Strategic Management: Evaluating Purpose, Vision, and Objectives in Setting Organizational Direction

STRATEGIC
MANAGEMENT

Contents
INTRODUCTION......................................................................................................................3
TASK.........................................................................................................................................3
A critical evaluation of the value of clear purpose, vision, mission and objectives in setting
the strategic direction of organizations using examples from selected organisation.............3
Assess the competitive advantage of the selected company, using the VRIO framework....4
PESTLE framework analysing the external environment of the selected business...............5
Application of the Porter’s Five Forces Model for the selected organisation........................7
Review organisation strategy.................................................................................................8
CONCLUSION..........................................................................................................................8
REFERENCES.........................................................................................................................10

INTRODUCTION
Strategic management is process of analysing company’s strategies to know about
position of firm in market. It evaluates existing strategies of firm so that entity can make
changes and can gain success in market (Kor, Mahoney and Tan, 2020). Present study is based on
IKEA, it is the well known furniture brand that offers cost effective quality home furnishing
its to global consumers. Current assignment will conduct Pestle analyses of chosen business.
It will conduct Porter’s five forces and Ansoff matrix. Organisational strategies will be
reviewed in this report.
TASK
A critical evaluation of the value of clear purpose, vision, mission and objectives in setting
the strategic direction of organizations using examples from selected organisation
IKEA being a leading brand has developed strong position in market.
Purpose of company is to improve better life by offering them high quality everyday life
products to them (Wellner and Lakotta, 2020).
Mission of company is to design amazing furniture and furnishing products and provide it at
affordable rates to wide range of consumers.
Objective of IKEA is to enhance its profitability by satisfying its consumers globally.
It is very essential for company that to have clear review of its strategies, these aids in
giving clear direction for future so that enterprise can grow well in market and can gain
competitive advantage as well (Coccia, 2020). Ansoff matrix is the model that is used to
review or evaluate strategic direction of company.
Market penetration
‘ This is the strategy in which company concentrates on selling its existing furniture
products in existing market only. IKEA is using this tactics greatly as it concentrates on local
market because it has great understanding about needs of local people. It implements
effective marketing tactics so that it can gain attention of consumers in existing market. As to

grow well and to become the leading brand it is essential for business to go internationally as
well (Ongaro and Ferlie, 2020). This strategy helps IKEA in attracting new buyers and
satisfying their needs hence goal of company can be accomplished.
Product development
This is the tactic in which enterprise can concentrate on developing new modified
products and sell it into the existing market (Ma, 2020). This is the great strategic direction in
which enterprise can attract new buyers as well. It can offer wide range of furniture products
such as kitchen, home furnishing items. Recently it has 2500 new products that has helped
the IEKA in gaining success in market and becoming the most popular favour brand in this
market.
Market development
This strategy is high related with entering into new market to grow well in global
market. Being a largest retailer this strategy is most suitable for IKEA (Bohórquez and et.al.,
2020). This has many branches in many areas. By this entity can know more about global
consumers and can offer them quality material. This would be better in gaining success in
market and accomplishing its objective successfully (Gray And et.al., 2020).
Diversification
This is the tactic that is also known as riskiest strategy in which IKEA can go into
new market with new products. This is quite risky because if it fails to make consumers
happy then it may face huge loss. But if it offers satisfactory items in new market then it
would generate huge opportunity for IKEA. This is great business strategy that can give cost
advantage to IKEA and will help the firm in accomplishing its objective successfully (Gupta
and Zhang, 2020).
Balance score card
It is the methods that is used by companies to complete organisational vision into real
action. That means taking such actions that may make strategic planning successful. It has
four major perspectives: financial, customers, business process, learning and growth.
IKEA’s main strategic objective is to increase its revenues and reduce cost of sales so
that net profit can be increased. It can be measured through net profit ration, mark up ratio