6.

0 The Strategic Agenda/Recommendations

6.1 Composite Analysis of Matrices

6.1.1 SWOT Matrix

STRENGTHS OPPORTUNITIES
- Strong brand Recognition - Rising household Units
- Located Globally - Growing awareness of modular designs
- IKEA is not a place to shop but an experience - Rapid urbanization
(experience valuation) - Young working population
- Ready-to-assemble furniture
- Affordable furniture

WEAKNESSES
- Furniture assembly
- The innovation in Hyderabad cannot be
blanketed with other places
- Products can easily be replicated
THREATS
- Furniture industry is highly fragmented
- High competition in the industry
o Furniture retailers who were playing
on cost
- Tier I cities advocate furniture renting
services while Tier II-III relied on local
furniture stores with free assembly and
delivery
- Furniture assembly and free delivery
- Government intervention
 6.1.2 SPACE Matrix

SUB-FACTORS SCORE AVERAGE AXIS VALUE

INDUSTRY ATTRACTIVENESS
Growth Potential 2
Profit Potential 3
Financial Stability 4 2.4
Complexity of Entering the industry 1
Bargaining Power of manufacturers 2
-0.85
COMPETITIVE ADVANTAGE
Market Share -4
Product Quality -2
-3.25
Product life cycle -3
Customer loyalty -4
FINANCIAL STRENGTH
ROI
LIQUIDITY
DEBT RATIO N/A
CASH FLOW
INVENTORY TURNOVER
ENVIRONMENTAL STABILITY -3
Technological change 0
Inflation rate 0
-3
Demand volatility -3
Price range of competitive products 0
Price elasticity of demand 0
Bottom Left – The company is to observe a defensive position, considering the vast number of
competitors and the amount of market share spread is, the industry is very unattractive. With the
current situation of IKEA in India, the company has the financial strength to compete but there is not
much on their competitive product.
 6.1.3 BCG Matrix
RMSP
HIGH LOW
STAR QUESTION MARK

HIGH

RMG
CASH COWS DOG

LOW

Question mark – In IKEA’s situation, the current market position of the company is in the question mark.
Even with the congested market, the amount of people shifting to modular designs is high. With that
there is a high potential for the market of IKEA to boom. It is generating low cash, in the country, IKEA is
not that much popular because of the presence of other competitors that are loved by the mass. IKEA is
also on a bad situation especially when the Government of the country decided to limit its actions. The
company needs to research more in its demographics, product, and geographic locations if it wants to
be in the STAR or CASH COW quadrant.
 6.1.4 IE Matrix

IFE matrix

KEY INTERNAL FACTORS WEIGHT RATE 1-4 WEIGHTED SCORE

STRENGTH

1. Strong Brand Recognition 0.10 3 0.30

2. Geographically present 0.10 3 0.30

3. Value experience 0.10 3 0.30

4. Ready to assemble
0.05 2 0.10.
Furniture

5. Affordable 0.15 3 0.45

KEY INTERNAL FACTORS WEIGHT RATE 1-4 WEIGHTED SCORE

WEAKNESSES

1. Furniture assembly 0.15 3 0.45

2. Product replication 0.20 3 0.60

3. Varied geographic housing

0.15 3 0.45
culture

TOTAL 1.00 2.95

EFE matrix
 KEY EXTERNAL FACTORS WEIGHT RATE 1-4 WEIGHTED SCORE

OPPORTUNITIES

1. Rising household units 0.05 3 0.15

2. Growing awareness of
0.20 4 0.80
modular designs

3. Rapid urbanization 0.05 3 0.15

4. Young working population 0.10 4 0.40

KEY EXTERNAL FACTORS WEIGHT RATE 1-4 WEIGHTED SCORE

THREAT

1. Fragmented industry 0.20 4 0.80

2. High industry competition 0.10 2 0.20

3. Lifestyle Tiers 0.05 2 0.10

4. Free assembly and

0.10 3 0.30
delivery

5. Government intervention 0.15 4 0.60

TOTAL 1.00 3.50

 3.0 1.0
4.0 THE IFE TOTAL WEIGHTED SCORES

STRONG AVERAGE WEAK

3.0 – 4.0 2.0 – 2.99 2.0 1.0 – 1.99
HIGH I II III
3.0 – 4.0

3.0
THE EFE TOTAL WEIGHTED SCORE

MEDIUM
2.0 – 2.99

2.0 IV V VI

LOW
1.0 – 1.99

VII VIII IX

IFE – 2.95

EFE – 3.50

Growth and Build Strategy –. The company needs to flow with the growth of the industry, especially
with the expected rise of the passing time. The strategy needs to focus intensive market penetration and
product development to secure a competitive position.
 6.1.5 Grand Strategy Matrix

RAPID MARKET GROWTH

QUADRANT II QUADRANT I

WEAK COMPETITIVE POSITION STRONG COMPETITIVE POSITION

QUADRANT III QUADRANT IV

SLOW MARKET GROWTH

Q2 – With the possibility of a huge opportunity at hand, IKEA should not miss this chance. The company
should develop its strategies to create a penetration to the fragmented industry. Product development
and service strategy is also a key factor that IKEA should consider especially with the people’s lifestyle
and culture towards buying furniture.
 6.2 The Strategic Choice/s

In line with the current situation and market position of IKEA in India, a more practical and culturally
driven approach is much appreciated and desired. The group would like to suggest a strategy from the
15 grand strategies in order to provide a more basic direction for the businesses action.

One of the group’s suggestion is to build Consortia. Because of the fragmented market, one of a best
strategy IKEA can have is to build interlocking relationships with local businesses in the industry. By
doing so, the product brand can be integrated while lessening the risk of failures and mishaps.

Another Strategy suggestion is to have a vertical integration. To be able to acquire a business that is
related to the firm with regards to its resources. By doing so, the company is able to isolate other
resource suppliers from the industry which in return can give the company a great competitive
advantage.

Last suggestion for the company to take is innovation. By building a substantial and sustainable furniture
that appeals to the people can give the company a great advantage in the playing field. Because of how
congested the industry, one way to attract the customers is to have something that is original and novel
towards others. By building a new product life cycle together with the existing products can build an
attraction that can open customer curiosity and endearment with the other products offered.