IKEA International Business and Management
IKEA Company Overview
IKEA is among the leading and largest furniture’s retail organization in the global setting. IKEA was established in the year 1943 by Ingvar Kamprad who was from Swedish national origin when he was only seventeen years old (IKEA, 2017). The corporation started with the sale of basic appliances for homes which was conducted for four years and the sale of home furnishings started. In the early 1953 the corporation made the first sale of a furniture showroom. With the reasonable furniture prices the founder’s adversaries made attempts to slow him down through introducing bans to local suppliers from offering raw furniture and materials from IKEA (IKEA, 2017). This led to the creation of a creative model of conducting business by Kampard the founder. IKEA started to learn on making their own furniture designs, made purchases of their manufacturing raw materials from suppliers who were polish and developed its own furniture exhibition. In the year 1965, IKEA began their first most flagship store that was located in Stockholm. The corporation currently holds more than 326 hundred stores in the global market which are distributed across over thirty eight nations (IKEA, 2017).
IKEA as a privately owned corporation has offered employment to more than one hundred thousand staffs who provide furniture’s that are ready to be assembled. The well established brand name produced by IKEA developed from a major marketing model concept that best illustrates its strength (Lymbersky, 2008). The company holds a constant strategy of offering good that are characterized with favorable and affordable cost which is objected at attracting more consumers and thus creating a supreme home surrounding. The advice of the corporation to the consumers is that they should always be prepared to more and innovative supplies. IKEA generally support the strategy of effective self service which is an important aspect of creating high consumer’s involvemen t(Lymbersky, 2008).
Throughout the period that IKEA has been in operation it has created a furniture market that is characterized by creativity and innovative designs with high quality and yet reduced costs. This is the major approach that the corporation has implemented its differentiation in the market in creating a wider market with increased value (Lymbersky, 2008). IKEA has additionally applied the product and cost of leadership differentiation approaches quite effectively. IKEA is therefore able to benefit from its differentiation since they products are highly valued and preferred as their uniqueness stands out among all the conventional products that the market has to give. The market has been defied since the design and the style utilized by the competitors can be classified as simple and easy to be imitated since the procedures to producing them is characterized by lowered costs (Lymbersky, 2008).
Business Strategy
IKEA can be described as a well established and highly popular international trend that through the utilization of an innovative business model and the primary focus on processes, systems and products has managed to overcome competition and remain highly competitive in the retailing furniture business (Ireland, Hoskisson, & Hitt, 2012). The corporation is focused in diversified furniture products that helps it in maintaining truck of the market and the use of its business model in handling real issues in the market. This is achieved via innovative or fresh thinking and the utilization of its low cost in leadership, differentiation and affordability strategies with further success drivers such as quality and scalability focus. The company has been able to get into various rising markets where its business models and products are likely to acquire success since most of the furniture market has not been tapped with the utilization of innovativeness. This strategies has been effective in increasing the general ability for the corporation to grow its consumer base (Ireland, Hoskisson, & Hitt, 2012).
Major Strategies Utilized By IKEA
IKEA Holds a unique model in business the connects the general needs of their consumers with high possibilities using the low cost leadership strategy (Ireland, Hoskisson, & Hitt, 2012). With increased knowledge that regards home life and the involved challenges that is experienced by consumers globally of limited money and home space and yet the existence of big dreams the corporation focuses on manufacturing is own products directly. The production starting point for the products designers and developers is usually based on the price. This involves the consideration of designs and shapes for packaging, production and transportation to be effective. While maintaining focus on the materials development so that resources and products can be improved much resources are saved (Ireland, Hoskisson, & Hitt, 2012).
The low pricing strategy is IKEA cornerstone concept that is useful in making consumers to wish on buying products from the corporation. The company generates more value from the idea because its general costs utilized in production is also very low. The strategy of low prices is normally accompanied with increased ranges of good designs and products that are fully functional (Kourdi, 2015). IKEA’s products are highly preferred since they serve for all the life stages and life styles of their consumers who are from the distinct age brackets and different households. This is a useful strategy given that the retail sector is one that is characterized by depression as it increases the potential for IKEA to expand. The corporation is highly focused in the generation of better living for most individuals by placing the environmental concern as the core of its business operations. This has been the case since the foundation of the business as its concern has always been placed on individuals and the surrounding. With the rise of consumers concern on the company’s products sustainability held in its selection of stores, communication, suppliers and product range the company has responded positively (Kourdi, 2015). This has been achieved through the spotting of business capability via the provision of solutions that are highly sustainable. Its concern on the wellness of the surrounding and persons makes an encouragement of improved utilization of both energy as well as materials. This strategy is effective as it assists the corporation in lowering the general cost thus playing part in increasing the capability of the corporation in attaining higher green targets thus creating an overall positive environmental impact (Kourdi, 2015).
In achieving its objectives the corporation utilizes a SWOT analysis as the strategic tool for planning. This tool helps the corporation in focusing on issues directly before getting into business ventures internationally and also locally. The strength held by IKEA may include the fact that the corporation is a specialist in the creation of products and marketing specialist. These can be categorized as the aspects of business that increases value to the company’s services and products (Kourdi, 2015). The corporation is additionally characterized by a strong presence in the global market as well as a strong international brand which is effective in attracting major consumer categories. In that, the corporation makes a similar promise on equal ranges and global in the global market. Based on its vision of generating better living for individuals each day it has created a positive concept internationally. The strength of the concept that the corporation utilizes lies on the capability of providing increased selections of designs as well as lowly priced functional goods. With the democratic design that reaches a significant balance amid function, design quality and prices increases consumer loyalties (Kourdi, 2015).
So that the existing threats and weaknesses and be developed and managed effectively the corporation has acknowledged them. This helps in playing a primary role in the setting of aims as creating fresh strategies. However, with its high scale and internal business size this at times challenges the general capability of the corporation in controlling quality as well as standards (Kourdi, 2015). The need for products that are characterized by low cost results in the challenging amid balancing costs and the products quality. IKEA is highly required its self as well as the products completely from those by the competitors that are easily copied. Moreover, the communication amid the corporation, shareholders and consumers in regard to environmental activities is weak. The business scale that is very wide presents increased challenges in communication management (Kourdi, 2015).
Some economic factors are associated with the slowdown of purchases since the available money for spending is reduced by other increased costs. In addition with the high increase of consumers getting into the market it is more likely that the cost of their products will be reduced further in handling competition since most organizations are utilizing low cost strategy in sustaining the leading position (Ireland, Hoskisson, & Hitt, 2012). The business however, utilizes its various strengths in obtaining higher focus as well as the creation of sustainability. The first strength is that there is an increasing demand for products that are characterized by green or those that are friendly to the environment. In addition consumers are highly demanding products with low prices which suits the company’s leading approach of less cost. In addition there are increased demands for products that favors less water utilization as well as reduced carbon prints which favors the corporation (Ireland, Hoskisson, & Hitt, 2012).
International Strategy: Economic, Legal, and Cultural Strategies
IKEA fully understands that in performing in the global market diversification is highly required in products in order to fully fit the consumer’s tastes, cultural value, economic as well as legal status in different status. The corporation utilizes an economic strategy through favoring reduced costs on all its products so that consumers from all economic and social levels can be attracted (Ireland, Hoskisson, & Hitt, 2012). With the conservation and high concern on the surrounding and persons the company focuses on fulfilling all its legal obligations by ensuring that that it corporate with all the necessary requirements that the governments necessitates from them. This helps in improving the condition in which the company operates and develops a more favorable one that grows its market, consumer loyalty and sales. The company operates in states that are characterized with low cultural values and norms in order to avoid market sales restrictions. Different cultures are characterized with distinct preferences and this may hinder the capability of person to make purchases in that the products may not be adequate in fulfilling their tastes generally. The low cultural value strategy helps in sustaining its competing advantage and the capability of making increased sales (Ireland, Hoskisson, & Hitt, 2012).
References
IKEA. (2017). IKEA Company’s History. Retrieved from https://www.ikeafoundation.org/history/
Ireland, R. D., Hoskisson, R. E., & Hitt, M. A. (2012). Understanding business strategy: Concepts plus. Mason, OH: South-Western Cengage Learning.
Kourdi, J. (2015). The Economist: A guide to effective decision-making. London: Profile Books.
Lymbersky, C. (2008). Market entry strategies: Text, cases and readings in market entry management. Hamburg: Management Laboratory Press.
