Competitive Strategy: IKEA Case Study

This case study analyzes the importance of competitive strategy by taking the example of IKEA. It discusses the cooperative strategy, strategic alliances, and the role of cooperative strategy in IKEA. It also covers the background of the company, reasons for cooperative strategy, and challenges faced by the company.

Running Head: Case study 1
Competitive Strategy
IKEA Case study

Case study 2
Executive Summary
The competitive strategy has a significant role in the company as it facilitates in providing
various information to stay in the competitive environment. The report has described the
importance of the competitive strategy by taking consideration of the IKEA Company. It is the
company which idea is entirely different from other companies that make it entirely different
from other concepts. The report entails the cooperative strategy which is helpful in amplifying
the competition in the market by making an improvement in the company’s operation. The
different concept of the company begins with the idea of giving an extent of home furnishing
products that are affordable to many people. The discussion makes on the cooperative strategy
on IKEA Company in which strategic alliances and the importance of alliances are elaborated.

Case study 3
Contents
Executive Summary.....................................................................................................................................2
Introduction.................................................................................................................................................4
Background of the company........................................................................................................................4
Cooperative strategy....................................................................................................................................5
Reasons of cooperative strategy..................................................................................................................5
The role of cooperative strategy in IKEA....................................................................................................6
Strategic Alliances.......................................................................................................................................7
Conclusion...................................................................................................................................................8
References...................................................................................................................................................9

Case study 4
Introduction
Competitive strategy is recognized as the long term strategy. It is the strategy that facilitates in
growing the business in the competitive market. This paper will consider the case study of IKEA
Company in which appropriate strategy will be taken. There are various strategies in the
competitive market in which the main focus of this paper is on the cooperative strategy. It is the
strategy that keeps focussing on creating the protective location in the industry (Schramm-Klein,
Morschett, and Swoboda, 2015). Background of IKEA Company will be elaborated under this
paper which will describe the position of the company in the competitive market. The reasons
behind choosing the cooperative strategy will be described under this paper. Along with that, the
role of the cooperative strategy in IKEA will be mentioned in order to bring the better
understanding regarding the case study and the condition of entry in the Indian Market.
Background of the company
IKEA is a global organization that offers the home furniture items, appliances of the kitchen and
assembles furniture. It has been discovered that IKEA is a global organization that arrangements
in furniture and fulfill the clients by giving them top-notch administrations. The organization has
in excess of 400 stores in 49 nations in which more than140, 000 representatives are working
around the world. The organization is known for its innovator outline for different sorts of
furniture and machine. The organization has created in excess of 12000 results of furniture with a
number of inside highlights. The vision and mission of the company put significant impact over
the business by which the company is able to attain the revenues in a huge manner. The
organization has in excess of 2.1 billion guests visit its sites and buy items (Harapiak, 2013. The
company is famous due to its effective operational particular, cost control and corporate credits
that represented IKEA to smaller its range transferred by normal of 2% to 3% in the season of
development of worldwide. It has been discovered that the present scene of the furniture business
is dynamic that is the reason it is required for the organization to look forward in the most recent
pattern of furniture with a specific end goal to achieve the energy in the destructive market (Burt,
Johansson and Dawson, 2015).

Case study 5
Cooperative strategy
The cooperative strategy facilitates many organizations to attain the objectives of the company
within the time frame. It is the strategy that considers as the planning strategy in which two or
more than two organizations are working in order to achieve the common goal of the business. A
cooperative strategy is being adopted by many companies for the purpose of increasing the
competitive advantages (Schramm-Klein, Morschett, and Swoboda, 2015). The main motto of
this study is to provide the chances to overcome the challenges by taking consideration of the
acquisition strategy. It has been analyzed that cooperative strategy has two sub-kinds such as
collusive strategy and strategic alliances. The job of the collusive strategy is reliant on the
working criteria of a few associations keeping in mind the end goal to distribute with capitulating
of the business beneath the destructive level. It has been found that the strategic alliances are
another sub-kind of the cooperative strategy which is able to amplify the position of the
competition of the industry (Regnér and Zander, 2014). The role of the cooperative strategy has
major role in the company as it facilitates in amplifying the competition in the market by creating
development in the operation of the company.
Reasons of cooperative strategy
There are so many reasons that being the major cause of applying the cooperative strategy in the
company. These are lack of resources, acquiring new skills and ineffective knowledge about new
concepts where the company wants to expand its business. Co-operative behavior is liable to
give a company value that cannot be attained independently. Companies develop a cooperative
strategy for the reason of creating strategic alliances due to lack of resources to attain their aims.
It helps in reaching the stakeholder's interests to decrease uncertainty inside the company.
Cooperation has the ability to develop the image of the company. The company can achieve
various opportunities to acquire knowledge and experience (Keyes, 2016). The role of the
cooperative strategy helps in fulfilling the resources for the purpose of developing the scope of
growth in the comparison of the competitors. It has been found that there is a number of
companies along with the trade projects that require expertise from different sorts of fields. It is
the strategy to ensure that the employees of the company are valuable and the strategic alliances
help in gaining a lot of knowledge about different culture.

Case study 6
The role of cooperative strategy in IKEA
It has been analyzed that the strategy of IKEA Company is entirely different from other
companies because the main focus of IKEA is on core competencies that have been influenced
with respect to maintain the productivity. The company’s capabilities are expanded worldwide in
which the value of the supply chain is involved. The company’s business model is based on the
low-cost strategy in which a company can approach a large number of customers in one go. The
major core competency of the company is to develop the firm brand equity in which unique
promotions and different kind of advertisement campaigns are embedded. The major strength of
the company is financially strong in which the brand value of the company is increased. It has
been found that the revenue of the company was €32.7 billion in 2015 (Hitt, Li and Xu, 2016).
The role of the cooperative strategy is great as it is not an easy task for any company to enter the
international market without applying an effective strategy. IKEA had to struggle for 12 years to
enter in the market of India because the company did not want to share its shares with other that
is why the main focus of the company is on suppliers. IKEA Swedish furniture Retailer
Company has signed a multimillion-dollar software contract with VerticalNet. It is done because
of its planning to set up a portal for communicating and negotiating with suppliers online. It has
been found that the company booked around $10 billion in sales for the purpose of negotiating
the contracts with manufacturers that is able to supply the organization with the facility of the
home furnishing which sells in around 170 stores worldwide. It has been expected by the
company to help communication regarding the sales of the store and the plans of manufacturing
with a huge number of manufacturers and suppliers that do not make use of Electronic Data
Interchange (Businesscase, 2018). The portal shows that the company is able in increasing
cooperative strategy in which the feature of the applications is made for the benefit of IKEA’s
suppliers which make them sure that they are valuable assets for the company. The role of the
cooperative strategy in the company is increasing the revenues of the company. India is the
second largest population country which has a largest open economy market. There are more
than 7500 products that are being offered by the company to a large number of customers
worldwide (Tandon, 2018). The strategy and the concept of the company is different from other
company in which Do it Yourself concept helps the customer to assemble the furniture as per
their needs and affordability. However, the company can be faced the challenge due to this
concept and with the help of the case study, it has been found that the company is facing various

Case study 7
challenges such as availability of retail space and its cost, Hiring activities and vendor
negotiations, Last-mile supply chain issues, Reception of IKEA’s products is unpredictable,
IKEA’s anti-corruption policy (HuffPost, 2012).
Strategic Alliances
IKEA took around 12 years to create a store in India and after a lot of struggle the company has
opened its store in Hyderabad. The company wanted to enter in the market of India with full of
shares but the local laws of INDIA allowed them to enter with 51% foreign ownership and rest
for a domestic country that hampered the entire plan of the company. In 2012, Indian
Government allowed IKEA to invest in the Indian Market around 600 billion and this proposed
plan was accepted India’s Foreign Investment Promotion Board. It has been analyzed that the
company started to a partnership with its supplier which is Hyderabad-based Shree Malani
Foams Pvt Ltd that deals in mattresses (TOI, 2018).
Strategic alliances are considered as the major factor of cooperative strategy to facilitate the
company in order to reduce the challenges of the lack of resources and skills. It increases the
value in the view of the partners that they are valuable assets for the company. Along with that, it
has been found that the company has the partnership with GATI-KWE to manage home
deliveries of its products which would be helpful to decrease the challenge of the major concept
of Do-it-yourself across Telangana. Alliances can provide the different way of earning more
revenues in the competitive market and amplify the range of responding to the opportunities of
the market and changes in the technology. The company has a different policy for suppliers in
which it has made IWAY (IKEA Way) that refers the code of conduct for the suppliers which
specify the requirements of the company as well as the supplier so that the bonding between both
of them can be maintained for a long term. The work of the company is proactively that help in
preventing the illegal and corruption activities. However, the company has corruption policy but
by giving more importance to the suppliers, the company conducts its own code of conduct for
the suppliers and IKEA representatives. IWAY is based on the international declarations as well
as on conventions. It involves laws and legislations in order to increase the importance of the
Human Rights. According to this code of conduct, suppliers are liable to communicate in the
context of the IKEA code of conduct to sub-suppliers as well as the co-employees (IKEA, 2018).

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Conclusion
In the limelight of the above discussion, it can be concluded that the role of the competitive
strategy is great in achieving the competitive advantages. Along with that, it has been analyzed
that the company is strategically designed their structure to provide better understanding about
the products to their target market. The case study of IKEA has been taken to describe the
cooperative strategy in which the paper has described the strategic alliances in an effective
manner. The paper has described the depth information regarding the cooperative strategy by
taking the case study of IKEA to make proper understanding regarding the position of the
company and its potential impact on the company because of the entrance in the market of India.

Case study 9
References
Burt, S., Johansson, U. and Dawson, J., 2015. International retailing as embedded business
models. Journal of Economic Geography, 16(3), pp.715-747.
Businesscase, 2018. Vision, Values and Mission in Driving Strategy An IKEA case study.
Available [online] https://businesscasestudies.co.uk/ikea/vision-values-and-mission-in-driving-
strategy/strateg.html. Accessed on 19th May, 2018.
Harapiak, C. 2013. IKEA’s International Expansion. International Journal of Business
Knowledge and Innovation in Practice. (1)1 pp.25-51.
Hitt, M.A., Li, D. and Xu, K., 2016. International strategy: From local to global and
beyond. Journal of World Business, 51(1), pp.58-73.
HuffPost, 2012. IKEA’s Environmental Sustainability Strategy Includes Plan For Energy
Independence By 2020. . Available [online] https://www.huffingtonpost.com/2012/10/25/ikeas-
environmental-susta_n_2018703.html. Accessed on 19th May, 2018.
IKEA, 2018. IWAY, Our code of conduct. Available [online]:
https://www.ikea.com/ms/en_SG/about_ikea/our_responsibility/iway/index.html. Accessed on
19 Sept 2018.
Keyes, J., 2016. Implementing the IT balanced scorecard: Aligning IT with corporate strategy.
CRC Press.
Regnér, P. and Zander, U., 2014. International strategy and knowledge creation: The advantage
of foreignness and liability of concentration. British Journal of Management, 25(3), pp.551-569.
Schramm-Klein, H., Morschett, D. and Swoboda, B., 2015. Retailer corporate social
responsibility: Shedding light on CSR’s impact on profit of intermediaries in marketing
channels. International Journal of Retail & Distribution Management, 43(4/5), pp.403-431.

Case study 10
Schramm-Klein, H., Morschett, D. and Swoboda, B., 2015. Retailer corporate social
responsibility: Shedding light on CSR’s impact on profit of intermediaries in marketing
channels. International Journal of Retail & Distribution Management, 43(4/5), pp.403-431.
Tandon,S., 2018. With 7,500 products and four years of research, IKEA is ready for India.
Available [online]: https://qz.com/india/1301582/ikea-prepares-to-open-its-first-store-in-india-
after-four-years-of-research/ Accessed on 19 Sept 2018.
TOI, 2018. IKEA partners with its first mattress supplier from India. Available [online]
https://timesofindia.indiatimes.com/business/india-business/ikea-partners-with-its-first-mattress-
supplier-from-india/articleshow/62892095.cms. Accessed on 19 Sept 2018.