TABLE OF CONTENTS
Chapter 1 Introduction……………………………………………….
1.3 Company Background
1.3.1 Company vision and mission
1.3.2 Company products and services
1.3.3 Corporate and business strategy
1.3.4 Sales and profit of the company
Chapter 2 Business and corporate strategy………………………….
2.1 IKEA business and corporate strategy
2.2 Micheal Porter’s Five Forces Model
2.3 IKEA as a competitive advantage
Chapter 3 Why IKEA failed in USA…………………………………..
3.1 Cause of the failure
3.2 Different management styles in USA
3.3 Different consumer decision process
The first attempt to go abroad was made in 1963 in nearby Norway, outside Oslo. IKEA took the lead in using nontraditional materials for furniture, like plastics, that made IKEA design well-known worldwide. The company also targeted younger families. It moved to the U.S in the mid -1980’s and has been targeting Eastern and Central Europe since the 1990’s. (Academy of Management Executive, 2003)
The Swedish heritage and approach to design can be seen in many of IKEA’s characteristics: from the furniture design, “which is modern but not trendy and functional but yet attractive” to the surrounding of their stores as they create the design concept “We think creatively to make innovative affordable products”. IKEA’s vision is to: “Keep continuing for a better everyday life of IKEA’s customer” (IKEA, 2011c).
IKEA builds the partnership with consumer, uses design and creative idea and searches for cheapest production facilities by purchasing huge quantities. IKEA also displays room setting in order to inspire home furnishing solutions to customers as well as the advantage of self-service and assembly concept. They also provide support functions such as restaurants, bistros, children’s playroom, pet drop-off, large area of parking lots and Swedish Food Markets. Besides selling furniture with lowest price, IKEA is also concern of the environment as they develop environmental policy conducted within its business. It is also a member of UNICEF and WWF by donating funds for children around the world. (IKEA, 2011d)
1.3.3 IKEA Product and Services
IKEA product range is well designed and functional and is sold at low prices so that it is affordable to many people. The IKEA concept makes it possible to serve all by providing low-priced products that contribute to helping more people live a better life at home (IKEA, 2011e) The IKEA concept guides the way IKEA products are designed, manufactured, transported, sold and assembled. Thirty three percent of IKEA products are manufactured in Asia. (Keegan. W & Schlegelmilch, 2001).The product and services is attached in Appendix 2.
IKEA – Business and Corporate Strategy leading to Competitive Advantage
IKEA has revolutionised furniture manufacturing and selling over the years. The current organizational structure of IKEA proves functional with a global market strategy. In this aspect IKEA has been able to maintain a centralised control on all functional activities. The most analytical, effective and influential model for assessing the nature of competition industry is Michael Porter’s Five Forces Model (see Appendix 3). Porters Five Forces includes an analysis of external and internal factors to identify sources of competition within the environment such as ‘potential entrants’, ‘substitutes’, ‘competitive rivals’, ‘supplier’ and ‘buyers eventually leading to value chain of an organisation. (Johnson & Scholes, 2002) IKEA also takes the advantage of low costs and enhances...