doing business internationally and is considered to be one of the strongest global entities in today’s world. Although IKEA has succeeded on many levels, leaving the competition far behind, there are a few possible threats the company may face in the future while doing business:

IKEA is known as a furniture manufacturer and retailer. The company is world renowned and known globally. It specializes in knockdown and discounted good quality furniture. IKEA was founded in 1943 by an individual by the name of Ingvar Kamprad. He wanted to serve price-conscious neighbors in the location of Southern Sweden. IKEA was based on developing innovated modern designed furniture. IKEA was also had the recourse to produce in mass produces and venturing early into Eastern Europe to build a supplier network. This was ideal for the company at this time to begin a business. In 1945, the first advertisement for IKEA appeared in the newspaper. Ingvar’s business soon outgrew hi being able to make sales calls all by himself, so he began

So let’s start with political environment. Political environment may mean some kind of regulation or legal issue made by the government. Fair-trade and minimum wage will be a good example. For IKEA, we can see any significant impact from the political environment.

IKEA was founded in Sweden by Ingvar Kamprad in 1943. IKEA has been established around the world in 26 different countries. Within these countries IKEA has a total of 303 stores. This business is effective in adapting to change through the use of the four key business functions; operations, finance, marketing, and human resources.