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Internal Analysis of IKEA Assignment

   

Added on  2021-01-01

6 Pages1715 Words184 Views
5. Internal Analysis of IKEA Value chain analysisValue chain analysis of IKEA identifies business activities that can create value and competitiveadvantage to the global furniture retailer. Operations- IKEA follows de-centralized business strategy in running its globaloperations. According to this strategy regional managers are granted decision making. It is thelargest producer of wooden furniture in the world. Inbound logistic- It is connected with buying raw material from 1002 suppliers locatedin 51 nations globally and relationships with supplier are preserved via 42 trading offices aroundthe 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. Thecompany provides two type of delivery, one is parcel delivery and other is truck delivery. Thedelivery of online purchase is free of charge. Marketing and sales- IKEA uses print media advertising, sales promotion, events andexperiences, public relation and direct marketing techniques. Online sales channel is also utilizedby IKEA. Traditional store sales of IKEA accounted for 95% of sales. IKEA service- Customer service is the primary activity in value chain. It providestelephone customer service, offering refund and exchange of goods according to their feedbacktowards good. If customers forget one part of furniture in store than no need to go to IKEA store,they helped with telephone call.

IKEA is UK based organisation which sales furniture, home and kitchen appliance andmany 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,which is to add value to the customersirrespective of the market condition. It has welldefined business strategy which through itincrease the customers. They are leading themarket through applying the best strategieswhich from they make existence in mind ofcustomers, which is called positioning. Itapplying the strategy in which customers candesign the product according to their demandand need. They focus on cost leadership. IKEAhas emerged as the worlds leading retailer offurniture.IKEA has ability to create buzzbefore opening in India. It has completeshopping experience so it is easy to open inIndia. IKEA is using the metrics provided byKPIs or key performance indicators that willinclude increased use of renewable materialsIKEA will smartly use their raw materials withthe help of metrics. It will be helpful of thecompany for establishing maintaining the longterms relationships with the suppliers in India.Weakness-IKEA operates in multiple countries around theworld, so it is difficult to control all thelocations in good manner. It mainly focuses oncost leadership and through this sometimes thequality goes for a toss. Cost of raw material hasgone up and it makes impact on theprofitability of the organisation. Sometimes itis difficult to maintain the quality in context ofincreasing cost. Company have problemregarding environmental policies to itscustomers and shareholders. It is the weaknessof IKEA to opening in India. Customers havedifferent preferences in chosen country and itis not easy to open new market in selectednation(Goel and Garg, 2018). Sometimes it isdifficult for the companies to maintain thequality in context of increasing costs forseveral locations it can be a cause of loss forIKEA's company while they will enter in theIndian market.Opportunities- The organisation have opportunities to increasethe branches in all around the world and makeThreats-IKEA has low cost business model and itscopied by the other competitors. That means

more profit. They will have not faced manyproblems just because of their goodwill. It hasbig opportunity with having green businessmodel. Customers like to buy such productsthat are environmentally conscious. It hassecond opportunity to expand the businessbecause of having cost leadership. Addition ofvalue to the customers is another significantopportunity.IKEA is already drawing up plansto enter markets like India with a clear strategyof cost leadership, which it hopes, would yieldbenefits to the company. With the cost cuttingefficiency IKEA can develop itself in India.India is second the largest country inpopulation so, it will be an opportunity forIKEA to earn profit by expanding business inIndia.the company has to innovate something new sothat 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 italso makes impact on the business. There isthreat for IKEA to opening in India market justbecause difference taste and preferences ofconsumers. There is big market of everyproduct so it is not easy to survive incompetition in market of India. Many strongcompetitors are there in Indian market whichcan 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 rangeof home furnishing products which are affordable for many people. This strategy will includequality, designing, combine functions and value. The IKEA concept is existing in each and everypart 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 thecompetitive advantage. All the global retailer of furniture are not able to offer their products inlow price as compare to IKEA. IKEA is mainly focusing on the international marketing. Whichwill help to expand its business across the world. There is opportunity to expand business inIndia 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

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