Strategic analysis assignment : IKEA

STRATEGIC ANALYSIS

CONTENTS
INTRODUCTION.................................................................................................................................1
Background information of the company..........................................................................................1
EXTERNAL ANALYSIS.....................................................................................................................1
PESTEL analysis...............................................................................................................................1
Porter’s five force analysis................................................................................................................3
INTERNAL ANALYSIS.......................................................................................................................4
SWOT analysis..................................................................................................................................4
Strategic capabilities of the firm........................................................................................................5
Resource based view (VRIO framework)..........................................................................................6
Value chain analysis..........................................................................................................................8
STRATEGIC SOLUTIONS................................................................................................................10
Porter’s generic strategies................................................................................................................10
Game theory....................................................................................................................................11
EVALUATION OF IKEA’A STRATGEY.........................................................................................11
Strategic choices (Ansoff’s matrix).................................................................................................11
CONCLUSION...................................................................................................................................13
REFERENCES....................................................................................................................................14

TABLE OF FIGURES
Figure 1: Value chain analysis...................................................................................................8
Figure 2: Porter's Generic strategies........................................................................................10

INTRODUCTION
In this current dynamic and competitive environment, the significance of strategic
planning and analysis for the organization is quite evident. Systematic planning is required
for the firms that are aspiring to become the major player in the industry. The term strategic
analysis is being referred as the assessment of the objective, capabilities, costs and
comprehending the existing market conditions of the company that forms the foundation for
the development of the strategic process. Thus, it is considered as the most vital tool for
enforcing proper planning process within the business (Thompson and Martin, 2010). The
current research study also focuses on offering a strategic analysis of IKEA, which is a
multinational company founded in Sweden, UK, engaged into selling and designing of
furniture, accessories and home appliances. The report will include external environment
analysis of the company in which it is currently operating and its related issues affecting the
firm. The study will also focuses on the competitive internal resources as well as capabilities
of the firm. The final part of the study will throw light on possible strategic solution that
IKEA can use for sustaining and improving its competitive position. The current strategy of
the firm will also be evaluated effectively.
Background information of the company
Throwing light in relation with IKEA, it is a multi-national retailer of home furnishing
being founded in the year 1943 in Sweden. The primary area of the business is designing and
selling home appliances, accessories as well as furniture. It is one of the largest furniture
retailer all across the world. The major competitive advantage of the firm in its domestic and
local market is the adoption of modern architectural design (Inter IKEA Systems, 2014).
Further, the firm also pays attention on its interior design and always makes efforts to remain
eco-friendly. The prices are also low with the aim to reach large number of people. IKEA was
successful in achieving a dominant market position by aggressive target costing as well as
relentless emphasis in the cost management. The prices of the organization run typically 30 to
50 percent below from its competitors.
EXTERNAL ANALYSIS
PESTEL analysis
The external environment of IKEA is impacted by numerous factors and the
evaluation of all such forces is known as PESTEL analysis. The evaluation of the factors
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