Strategic Management of IKEA: Analysis and Recommendations

STRATEGIC
MANAGEMENT

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................3
ENVIRONMENTAL ANALYSIS..................................................................................................3
Porter’s Five Forces Model.........................................................................................................5
CAPABILITY ANALYSIS.............................................................................................................7
Strategic capabilities....................................................................................................................7
VRIO criteria...............................................................................................................................8
Competitive Implications.............................................................................................................9
PROPOSED STRATEGY.............................................................................................................10
CONCLUSION..............................................................................................................................11
REFERENCES..............................................................................................................................12

INTRODUCTION
IKEA is a private organization which is belonging to Netherlands and has entered this
industry in 1943. The headquarters is in Delft with a number of 211,000 employees in the
organization. The company has made a place for themselves in the market which is a great factor
for them. The company has developed themselves in the local areas which are a great factor for
the company but the company will have to expand themselves if they want to explore and get
more customers in the organization. IKEA mission statement is to offer wide range of well
designed function home furnishing products at low prices. Due to increase in the competition in
this segment it is increasing challenges to fulfil company’s statement effectively. There are a lot
of threats which the company is having which needs to be handled in the organization so that
they can have higher profit margins. The company is selling products which are having high
quality of products which is why the company is having loyal customers in the organization but
it is because of the external and internal factors which are making a problem for the company to
function effectively. There are a lot of political changes which have come in Europe and United
kingdom which the company has expanded themselves into which is why it is getting difficult
for the organization to have a better functioning and understanding for themselves in the market
to be stable. There are a lot of competitors which are coming up in the retail industry which is
why it is very important for IEA to take measures and change the strategies so that they do not
lose their competitive advantage and market share (Ferlie and Parrado, 2018). There are long
term goals IKEA is having in the market which are being achieved on time which is a great
factor for the organization and the company is also having a strong internal factor in the
company which is making the organization have a better functioning for themselves.
The report is going to consist of the strategic options which the organization have for
them in the market which is going to make the company get a competitive advantage. It is very
important for the company to understand the competition which is rising in the market and then
take planning and measures according to them so that the company can have better functioning
for themselves which is going to make the company have a better functioning and understanding
for themselves which is a very important factor for the organization.
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ENVIRONMENTAL ANALYSIS
There are a lot of factors which are influencing the functioning of the organization which
needs to be controlled by the organization so that they can continue to have a competitive
advantage in the market (David and David, 2016). The needs and demands of the customers and
the employees are changing from time to time which needs to be controlled and improved upon
by the organization so that there is a better functioning. The external factors are not in control of
the organization which is why the strategies and measures have to be planned accordingly in
IKEA. The further report is going to analysis the PESTLE of the organization and the
opportunities and threats which are present in the company because of these factors.
 Political Factors
Opportunities- The taxes and other policies which are being trade is a great opportunity for
the company because there is a free trade policy which other countries have started which can
help IKEA to expand them (Ocasio, Laamanen and Vaara, 2018).
Threats- There are changes which are taking place in the political parties which can turn out
to be a great threat for the company which is why the organization must find ways through which
they can change strategies and have a better functioning for themselves.
 Economic Factors
Opportunities- IKEA is being able to find low labour wages employees which is cost
friendly or the organization.
Threats- New employees are not hired in the organization because of this factor and new
ideas are not being able to generate (Rothaermel, 2016). The currency value is also a great threat
for the company which is why the organization will have to be more careful while expanding
themselves.
 Social Factors
Opportunities- Company is being able to understand the customers and change the trends
and products design according to the customers which is a great factor for the company
(Steinbach and et.al., 2017).
Threats- The changes have to be got in rapidly in the organization which is a little difficult
in IKEA because the employees are used to the old working which is not just making the
productivity slower but the operations as well in the organization.
 Technological Changes
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