Strategy for

Lyndon McCluskey, Tiljua Montford, Joshua Shaffer & Brandon Young

JLTB Consulting
Founded in 2000 Atlanta, Georgia Business consulting firm, specializing in retail management and entrepreneurship Offices in Dallas, San Diego and New York City Chief Executive Officer: Joshua Shaffer VP of Operations: Tiljua Montford Chief Financial Officer: Lyndon McCluskey VP of Marketing & Sales : Brandon Young

Overview
Opportunity statement SWOT analysis IFE/EFE Matrix Balance Scorecard/Strategy Map Proposed Actions Summary/Questions

The decision to expand is sometimes driven by the wrong reasons. In many cases companies are not thinking of the long-term consequences of what they are doing. -Professor Juan Alcacer, Strategy Unit, Harvard Business School

Opportunity Statement
Propose a Market-Development & Penetration strategy for IKEA in the United States.
We will achieve this through a 2-pronged approach, with emphasis on the following areas of focus: Market Expansion Retail Management

Strengths

Weaknesses
1. Not meeting customer expectations. 2. Cost of expansion in North America. 3. Available resources in new locations.

Internal Factors

External Factors

1. Top 100 Global Brands by Interbrand (#28). 2. 38 Blue IKEA owned stores in United States. 3. $3.85 billion revenue annually. 4. Employs 11,000 workers.

Opportunities
1. Market penetration through market development and expansion. 2. Job creation, help local economies, tax breaks. 3. Increase revenue.

SO Strategy

WO Strategy
Increased revenue/return on investment (ROI) will overcome any additional cost of expansion (long term).

Reputation for good employment practices throughout the U.S. will provide easy transition into new cities.

Threats

ST Strategy
1. Local furniture retailers. 2. Damage to IKEA brand if new locations fail. 3. Local restrictions. High brand awareness (Interbrand Global Top 100 listing) will limit damage to brand in case of failure and will give IKEA competitive advantage over local stores.

WT Strategy
Minimize possibility of not meeting customer expectations, preserve brand equity and limit possibility of new locations failing with a strong advertising campaign focused on local communities and customer service.

IFE Matrix
Key Internal Factors Internal Strengths 1. Top 100 global brands by Interbrand. 2. 38 Blue IKEA owned stores in United States 3. $3.85 billion revenue annually. 4. Employ 11,000 US workers. Internal Weaknesses 1. Not meeting customer expectations. 2. Cost of expansion in North America. 3. Available resources in new locations. Weights 0.18 0.15 0.2 0.14 0.07 0.15 0.11 Rating 4 3 4 3 2 2 1 Weighted Score 0.72 0.45 0.8 0.42 0.14 0.3 0.11 0 0 0 0 0 0 0 2.94

Totals

EFE Matrix
Key External Factors External Threats 1. Local furniture retailers. 2.Damage to IKEA brand if new locations fail. 3.Local restrictions External Opportunities 1. Market penetration through market development/expansion. 2. Job creation, help local economies, tax breaks. 3. Increase revenue. Weights 0.18 0.15 0.14 0.2 0.15 0.18 Rating 2 2 1 4 3 4 Weighted Score 0.36 0.3 0.14 0.8 0.45 0.72 0 0 0 0 0 0 2.77

Totals

IKEA Strategy Map

Mission: Gain market share for IKEA in the U.S. through a market-development & penetration strategy. Vision: IKEA will achieve its mission through a focus on market expansion and retail management.
We will pursue our mission and vision through a focus on market expansion, infiltration & retail design.

Retail Layout Superiority

CR1 Uniform retail layout for all IKEA stores

Location Superiority
CR 2 Provide easy access to IKEA stores in more urban areas.

Product Offering Superiority

CR3 Maintain vast product range for customers in all locations.

C2Implement Best practices for retail layout in existing stores.

C1 Close proximity of distribution centers to retail locations to provide best product availability.

C6 Offer free online-to-store shipping for new locations.

C4 Advertising (billboards, etc.) representative of customer experience in IKEA stores.

C5 Prime locations in cities which do not normally meet requirement for Blue IKEA store.

C7Development of mobile application which provides online ordering.

C3 Invest in retail locations that benefit IKEA and the local economy/population.

CM1 Acquire short-term investments which will convert into long-term benefits for IKEA.

CM2 Enhance customer experience with frequently updated product offerings.

CM3 Accept limited inherent risk with acquisition of new store locations.

CM4 Take advantage of tax breaks for opening of new IKEA retail locations.

CM5 Increase earned revenue

S1 Foster an employee environment that is mission-oriented and vision-driven

S2 Indoctrinate all employees in mission & vision

S3 Enhance development of existing leadership training programs.

S4 Temporarily relocate IKEA employee trainers from nearby retail locations for high-intensive training sessions for new employees

S5Implementation of IWAY Standard for all new locations, creation of better everyday life.

Measurements
Customer Relations
Leading: Customers want unique furniture products at low costs. Lagging: How closely have we met the desired outcomes for customer relations?

Cost Management Strategy

Leading: Do our ROI investment calculations support the planned expansion and retail strategies? Lagging: What are our daily/weekly/monthly/annual profits?

Convenience
Leading: Customers want accessibility, convenience and original product selection. Lagging: How have we met outcomes for accessibility and convenience, and are we creating a better everyday life for customers?

Store Management Strategy

Leading: Can new employees be trained for new locations and become efficient in a timely manner? Lagging: Are newly trained employees adhering to mission and vision?

Proposed Action #1: U.S. Red Store strategy

Tier 1 Stores (1 year strategy) Tier 2 Stores (3 year strategy)

Jacksonville, FL Population: 827,908 Indianapolis, IN Population: 827,609 Central location

Milwaukee, WI Population: 597,867 Oklahoma City, OK Population: 591,967 Central location Nashville, TN Population: 590,807 Central location

Existing stores New red stores

Proposed Action #2: Retail Strategy

IKEA Limited Stores

Cities between 250,000499,999 population IKEA owned Exact same retail layout as full size store 75% of product offerings (remainder available for online-to-store) 75% of full-size blue IKEA stores

Benefits of Proposed Actions

Short Term Long Term

Market expansion Increased brand awareness/brand equity Broadened customer base Stimulate local economies Tax breaks

Market penetration Increased market share Exponential revenue increases in the U.S. Conversion of red stores to IKEA owned blue stores Expansion of distribution channels

References
Barldi, E.(2008) Strategy in Industrial Networks: Experts from Ikea Carlifornia Management Review, 50(4), 99-126. Beard, B. (2006) IKEA facing competition on furniture row Arizona Business Gazettes, available online at: http://azcentral.com/abnews/articles/0824abg-tremeraldo824.html, accessed 09/20/2012 Gerdeman Dina. (2012, January 09). Location, location, location: The strategy of place. Retrieved from http://hbswk.hbs.edu/item/6916.html Moon, Youngme (2004). IKEA Invades America case study: Harvard Business School, 1-13.

Questions?