Q3 Explain how IKEA tries to ensure that their ‘hybrid’ strategy remains sustainable and

does not become ‘stuck-in-the middle’.

IKEA effectively operates a hybrid strategy by simultaneously achieving differentiation and low
cost than competitors. The hybrid strategy of IKEA is difficult to imitate by competitors. IKEA
won't stuck-in-the middle because they have well-designed, low-cost products with high quality,
which is the main competitive advantage of IKEA. Customers value these offerings of IKEA
because none of the competitors has made high-quality products with low pricing. For most
competitors, having the lowest price seems to mean being five to ten percent, but IKEA's prices
are 20% lower than its competitors. Instead of adapting the Company’s product range to the
markets, the Company is operating in. However, IKEA has shifted the market’s preferences
towards their own product range and style. By doing this, IKEA has maintained a unique and
distinct profile, and this is a more difficult path to follow. The most crucial factor in ensuring
that IKEA's‘ hybrid’ strategy remains sustainable and does not become ‘stuck-in-the-middle’ is
the IKEA value chain. IKEA has total control of the value chain from raw material, production,
and range development, to distribution into stores. Most other companies working in the retail
sector control either the retail end (stores and distribution) or the product design and production
end. But not control on the entire value chain like IKEA. IKEA’s vertical integration makes it a
complex company compared to most since it owns both production, range development,
distribution, and stores. This included backward integration by extending the activities of
Swedwood beyond furniture factories into control over the raw materials, sawmills, board
suppliers, and component factories.