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Ikea Strategic Management Essay

822 words - 4 pages

Pāvels KuzĦecovs Andrejs Dzedons RBS Professor, Strategic Management Case Study: IKEA Overview IKEA is one of the very few companies to develop from a small privately-owned firm into a multi-billion retail giant in just 4 decades! What is even more impressive is the fact that IKEA managed to generally preserve its ownership format, and grew without going public. I believe that there are several elements of IKEA’s strategy that allowed developing and sustaining of significant competitive advantage: 1. Cost Leadership has been the key objectives by IKEA from the very beginning of furniture operations. IKEA’s initial production cost advantage vs. Swedish competitors was reflected in very ...view middle of the document...

IKEA has obviously succeeded with both. The following elements of IKEA’s retail strategy are important: - Selection of high-traffic locations, preferably extra-territorial. IKEA positions its malls as household shopping destinations where shoppers can spend a lot of time. - Offering of products and services for impulsive purchase. - Unique store-layout in a shape of a maze, ensuring that customers observe the full spectrum of IKEA’s offering. 4. Corporate Culture. Mainly a result of founder’s attitude, IKEAs corporate culture is very unique: it is very liberal, and the same time mission-driven and demanding. IKEA heavily relies on promotion from within, which is quite typical for unique organizations; People from outside adopt poorly and rarely share specific internal values. Localization Challenge: IKEA in US One of the issues that occurred in 1990s as IKEA started expansion to the US was related to the lack of local focus in terms of product offering. Consumer habits, product expectations proved to be very different region by region, and IKEA products were not as widely accepted in the US as in Europe. Besides, importing goods to US deteriorated cost/price leadership. IKEA was fast to adjust its business model to American needs, and came very strong out of this crisis. Riga, 15th of March, 2011

Future Challenges Despite the envious current situation, I see numerous challenges for IKEA in the future: 1. Ambitious growth targets. Opening of 20-25 stores per annum sounds rather ambitious...

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