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5. Internal Analysis of IKEA Value chain analysis Value chain analysis of IKEA identifies business activities that can create value and competitive advantage to the global furniture retailer. Operations-IKEAfollowsde-centralizedbusinessstrategyinrunningitsglobal operations. According to this strategy regional managers are granted decision making. It is the largest producer of wooden furniture in the world. Inbound logistic-It is connected with buying raw material from 1002 suppliers located in 51 nations globally and relationships with supplier are preserved via 42 trading offices around the world. It includes the economy of scale and existence of strategic relationship with provider. Outbound logistic-Ikea function its business in 28 market all around the world. The company provides two type of delivery, one is parcel delivery and other is truck delivery. The delivery of online purchase is free of charge. Marketing and sales-IKEA uses print media advertising, sales promotion, events and experiences, public relation and direct marketing techniques. Online sales channel is also utilized by IKEA. Traditional store sales of IKEA accounted for 95% of sales. IKEA service-Customer service is the primary activity in value chain.It provides telephone customer service, offering refund and exchange of goods according to their feedback towards good. If customers forget one part of furniture in store than no need to go to IKEA store, they helped with telephone call.
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IKEA is UK based organisation which sales furniture, home and kitchen appliance and many other products. It has been worlds the largest furniture retailer organisation since 2008. Internal analysis of the organisation considers as a swot analysis(Rothaermel, 2015). Strength- Its biggeststrength is that it has clear vision, whichistoaddvaluetothecustomers irrespective of the market condition. It has well definedbusinessstrategywhichthroughit increase the customers. They are leading the marketthroughapplyingthebeststrategies which from they make existence in mind of customers,whichiscalledpositioning.It applying the strategy in which customers can design the product according to their demand and need. They focus on cost leadership. IKEA has emerged as the worlds leading retailer of furniture.IKEAhasabilitytocreatebuzz beforeopeninginIndia.Ithascomplete shopping experience so it is easy to open in India. IKEA is using the metrics provided by KPIs or key performance indicators that will include increased use of renewable materials IKEA will smartly use their raw materials with the help of metrics. It will be helpful of the company for establishing maintaining the long terms relationships with the suppliers in India. Weakness- IKEA operates in multiple countries around the world,soitisdifficulttocontrolallthe locations in good manner. It mainly focuses on cost leadership and through this sometimes the quality goes for a toss. Cost of raw material has goneupanditmakesimpactonthe profitability of the organisation. Sometimes it is difficult to maintain the quality in context of increasingcost.Companyhaveproblem regardingenvironmentalpoliciestoits customers and shareholders.It is the weakness of IKEA to opening in India. Customers have different preferences in chosen country and it is not easy to open new market in selected nation(Goel and Garg, 2018). Sometimes it is difficultforthecompaniestomaintainthe qualityincontextofincreasingcostsfor several locations it can be a cause of loss for IKEA's company while they will enter in the Indian market. Opportunities- The organisation have opportunities to increase the branches in all around the world and make Threats- IKEA has low cost business model and its copied by the other competitors. That means
more profit. They will have not faced many problems just because of their goodwill. It has big opportunity with having green business model. Customers like to buy such products thatareenvironmentallyconscious.Ithas secondopportunitytoexpandthebusiness because of having cost leadership. Addition of value to the customers is another significant opportunity.IKEA is already drawing up plans to enter markets like India with a clear strategy of cost leadership, which it hopes, would yield benefits to the company. With the cost cutting efficiency IKEA can develop itself in India. Indiaissecondthelargestcountryin population so, it will be an opportunity for IKEA to earn profit by expanding business in India. the company has to innovate something new so that the low cost can would not impact on it. IKEA has to come up with new strategies. They have to focus on social trends because it also makes impact on the business.There is threat for IKEA to opening in India market just becausedifferencetasteandpreferencesof consumers.Thereisbigmarketofevery productsoitisnoteasytosurvivein competition in market of India. Many strong competitors are there in Indian market which can affect the business of IKEA in India. 6. IKEA business strategy - This strategy is built upon the IKEA concept. It starts with the idea of providing the range of home furnishing products which are affordable for many people. This strategy will include quality, designing, combine functions and value. The IKEA concept is existing in each and every part of the company such as- packing, sourcing, distributing, designing etc. (Ngai and Falkheimer, 2017). Cost leadership-Effectiveness of price is one of the solid base of IKEA for the competitive advantage. All the global retailer of furniture are not able to offer their products in low price as compare to IKEA. IKEA is mainly focusing on the international marketing. Which will help to expand its business across the world.There is opportunity to expand business in India because many people in India, wants product at lower cost so this strategy can help IKEA.
to being globally. Company can increase the variety of their products that can help to expand the business in India. IKEA is focusing on the cost leadership strategy there are many young buyers are focusing on the fashionable furniture and accessories at low cost. IKEA has targeted market segmentations fr these types of customers. IKEA is conducting various activities to keep their cost low in india such as- instead of relaying primarily on third party manufacturers, the engineersofcompanywilldesignlow-costmodularoffurniturereadyforassembleby customers.Company is selling many products in the lowest prices. Company is focusing to provide the best quality of their products. Furnishing chain and home improvement traditionally engaged for new market development in different manner. IKEA has 28 markets worldwide and 340 stores across the world(Ngai and Falkheimer, 2017). Differentiations-it is a second strategy that can be used by IKEA to differentiate their products in compare with other companies. Differentiations is based upon the products and delivery process and making approach and many other products. IKEA can keep low cost of products than the premium price to get better profitability in India. There are many competitors whom can copy the goods and ideas of IKEA so it will use low pricing strategy through large - scale procurement. Integrated strategy- Integrated strategy includes all the various strategies which can help to IKEA to expand its business.This strategy also control the process of marketing and its factors such as- suppliers, retailers, distributes.In this kind of strategy IKEA will take overall control over one of more phases in the production and distribution of products and services and it can help the company to expand the business in India. It has home delivery and flexible return policy system so it is easy to attract customers for it. IKEA also adopting the store location strategy to expand its business across the world. In the US, most consumer use personal vehicles, IKEA outlet are normally situated in the suburbs. People of china are mostly using the public transportation so the IKEA has set up their outlets outside the cities which are connected by rail and metro networks(Jin-Yuan and et.al., 2016).
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Recommendations From the above study of IKEA it has been concluded that there were external and internal factors which shows the condition of the company in the world. Customers are aware about the products which sold by IKEA, but there is a problem of customer loyalty. It provides low cost products so some customers can not believe on the product quality. IKEA has to develop customer loyalty. IKEA can promote green strategy to increase the customers. They can also promote giving back to community. Direct marketing is needed to IKEA for better performance in the competitive market.
REFERENCES Books and Journals Rothaermel, F.T., 2015.Strategic management. McGraw-Hill Education,. Goel, R. and Garg, S., 2018. India As a Marketplace: A Case Study of IKEA.Available at SSRN 3282924. Ngai, S.B.C. and Falkheimer, J., 2017. How IKEA turned a crisis into an opportunity.Public Relations Review.43(1). pp.246-248. Jin-Yuan and et.al., 2016. Analysis for Cost Leadership Strategy and Core Competitiveness Points of IKEA CO.DEStech Transactions on Economics, Business and Management, (iceme-ebm).