sitsro1g “The strategic poston ofthe kea company The strategic position of the Ikea company rds (12 pages) essay in Market Discover our % UKessays : 7 Haves eumenramaamnstnnatianinmaimnsngereene | ESE Frode yo xanga You now snake ean te Gaston cere anne etrecuaycaheven fukin £28 Position Analysis of IKEA “ of ther implementation of competitive strategies fr a global marketplace. All aspects of the company's value chain ate focused on the production of high quality knock-down’ furniture at low and affordable prices cor ow IKEA’s Strategic Position back Johnson at al. (2008, p13) stated that: Each order includes “the strategic positon is concerned with the impact on strategy ofthe Sager lesternal environment, an organisation's strategic capability (resources and TOO cone the wrk is competencies) and the expectations and influence of stakeholders.” ever resol or peed petenciesh P “ Sond iy anensnant PESTEL ANALYSIS 1 Apaperwritan tthe tance ‘The under-mentioned isan assessment ofthe environment in which IKEA, 1 Acetaied poi epon ‘operates, which has alowed them to use thelr core competences to gain Y Aeonprebense iy report competitive advantage ina global recessionary market Rated 4.5 out of 5 by Poltically asa direct consequence ofthe global recession many countries in OREVIEWS« an attempt to protect thelr economy and loca industries impose trade ReRRH Ghee) tembargoes and tarfs in an attemps to prevent or make it more dificult for the import of KEA products into their county. The double-dip recession has resulted in a decrease in sales of IKEA's furniture 2¢ many persone are unemployed due to many companies inability Our Services to fnancially mest their overhead cost. Asa result many of IKEA's customers We have range of academic have chosen to hold onto their savings due tothe economic uncertainty. The __witing and proofreading recession impact IKEA's operations as countries in which IKEA operate in, may Services for students of ll, globalize ther markets and try to promate buying-in to thelr local levels: products and services instead of products fom the international market ‘Terefore this would reduce KEA's earning potential based on a decrease in y Waiting Serv customer spending. Socially, KEA has been able to provide employment to persons in 35 countries improving the standard of ving of these employees IKEA has been ‘gaining strategic advantage over thet competitor since they have been ‘outsourcing the primary level of thei value chain activites. This strategy i sed to increase emloyment levels in developing countries as they grapple vith the soil effects ofthe global recession, such a increased ‘unemployment and criminal activites. tps. 19sitgrnce tps. We can help with your essay systems and metheds to improve on the production process. Their technology has resulted in an efficent cstribution chain to ensue that goods reach their consumers as and when they are needed, making them tool always avaliable. IKEA's information technology offers countless opportunities te simplify, streamline, andl improve every aspect of eperational activity. APA referencing Hanard reterencing tool Ethiclly IKEA has st admirable standards fr achieving improved competitiveness in the household {umishings industry. Through its clear definition oftheir roles and their relationship with their customers, KEAIS referencing tool able to increasingly develop strategies and systems to ensure that products reaches the customer on time and is ofthe highest marketable quality ‘Study guides salable at affordable prices IKEA's corporate policies basically are regarding their impact on the nasural environment itis the motvatar for their relationship with suppliers. KEA is positioning itself to supply enerey saving electrical bulbs to consumers Tarough its socal programs IKEA has donated thousands ofthe most basic requirements to underprivileged children PESTEL ANALYSIS lec2 side 1.png There ore als legislations to contral the ethical and lawful management organisations including IKEA. IKEA must conduct their operations according to the rule of hw asi pertains to the counties in which they operate especially regarding the human rights act, the protection of workers andthe proper implementation ofthe Occupation Health and Safety Act. These laws are enacted to protect worker from exploitation, abuse, discrimination and Violation. f workers fel that their rights, while employed have been violated by the company they have a course of action which they are obligated to take against thelr employer. The vieltion of workers’ rights can be very damaging he image, brand and reputation ofthe organisation. Therefore, itis of crucial importance tha the proper investigation and standards are Implemented when outsourcing activites to ensure that workers rights in veloping countries are not exploited and abused, STRATEGIC CAPABILITIES IKEA's strategic capabilties are their strengths, sue a5 ther skiled human resources and their efficient value chain and cistibution channel. The company developed strategies to overcome weaknesses and convert them io strengths which the organisation can capitalise onto gain competitive advantage, Te stanlsation ofthe production process in the manufacture of ‘ther furiture allows IKEA to increase its production output with increased accuracy and efficiency, thereby enjoying economies of scale Strengths, Weakness, Opportunities, Threats (SWOT) Analysis identify the challenges and issues. IKEA has outsourced to a number of global manufacturers to produce furniture ata cheaper cost added tothe easily availabilty of raw material and skilled bbour. This however, can be a challenge for IKEA as governments wish to protect their local industries. Therefore, they may impose trade tarfs and embargoes on the company's products thus making them more expensive for import The affordably of KEA's furniture is» source of strength forthe furniture sant asa result of which they are able to enjoy increased sales. However, IKEA has fel the challenges ofthe double-cip global recession from 2008, 219sitgrnce tps. We can help with your essay hetpitranchisorikea convimages/chartstumoversit Through the standiscation of ther production processes and furiture design IKEA has been abe te increase production, with minimum wastage and increased efficiency and speed. However, the standarcization oftheir furniture dees presenta challenge for KEA since itis a global company and ‘the cukral difference in countries exist. Therefore, their global customers ‘may requir a variety and they may need to adapt thee furniture to adequately satisty the diferent tarts, needs and sys, The organisation has adopted a fat organisation structure for greater efficiency in the management and control of staf to ensue that corporate and business objectives of KEA are achieved tthe operational level ofthe organisation. However, KEA’s management strategy which empowers staf to make decision may ead to the developmer faire attitude among staff Management may oss control as staff conduct ‘may become unethical and irresponsible a lassie IKEA's policy of deploying management from thelr Swedish store to tain staf at thelr global branches is used asa strategy to ensue that IKEA's concepts, vision and mission is standarsed throughout the company’s 300 branches. This palcy may leave many employees feeling de-motivated as they may feel thatthe Swedish branch is centaling their power, authority and control over IKEA's glossy catalogue isan ideal promotional tool as tis distributed in 35 counties, n 25 languages in excess of 190 million. The cst attached to publish these catalogues would impact the company’s prot margin especially ina market experiencing slow sales. The impact on the destruction (ofthe natural habitat asa result ofthe high numberof catalogues circulated (oma yearly basis theres cause for environmentalist to be concerned, httptranchisorikea convimages/charts/eatalogue git IKEA's main strength however isthe speed and efficiency with which the ‘company ensures that their fumiture reaches their customers though however, in trying to make the furniture mare affordable IKEA has failed to ‘add tothe appeal oftheir customer hase through their lack of style and choices IKEA has been able to open 35 stores however, the negative impact ofthe Global recession poses a challenge as the value of countries currency may be devalued as countries seek to deal withthe economic effect of te recesion. Many governments in an attempt to protect their loca industries from the Impact of globalsation are deglobalising their economies to allow their local businesses to survive as many persons exercise greater control with regards to ther spending EXPECTATION & PURPOSE A this level business operations must be conducted ethically tothe benef its stakeholders (employees, environment, customers, shareholders, supplies competitors). IKEA has a responsibly to society and is interaction with its stakeholders must reflect and represent the organisation's best interest, The business lvel of IKEA's operations strategies are implemented which allows fr the hiring ofthe best sled, qualified and trained employees who are able to work efficiently with minimum supervision. Employees are ‘empowered tobe apart ofthe compary’s decision making processes ofthe company. This has alowed the company to be increasingly Inmovative in a9sitgrnce tps. EXPECTATION AND PURPOSES STRATEGIC CHOICES Johnson et a (2008, 2217 stated that ‘Srategic choices are concerned with decisions about an organisation’ future and the way in which it needs to the many pressures and influences3€ BUSINESS LEVEL IKEA's mission isto provide low-cost furniture, of high quality which would sstisty the needs and expectations oftheir customer base. Their workforce is highly trained and empowered withthe authority ta make decision and to ‘ake responsibility for their decisions IKEA can also implement procedures and policies to ensure that their ore prediction and manufacturing concepts ‘re standardised on a global scale at all ofthe 300 stores inthe 35 counties hich they operate CORPORATE & INTERNATIONAL LEVEL However, atIKEA's corporate and interationa strategic level they ensure that the production and manufacturing processes oftheir furniture re standardised to ensure that efficiency and quality contol are maintained. The furiture ae easly made avalable packed in boxes where the customer do not have to pay added costs to have the product delivered they can self transport and assemble themselves. DEVELOPMENT DIRECTIONS & METHODS IKEA's strategic erection and methods of development has allowed them to invest in research and development. Theirnew concept in “knock-down” fumiture has positioned them become a market leader in this sector, STRATEGIC CHOICES STRATEGY IN ACTION IKEA have been able to implement planned and unplanned strategies which has enabled the company to gain competitive advantage through technological leadership, producing superior furniture in comparison to competitors. Suggest a range of options to deal with the challenges of IKEA’s position analysis issues. Fora global organisation uch as IKEA operating ina highly competive recessionary market plagued by challenges and issues there are number of successful strategies which IKEA should implement. The successful Implementation would place KEA in 2 position to revitalise thee declining ‘market and boost their product offerings which would allow them to msintain competitive advantage. KEA must use strategies t crive the market through Innovative concepts and not lt the market drive it FOCUS DIFFERENTIATIONsitgrnce tps. We can help with your ata stratecie advantage to provide furniture at a substantial price toa selected niche market demanding furniture af an exquisite quality and detail This strategy would allow IKEA to target consumers from the upper and ‘upper midele class which they did not target before PROMOTION Ie is also advisable that KEA invest heavily nto promotion and branding of their products to atract a wider demographic ane segments. This strategy attempts to convince customers that they are paying bigher prices for an item of higher quality and unique tothe needs and wants of the consumer. OUTSOURCING/OFFSHORING Through the implementation ofa diferentiation strategy IKEA can provide 00d and services diferent and af a wider varity from their competitors. To ain stategic advantage in global recessionary market and highWy competitive market IKEA can futher outsource ancl also offshore their support and primary activities ofits value chain to India for example where the cost of labour s much cheaper than it would be thar for example, the USA and Europe. Here they would be able to benef from time arbitrage IKEA can enjoy the benefits of time changes by putting the change in time from one geographic location to another to productive use therefore the monutacturing process is doubled ew market This strategy would enable IKEA to enter and capture new segments ofthe ‘market that they were not able to enter before. As aresul the cost of, production decreases making price mote affordable tothe masses. Resulting increase sales and stengthening the market potential of the IKEA brand on 3 lobal scale IKEA can focus on improving the quality of their essing products thus staying competitive reducing the risk of lsing marketshare to competitors MAINTAINING CUSTOMER LIFETIME VALUE 8 focusing on maintaining Ifetime customer value IKEA should not only facus on 2 single transaction with the customer but developing anc ‘maintaining a flong relationship wit their customers. KEA can achieve this by maintaining 2 level of constant contact with customers, keeping informed of theirneds and providing them witha supetor level of customer service hich their competitors are unable to imitate ar they would find efit to do so. Ths strategy works of building customer loyalty which can last 2 Ietine. PROVIDE VALUE IKEA should continue to provide added valu customers do care about the benefts which they get from their IKEA, furniture, they must get value for money. KEA must continue to offer an extra level of servic to further improve the value of thee furniture to their, customer base, IKEA has already done this by proving a low-cost product, assisting in reducing te cost by allowing customers to deliver and assemble their own furniture. Additional, er customers sinc ‘can offer more benefits to their consumers such as promotional gifts with purchases, MERGERS/ACQUISITIONS 59sitgrnce tps. We can help with your ‘the tangible and intangible resources of both companies are merged which Increase the opportunty for further growth potential [As result of his growth IKEA can benefit from horizontal integration which can allow IKEA to offer to naw markets its exiting furniture ine or thay can introduce anew range of products to their curent. This strategy can allow IKEA to experience further growth and inreased benefits from economies of scale, a there isan increase in the number of units produced this results in 2 lower cost per unit IKEA supply chain which includes in adequate supaly of raw mater to ‘manufacture their furniture being able to satisfy the needs and wants of their customers As 9 consequence, KEA would be poised to exercise greater contol oftheir operational systems resulting in improved quality, quantity and price which would impact the company’s profit marginsin a postive way IKEA can also experience growth by diversifying inte a new range of products and new product development allowing KEA to enjoy synergic growth and development SHORTENING THE PRODUCT LIFE CYCLE 8y developing products with a shorter product life eyle IKEA can continue to antieipate and successful satisy the changing needs of their customer base, ‘meeting and filing the needs of new customers as well the existing, Through innovation and research IKEA would be able to Keep-up with changes in vends inthe market, Giving the customer what they wont before the customer even know, what PROCESS RE-ENGINEERING IKEA can re-engineer its systems by critically examining it operations ta develop strategies to allow it to increage the company's efceney by making it mare simple or removing them from the company’s operational systems, TALK TO YOUR CUSTOMERS IKEA can improve its exiting product, packaging and supply their furs offering in 2 new way an excellent marketing strategy whieh can allow IKEA to ‘maintain competitive advantage. This strategy would be used to impress IKEA's customers withthe new improved product offering. KEA's marketing ‘manager can develop strategies through effective market research into (geographic and demographic segments of KEA's furniture market. With the information gathered IKEA can generate new ideas to improve their product offerings benefiting customers as they are able to satisfy their market potential through customer satisfaction ey want ‘Trough market research IKEA was able to provide stores inthe geographical locations where there has been a high demand forthe IKEA brand. RESTRUCTURIING This may involve including or removing levels of contol in KEA'S organisational structure which would promote a more efficent culture leading to increasing producti TRAINING & DEVELOPMENT IKEA should target training and development programs which would allow staffto develop and hamess their capabilties to be more innovative and creative giving IKEA competitive advantage. assitgrnce hits. We can help with your comprehensive environmental analysis is conducted which can determine winat is the best strategies to be implemented to meet the changing needs and taste ofthe new market andthe existing market. In rapidly evolving ‘word in a market where consumers needs are constanlly changing at 2 rapid ‘ate, coupled withthe economic challenges ofa global recession, IKEA must diligently evaluate their products and their abit to satisfy te future needs of thor consumers. 8y developing and enhancing the sills and abit ofthe human resources KEA would be poised to maximise the capabilites of thelr, cote competencies, IKEA can reinvent itself 35 they strive to maximise the level of competitive advantage it has over its closest rival, Cite This Work To exporta reference to this article please select a referencing stye below: APR MLA Mi: Hanard © Vancower kinesin oscola says, UK. (November 2078). The strategic position of the Kea company. 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