This research will begin with the presentation of the types of competition IKEA faced in each of its regions. These included multinational furniture retailers; specialized furniture manufacturing; single country; non specialist companies; small &/or specialized retailers/manufacturers…
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Strong Connection with Culture: The IKEA furniture has become an essential part of the culture. Its perennial existence has made it the de facto furniture company and many of its products have a long history. Employee Focus on Thrift: In an environment of increasing competition every last penny has value. The practice and culture of employees being thrifty to ensure that they utilize every last penny properly indicates that the firm’s culture dictated that resources be used properly. Staffing levels are appropriate, and not excessive, and even top employees fly economy to indicate that squandering of resources will not be tolerated. Entrepreneurial spirit of the Kamprands: Kamprand was known for his entrepreneurial abilities and skill of identifying profit opportunities. He had a knack of choosing the ventures with most potential. Even with IKEA he was able to establish a low cost supply line very early into the firm’s existence. High Turnover to Visits ration: IKEA poses a high visits to turnover ratio. For every million visits to the store revenue of 34 million is generated. This is a really good figure as it reflects the firms’ brilliant selling skills and customer loyalty. Strong presence in 25-50 year old population: The strong connection of Sec B and C to IKEA is a strongpoint for the firm. Even some portion of the A class consider IKEA as an option. The customers are smart, hence IKEA doesn’t need to do the pitch for everyone. Weaknesses: The weakness of IKEA will help us evaluate what is wrong with the firm and how it can improve it for the betterment of its owners and stakeholders. Informal ownership structure/No Shares: The absence of shareholders and a proper board of directors means that there is little accountability of managerial...
This essay discusses that home furnishing was a market with immense potential globally. The global sales for the industry reached a staggering $600 Billion in items such as furniture, textile, and floor coverings. A significant percentage (less than 50%) of these sales were constituted by furniture stores. IKEA was standing strong with a 2.5% share in the global market and reaching sales of greater than $20 Billion. The market was highly fragmented, with most of the competition occurring locally rather than globally. Strengths are the core competencies and strong points of firms. A look at the strengths of IKEA would give us an idea of how the firm has been so successful throughout the years. The IKEA furniture has become an essential part of the culture. Its perennial existence has made it the de facto furniture company and many of its products have a long history. The weakness of IKEA will help us evaluate what is wrong with the firm and how it can improve it for the betterment of its owners and stakeholders. The absence of shareholders and a proper board of directors means that there is little accountability of managerial practices. The domination of the Kamprand family means that the corporate structure format of firms is missing and the firm continues to be more of a family businesses influenced by incumbents rather than managerial experts. IKEA has taken the rough route in times of tough economic conditions. It has got rid of workers and insisted on cost cutting rather than innovation. This, however, was the need of the hour as the economic conditions demanded such action.
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“Business Strategy of IKEA Essay Example | Topics and Well Written Essays - 2000 Words”, n.d. https://studentshare.org/business/1396066-business-strategy-of-ikea.
The survival of firms in the global market is depended not only on the market trends but also on the strategic choices employed. Firms with a well-known brand name, like IKEA, have to continuously alternate their strategies in order to secure their position within their industry.
II. Competitive Advantages IKEA’s success can be summed up by saying it “provides a one-stop sanctuary for coolness” (BusinessWeek). Specifically, IKEA outlets are not just furniture stores, they are gathering spots where families can have a social outing (Normann & Ramirez).
IKEA was one of the pioneers towards globalization by offering furniture that was sold unassembled to its clientele therefore it could be shipped more securely and economically and consequently sold at the lowest possible costs to their customers.
The company has gained worldwide recognition through innovative design and unique customer service. The study has dealt with how various strategic management models can bring about the betterment of the organization and also helps to form a strong global footing.
The example of opening an outlet near the Metro station was a big mistake. The fall of the Russian economy and the subsequent revaluation of the currency made many multinational companies to leave Russia. IKEA stood firm among the ruins to earn reputation and trust.
This home furnishings retailer owes its success to its low priced and wide product range, smart purchasing and distribution activities and retail function (Nattrass and Altomare, 1999).
Based on the history of IKEA given in the Appendices section, this report aims to evaluate the business strategies of IKEA.
This is achieved by employing cost cutting solutions that do not affect the quality of the product. IKEA through its various marketing strategies has created a steady demand for its products. The company also prides itself in
According to the report for most businesses, this has been challenging to attain due to the prevailing harsh economic times globally, which have solely contributed to challenging business conditions for businesses in the world today. Every business attempts to adopt business strategy that they deem to be effective and efficient.
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