In the following research essay, the IKEA organization as a cost-leader with a mixed strategic approach will be analysed. For exposing and identifying the strategy it is important to understand background and history. Therefore, a brief overview will be given. Afterwards, the IKEA way of reducing costs will be described to underline potential strategic positions. Furthermore, key strategic issues, facing IKEA as it seeks to generate and sustain competitive advantages will be identified. In order to analyse IKEA’s strategic position, theoretical frameworks and concepts will be used. Likewise, these frameworks will be critically evaluated in adaptation to the case. Finally, the IKEA strategy will be categorized and a general strategic approach will be highlighted.
Table of Contents
- INTRODUCTION
- OVERVIEW OF THE COMPANY IKEA
- Company Profile of IKEA
- History of IKEA
- THE ‘IKEA WAY’ - CREATION OF LOW COSTS
- IDENTIFYING THE STRATEGY OF IKEA
- Porter's Five Forces
- Porter's Generic Strategies
- Bowman's Strategic Clock
- Internationalization of IKEA
- IMPLICATION OF THE ANALYSIS
- CONCLUSION
Objectives and Key Themes
This essay analyzes IKEA's strategic approach as a cost-leader. It explores IKEA's history and cost-reduction methods to understand its competitive advantages. Theoretical frameworks are used to analyze IKEA's strategic position and categorize its overall approach.
- IKEA's cost leadership strategy
- The "IKEA Way" and its impact on cost reduction
- Analysis of IKEA's strategic position using established frameworks
- IKEA's internationalization strategy
- Competitive advantages and sustainability
Chapter Summaries
The Introduction sets the stage for an analysis of IKEA's strategy as a cost leader. The Overview of the Company IKEA provides a company profile and a brief history, highlighting key developments. The section on The ‘IKEA Way’ - Creation of Low Costs details IKEA's methods for achieving low costs, including flat-pack furniture and global sourcing. The Identifying the Strategy of IKEA section uses Porter's Five Forces, Porter's Generic Strategies, and Bowman's Strategic Clock to analyze IKEA's strategic position. This section also examines IKEA’s international expansion. The Implication of the Analysis section will draw conclusions from the previous analysis, and the Conclusion is omitted to prevent spoilers.
Keywords
IKEA, cost leadership, strategic management, competitive advantage, internationalization, low-cost strategy, flat-pack furniture, supply chain management, Porter's Five Forces, Porter's Generic Strategies, Bowman's Strategic Clock.
Frequently Asked Questions
What is IKEA's primary competitive strategy?
IKEA follows a cost-leadership strategy, focusing on providing functional home furnishings at prices so low that as many people as possible can afford them.
What is the "IKEA Way" of reducing costs?
It involves flat-pack furniture to save on shipping and storage, global sourcing, and a self-service model where customers pick up and assemble products themselves.
How does Bowman's Strategic Clock apply to IKEA?
IKEA is often categorized in the "Low Price" or "Hybrid" segment, combining low costs with a perceived value that differentiates it from pure discounters.
What are Porter's Five Forces in the context of IKEA?
The framework analyzes the furniture industry's competitive rivalry, the threat of new entrants, the bargaining power of suppliers and buyers, and the threat of substitutes.
How does IKEA handle internationalization?
IKEA uses a standardized global concept but adapts slightly to local markets, leveraging its strong brand identity and efficient supply chain to enter new regions.
- Quote paper
- Sven Rosenhauer (Author), 2005, “Profit is a wonderful Word”. IKEA’s Strategy behind the Profit, Munich, GRIN Verlag, https://www.grin.com/document/119564
