Business Strategy Models and Frameworks

In this assignment, we are provided with a list of various business strategy and marketing-related articles, books, and online resources that can be used to create a network model for businesses. These sources offer insights on how to create blue ocean strategies, design corporate identity, develop effective decision-making processes, pursue flexible commitment, and implement high-functioning business strategies. By examining these materials, we can identify patterns, connections, and relationships between different ideas and concepts that can be applied to create a comprehensive network model for businesses.

Case Study
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Table of Contents
INTRODUCTION...........................................................................................................................3
Question 1: The decision to locate overseas should be an informed process. Describe and assess
the methods and tools available to a business when making the choice between different
locations...........................................................................................................................................3
Question 2 Overseas environments may differ from a business's domestic environment.
Considering the political, economic and cultural framework, discuss how overseas environments
may differ. Explain how such differences may present a risk to a business organization. ............7
CONCLUSION................................................................................................................................9
REFERENCES..............................................................................................................................10
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INTRODUCTION
In order to conduct business expansion in the new market, it is necessary for
organization to undertake effective strategies so that their objectives can be fulfilled
effectively. . Along with this, it also helps business entities to attain high sales and
profitability by expanding business in an effective manner. However, it is crucial for firm
to make effective decision regarding locating its business in the overseas market and at
the same time, it is also necessary to be consider the rules and regulations of
government so that business can be easily expanded (Grant, McLeod and Shaw, 2012).
Also, management of firm is required to take leadership action so that potential of
market should be analyzed before entering into specific market. The current study is
based on a case study of IKEA that undertakes strategies to expand and become
profitable in Chinese market. Further, business is also planning to enter into Indian
market and for that, it is focusing on assessing the advantages available in the market
of India.
Question 1: The decision to locate overseas should be an informed
process. Describe and assess the methods and tools available to a
business when making the choice between different locations.
It is essential for organization to make effective decision regarding locating
business into the overseas market and thus, it should be an informed process.
However, IKEA needs to undertake an expansion plan by informing others who are
related to the business operations at the time of enlarging the business. IKEA is a
Swedish low cost furniture brand which adopts different strategies so that they can
expand business effectively and become profitable in China as well (Hoványi, 2006).
Therefore, in order to locate business in the overseas market, it is essential for firm to
plan suitable strategies so that they can gain attention of Chinese consumers and their
preference towards furniture products can be identified. Also, business is required to
determine the availability of local competitors and their pricing strategy so that it can
give tough competition to them. However, business also faces certain issues while
entering into China market such as local competitors copied its design and sold at low
prices that affects the sales of firm. Further, local suppliers also refused to supply raw
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materials to business and importing from other countries incurs high import tax that
ultimately results into increase in prices that affects sales of furniture in market
(Kouropalatis, Hughes and Morgan, 2012).
In addition to this, management of IKEA should need to identify all the factors
regarding the overseas expansion so that appropriate strategies could be developed
and implemented in order to achieve organizational goals. Also, it is significant for IKEA
to adopt an effective informed process so that they can effectively locate its business
operations in the overseas market such as India and China (Miles, 2002). Thus, before
starting activities at different places, management of firm is required to determine
various factors such as price, product, value proposition, store location, promotion and
logistics. However, all these factors need to be considered by IKEA at the time of
making choice for locating business at different locations. Also, firm should analyze
market conditions prevailing in the country and assess the taste and preference of
consumers while buying the furniture items. Main decision of positioning business in the
international market is taken by management and owners that is related to inform other
individuals regarding the choice of selecting different places where business is going to
start its operations. For instance, here, business is planning to launch its activities in
Chinese market and later in Indian market so that choices and preferences of
consumers should be identified in order to attain organizational goals (Morgan, Strong
and McGuinness, 2003).
However, informed process is a crucial element for firm as it helps them to obtain
permission from different individuals before conducting business operations in the
overseas market. Therefore, management needs to ask employees and also involve
them in decision making process so that crucial strategies could be developed in regard
to determine the market where firm is planning to launch its business operations. In
addition to this, it is also significant for firm to ensure that applied strategies would result
into profits and attain desired goals in an effective manner (Paswan, Blankson and
Guzman, 2011). Here, research and development department of IKEA plays a crucial
role in determining the choice of targeted consumers in both the markets i.e. China and
India and after that, identifying the market conditions that are prevailing in the country.
Decision of international expansion is crucial as it needs to be informed to other people
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working in the organization so that they could make proper planning of strategy
implementation that helps in achieving positive outcomes in form of high sales and
profitability. There are different methods and tools such as Porter Five Forces present
with business in order to implement at the time of expanding business activities in the
international market i.e. India and China. As both the destinations are developing in
nature, therefore, it is essential for IKEA to identify consumer’s choices regarding
different factors such as product quality, features, price, promotion, value proposition
etc. in order to attain success (Ireland, Hoskisson and Hitt, 2011).
Following are the different factors present with the business while making the
choice of expanding business within different locations i.e. China and India. These are
as follows-
 Value proposition- Chinese consumers aim to obtain good quality furniture in
western style. Therefore, IKEA needs to develop its brand image in the market in
order attract middle class people to buy furniture products and enhance sales
and profitability. On the other hand, Indian people also like to buy the furniture of
good quality and that too at affordable prices. Thus, firm needs to keep this in
mind that both the nations are developing economy and thus, it should focus on
this aspect as well as build furniture accordingly (Kim and Mauborgne, 2013).
 Product- At the time of launching business within Chinese market, marketing
team of firm is required to analyze the requirement of Chinese consumers in
terms of product features that should be flexible in nature so that they can be
best suited as per the needs of local market. For instance, IKEA management
should determine the size of apartments in China where people live and thus,
firm should produce furniture for the same so that best result can be attained.
While, within Indian market, needs of people are different. They want unique
design product that looks like international brand and due to this, people
purchase it for their homes and decorate it with that (Knapp, 2001).
 Store location- Within China market, IKEA locates its stores in the outskirts of
city i.e. next to the rail network or metro stations because most of the people use
public transport. While, in India, company is planning to start its operations in
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Shopping Mall because huge number of people visit there and thus, they can
attract towards products and services of business (Kourdi, 2010).
 Price- After viewing the spending pattern of consumers both in Indian and
Chinese market, it is essential for IKEA to produce its furniture at affordable
prices so that different consumers can purchase it (Lafley, 2013).
 Promotion- In China, firm promotes its products through advertising on Chinese
social media and micro-blogging website i.e. Weibo that is one of the social
media tools is used so that large number of people can be attracted. While, in
Indian market, company promotes furniture through exhibitions and trade shows.
Also, it adopts television and internet sources to promote its products and
services (Langabeer and Napiewocki, 2000).
 Logistics- In China, company purchases raw materials and products from the
local market in order to save taxes and reduce cost because firm needs to sell
products at low cost in this market. On the other hand, in Indian Market, IKEA
faces challenges especially in relation to distribution and logistics due to different
rules and regulations of government and more intervention of political parties
(Pinnington and Scanlon, 2009).
Furthermore, Porter Five Force tool can be used by business in order to evaluate
the best choice for starting business operations among different locations and
thereafter, expanding firm within the international market (Thorpe and Morgan, 2007). In
case of IKEA, description of Porter Five Forces is as follows-
 Rivalry among firms- It is high within the international furniture market as there
are varied range of competitors available such as Walmart stores, Argos etc.
Thus, it is essential for IKEA to provide best quality furniture so that they can
gain high market share and overcome competitors (Hansen and Smith, 2006).
 Threat of new entrants- It is low as entering of new customers in furniture
industry requires huge investment. Thus, current market condition is saturated
and also expertise is required to become successful furniture seller at
international level.
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 Bargaining power of buyers- It is high as the competition is stiff and thus
people possess varied range of choices offered by furniture industry at
international and national level (Kambil, 2008).
 Bargaining power of suppliers- It is low as there are wide range of suppliers
available in the market and thus IKEA develops strong long term relationship
with its suppliers and satisfy their needs in order to attain desired goals (Marren,
2007).
 Threat of substitutes- It is also low as there are not so many products and
services present that can substitute the need of furniture offered by IKEA.
Therefore, it possesses strong brand image and achieves high market share
(Marren, 2012).
Question 2 Overseas environments may differ from a business's
domestic environment. Considering the political, economic and
cultural framework, discuss how overseas environments may
differ. Explain how such differences may present a risk to a
business organization.
It can be assessed that expansion of business in the international market always
differs from domestic market environment. For instance, availability of political factors,
cultural factors and economic conditions prevailing in the economy of international
market where firm is planning to operate its business. However, decision of involving
business into international market depends on the size of firm's domestic market, its
brand image, production capacity, financial performance as well as other resources
which are required by firm to operate into foreign market (Trim and Yang‐Im, 2008). In
regard to this, if firm is able to meet all these requirements then IKEA is able to place on
an internationalization scale that ranges from domestic market to overseas market.
Further, business also becomes relevant to the domestic culture as well as managers
and employees are aware regarding the buying behavior of consumers in the market.
While, it becomes difficult for firm to determine the culture of international market where
they are going to establish and attain results beyond national boundaries. Here, firm is
also emotionally sensitive to their consumers in the domestic market but on the other
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hand they require time to understand the needs of international consumers and thus
work effectively in the overseas environment (Wilson and McDonald, 2001).
In addition to this, expanding business to international market is an exciting task
while in certain cases it is also challenging. But, it is essential for organization to earn
profits and grow exponentially so that organizational goals can be attained effectively.
For instance, IKEA carries out its operations both in international and domestic market
and thus builds a brand image of firm in both the market so that its sales can be
enhanced. Further, when business plans to expand beyond the boundaries at that time
it requires to recruit skilled employees with efficient knowledge so that they can acquire
best results (Casadesus-Masanell and Ricart, 2009). Thus, it is crucial to understand
the differences among the domestic and international business that helps in attaining
success. At the same side, when business starts working in different cultures, people
need to understand both social and business culture and then provide relevant products
to consumers so that their needs could be fulfilled. Also, advertising activities differ from
domestic market to international market. Understanding all these consequences helps
firms to enter into new market and work efficiently in order to attain goals (Jones, 2002).
While, entering into international market, IKEA ensures that level of competition
is high and thus it is essential for the management of firm to develop their skills and
expertise so that best results can be attained both in international and domestic market.
Following are the different factors such as political, social and cultural that impact
business operations while expanding business into the international market (Nickols,
2012). These are as follows-
 Political factors- It states that political environment differs from place to place.
Therefore, at the time of international expansion in different countries such as
China, IKEA faces serious consequences because here as per the government
laws, business is required to involve local entity into operations and then, jointly
carry out activities. Therefore, IKEA is required to involve Chinese people to
understand the needs of local consumers and then produce product accordingly.
However, political stability of the environment is also crucial as it helps firm to
grow and expand (Grant, McLeod and Shaw, 2012).
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 Social factors- IKEA is required to determine social trends prevailing in the
country because at the time of expansion, firm needs to reflect to the lifestyle of
people. For instance, IKEA is found in Sweden market and thus it reflects
Swedish lifestyle in its product range. Thus, it becomes difficult for firm to reflect
to the country's product range and satisfy the needs of people (Miles, 2002).
 Cultural factors- Furthermore, culture differs from one country to another. Thus,
it is essential for business to value culture where they are going to work. For
instance, at the time of enlarging business operations to China, firm aims to
determine the needs of consumers regarding flexible furniture because they have
small apartments to live in. Therefore, firm plans to develop products according
to their need in order to sustain in the international market (Kim and Mauborgne,
2013).
 Economic factors- IKEA faces issues at the time of operating in international
market such as recession, high inflation rate, interest rate and wage rate .
Therefore, it is crucial for firm to cope up with such challenges and thus develop
the position to work in the international market (Knapp, 2001). GDP is another
factor which can affect the business practices of IKEA. It represents the
economic performance of the country. A significant change in the GDP, whether
up or down generally has a significant impact on the stock market. This
influences the stock performance of the company. Hence it is very essential that
economy must perform in good manner for the benefit of the business. A bad
economy usually means lower profits for the companies which in turn also lowers
the stock prices. This also puts an negative impression on the minds of the
investors.
Further, it can be stated that differences in economic, social and cultural
factors arise due to working in both the international and domestic market. For example,
differences within such type of factors affect business operations in the form of failure to
company. Therefore, it is essential for enterprise to hire skilled and trained employees
from the same culture where firm is going to expand so that they can implement the
needs of consumers effectively and attain success (Kourdi, 2010). Thus, differences in
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such factors at the time of working domestic and international may assess the risk of
losing market share as well as product can also be failed in the market.
CONCLUSION
It can be concluded from the above essay that IKEA is required to determine
marketing condition of the place where firm is planning to expand its operations. Also,
they should involve each member of business into decision making process by
adopting informed process so that overseas expansion can be don effectively. In regard
to this, IKEA plans to expand its operations in China and India which are considered as
developing economies. Therefore, firm should produce low cost affordable furniture so
that sales can be enhanced. Further, functions of business differ in between
international and domestic market. Thus, such differences arise risk of failure in the
international market.
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REFERENCES
Books and Journals
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consequences of networking for advertising planning. European Journal of
Marketing. 46(1/2). pp.73 – 91.
Hansen, F. and Smith, M., 2006. The ethics of business strategy. Handbook of
Business Strategy. 7(1). pp.201 – 206.
Hoványi, G., 2006. Developing Strategies for International Business. The WRAP
Process. European Journal of Marketing. 40(5/6). pp.718 – 719.
Ireland, D. R., Hoskisson, R. and Hitt, M., 2011. Understanding Business Strategy
Concepts Plus. Cengage Learning.
Kambil, A., 2008. Purposeful abstractions: thoughts on creating business network
models. Journal of Business Strategy. 29(1). pp.52 – 54.
Kim, C. W. and Mauborgne, R., 2013. Blue Ocean Strategy: How To Create
Uncontested Market Space And Make The Competition Irrelevant. Harvard
Business Press.
Knapp, M. P., 2001. Designing Corporate Identity: Graphic Design as a Business
Strategy. Rockport.
Kourdi, J., 2010. The Economist: Business Strategy: A Guide to Effective Decision-
making. Profile Books.
Kouropalatis, Y., Hughes, P. and Morgan, E. R., 2012. Pursuing “flexible commitment”
as strategic ambidexterity: An empirical justification in high technology firms.
European Journal of Marketing. 46(10). pp.1389 – 1417.
Lafley, G. A., 2013. Playing to Win: How Strategy Really Works. Harvard Business
Press.
Langabeer, R. J. and Napiewocki, J., 2000. Competitive Business Strategy for Teaching
Hospitals. Greenwood Publishing Group.
Marren, P., 2007. High-functioning business strategy. Journal of Business Strategy.
28(6). pp.37 – 39.
Marren, P., 2012. The devil's dictionary of business strategy. Journal of Business
Strategy. 33(4). pp.58 – 60.
Miles, M., 2002. Strategic Marketing: An Introduction. European Journal of Marketing.
36(11/12). pp.1441 – 1444.
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Morgan, E. R., Strong, A. C. and McGuinness, T., 2003. Product‐market positioning and
prospector strategy: An analysis of strategic patterns from the resource‐based
perspective. European Journal of Marketing. 37(10). pp.1409 – 1439.
Paswan, K. A., Blankson, C. and Guzman, F., 2011. Relationalism in marketing
channels and marketing strategy. European Journal of Marketing. 45(3). pp.311 –
333.
Pinnington, D. B. and Scanlon, J. T., 2009. Antecedents of collective‐value within
business‐to‐business relationships. European Journal of Marketing. 43(1/2). pp.31
– 45.
Thorpe, R. E. and Morgan, E. R., 2007. In pursuit of the “ideal approach” to successful
marketing strategy implementation. European Journal of Marketing. 41(5/6).
pp.659 – 677.
Trim, J. R. P. and Yang‐Im, L., 2008. A strategic marketing intelligence and multi‐
organisational resilience framework. European Journal of Marketing. 42(7/8).
pp.731 – 745.
Wilson, N. H. and McDonald, B. H. M., 2001. An evaluation of styles of IT support for
marketing planning. European Journal of Marketing. 35(7/8). pp.815 – 842.
Online
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Nickols, F., 2012. Strategy. [Online]. Available through:
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